The C suite is increasingly embracing data-driven decision-making. Now they just need to get everyone else to adopt it.
Slowly but surely, the corner office is giving data the attention it deserves.
With generative AI elbowing its way into C-suite conversations, and data literacy for leaders gaining traction, the need for data-driven decision-making is getting full-on recognition from CEOs. It’s now increasingly understood that data is everyone’s responsibility—including those at the top levels of the organization.
However, there’s little guidance on how to embed data-driven decisioning into all levels and areas of the business. While data-driven decision-making is receiving increased coverage in everything from leadership playbooks to analyst reports, encouraging this practice takes top-down change.
What businesses need to do is operationalize data-driven decision making. This means valuing insight over instinct, using the customer experience as a starting point, and then considering the possibilities for the company’s own internal business processes.
What keeps CEOs awake at night? Data.
To find evidence of the shift toward data-driven decisioning, we need look no further than, well, data. Our analysis of recent Economist Impact research revealed that 37% of senior executives identified data-driven ways of working as business-critical, and an additional 57% said it was a medium or high priority.
Anecdotal evidence also abounds. When a CEO recently took questions from the audience after an industry presentation earlier this year, he had a one-word answer for the query about what keeps him up night: data.
We hear more chief data officers (CDO) say the chief executives they report to are moving away from relegating data decisions solely to CDOs and chief information officers (CIO), and instead are becoming more involved in making decisions on technology and regulatory issues.
The new generation of data-savvy CEOs is helping to fuel the trend. In 2022, incoming CEOs were significantly younger than those departing, with nearly 30% of the new cohort under 50. Compare that with 2021, when only 12% of newly appointed CEOs were under 50.
More comfortable with data than their predecessors in both their personal and work lives, these executives are likely to be more adept at balancing concerns about data, from compliance and data quality, to risk and fraud, with a growing ability to marshal their organizations’ vast reserves into intelligent decisioning and a stronger business.
Getting to data-driven decisioning
Here are three actions CEOs can take to launch their organization’s transition to data-driven decision-making.
- Create a decision-making culture based on insight rather than instinct. Establishing a data-driven culture requires companies to jettison the time-honored value of gut instinct. It’s a hard tradition to part with: Many execs have traditionally embraced the notion of business as an art and savor the thrill of the “eureka” moment. But today’s business decisions move too fast and have too much at stake to bypass what data tells us.
Still, not everyone is comfortable with data. Although 83% of CEOs want a data-driven organization, only 33% of executives are comfortable questioning business KPIs and metrics, according to IDC. In our own research, we found that among chief financial officers (CFