What is Data Culture? And Why Does It Matter?
By Aaron Kalb
Published on November 27, 2023
Originally published in February 2021 and last updated in November 2023.
Data culture is top of mind for nearly every data leader. According to a recent Gartner survey, data culture was the #1 priority for chief data officers (CDOs). McKinsey, the management consulting firm known for its deep knowledge of the C-suite, is writing about data culture and why it matters, pithily stating that “data culture is decision culture.” According to a recent survey by Alation, 78% of organizations have a strategic initiative to become more data-driven, and Alation customers routinely report that fostering a data culture is their core objective.
Since everyone seems to want a data culture, we decided to write a multi-part blog series defining data culture, reviewing its benefits, and explaining how your organization can go about getting one.
What is data culture?
Data culture is an organizational culture of data-driven decision making. Organizations build a data culture because they want to make better decisions. How does a data culture differ from other organizational cultures? Well, let’s consider some common alternatives — consensus culture and hierarchical culture:
In consensus cultures, achieving agreement is valued above all else. Consensus culture can feel warm and fuzzy on a day-to-day basis because everyone has a say and no one gets “steamrolled” or “overruled.” Unfortunately, consensus cultures move slowly and struggle to innovate over time, because in a large organization, invariably somebody won’t be comfortable with a novel idea that rocks the boat.
On the opposite end, hierarchical cultures value status or seniority above all else, and everyone defers to the “HiPPO” — the highest-paid-person’s opinion. When the ability to generate ideas and make choices is limited to a select few, the experience is demoralizing for everyone else. Ultimately, these cultures end up crushing creativity and missing big opportunities. And since no one can be right all the time — and often the folks “at the top” are insulated from the realities “on the ground” — the HiPPO is frequently wrong.
In a data culture, by contrast, evidence and reason are valued above all else. It doesn’t matter who’s talking or what tone they’re using — what matters is whether the argument makes sense given the data.
Consensus and hierarchical cultures generally aren’t intentionally selected as preferred alternatives to data culture. Rather, they emerge because they’re easy. You can always turn to your peers in a meeting room to solicit their opinions, or turn to the boss. But to be able to look at the data for answers, the data must be readily available, trustworthy, and interpretable.
Why does data culture matter?
Organizations with a data culture win out against slower-moving consensus cultures and myopic hierarchical cultures. According to Forrester Research, organizations with an insights-driven culture are nearly three times more likely to have double-digit growth.*
How? Data cultures help organizations make better decisions, faster. Per a recent write-up on the 2020 MIT CDO and Information Quality Symposium, companies with data-driven cultures “enjoy increased revenue, improved customer service, best-in-class operating efficiencies, and improved profitability.”
Furthermore, a data-driven culture can help you attract and retain the best employees. After all, would you rather work in a culture that’s dominated by politics or bogged down by consensus-seeking, or in a place where the most logical argument wins the day?
Finally, data-driven cultures increase the commitment to organizational decisions. How many times do corporate initiatives fail due to a lack of employee buy-in, particularly in power cultures where the initiatives come down as dictates? How often are opportunities lost because it takes too long to come to consensus? By demonstrating the data and analysis behind decisions, employees in data-driven cultures are not only happier but more committed to executing on company plans — and commitment alone can dramatically increase the odds of a strategic initiative’s success.
The impact of data culture: challenges and benefits
In the previous sections, we explored the concept of data culture, its definition, and why it's crucial for organizations in today's data-driven landscape. Now, let's take a closer look at the tangible outcomes organizations can expect when they embrace and foster a strong data culture.
Challenges without data culture
Without a data culture, organizations often struggle with slow and unreliable decision-making processes, leading to missed opportunities, a lack of agility, and reduced competitiveness. These strategic errors can have long-term consequences.
In environments lacking data-driven decision-making, employees may become disengaged due to a perceived lack of transparency and logic in decision processes.
Benefits of a strong data culture
Conversely, organizations that foster a strong data culture have the potential to reap significant benefits:
Make precise and timely decisions based on factual evidence.
Enhanced Operational Efficiency
Improve productivity by streamlining processes, reducing inefficiencies, and optimizing resource allocation.
Uncover revenue opportunities and enhance the effectiveness of marketing efforts.
Improved Customer Service
Achieve higher satisfaction rates with personalized customer experiences.
Maximize operational efficiency and adaptability.
Increase collaboration and innovation.
Effective data governance practices help identify and mitigate various risks.
The benefits of a strong data culture include mitigating the challenges associated with inefficient decision-making, missed opportunities, reduced competitiveness, disengagement, and strategic missteps. Organizations that prioritize and invest in a data-driven culture position themselves for long-term success and sustainability.
How can a company adopt a sticky data-driven culture?
Building a data-driven culture in a company requires leadership support. It needs a data-driven approach to improve decision-making and enhance operational efficiency. It also demands investment in data literacy training and tools to make data easily accessible, including a data catalog and a well-structured data governance framework.
You can't buy a data culture, but you can buy software to help build one
Imagine a naïve organization with a corporate initiative to “foster Customer Intimacy.” If that organization merely buys Customer Relationship Management (CRM) software and expects magic to happen, they’ll be disappointed. Now imagine trying to infuse Customer Intimacy into an organization where each customer interaction is only known to the lone employee who was there. Even with great training programs and change management techniques, that’s a tall order. CRM software alone doesn’t cause cultural change, but it certainly makes that change more achievable.
Similarly, an organization can’t buy a data culture; it can only build one. But it’s exponentially easier to build one with the right technology. Building a data culture requires a mix of software, education, and change management.
The Three Pillars of Data Culture
Ultimately, building a data culture requires an organization to enable three capabilities:
Data search & discovery – Employees need to find relevant data just-in-time as they try to make decisions.
Data literacy – Employees need to correctly interpret and analyze data to draw logical conclusions.
Data governance – The organization must ensure that data is appropriately managed, so employees use the right data in the right ways.
We call these capabilities the three pillars of data culture.
Putting Data Culture at the Forefront of Your Organization
In today's rapidly evolving business landscape, data is undeniably the lifeblood of informed decision-making and sustainable growth. To thrive in this data-driven era, organizations must put data culture at the forefront of their operations. It's not merely a trend but a strategic imperative for those aiming to achieve competitive advantage and long-term success. As data becomes increasingly abundant, the ability to harness its power through a data-driven culture will be the defining factor that sets thriving organizations apart from the rest.
As the business landscape evolves, data is crucial for smart decision-making and lasting growth. To succeed in this era, organizations need to prioritize a data-centric approach. It's not just a trend; it's a strategic necessity for gaining a competitive edge and ensuring long-term success. As data becomes more prevalent, organizations that embrace a data-driven culture will thrive.
In the remaining three parts of this multi-post blog series, we’ll take a closer look at each of the three pillars – data search & discovery, data literacy, and data governance – to explore what they are, why they matter, and how to deliver them.
Spoiler alert: building up each pillar in your organization requires foundational investments in data intelligence technology (like a data catalog and data governance software) and shifts with people and processes — although the ratio varies: good search & discovery technology is almost sufficient (just as people don’t need much training to use Google search), while data literacy initiatives necessarily require more human effort (at least until we can download statistics knowledge into our brains the way Neo learned kung fu). Ideally, the technology is entwined in people’s work days leading to a virtuous cycle of engagement.
The Three Pillars of Data Culture Articles:
*Forrester: Insights-Driven Business Set the Pace for Global Growth. October 2018
- What is data culture?
- Why does data culture matter?
- The impact of data culture: challenges and benefits
- Challenges without data culture
- Benefits of a strong data culture
- How can a company adopt a sticky data-driven culture?
- You can't buy a data culture, but you can buy software to help build one
- Putting Data Culture at the Forefront of Your Organization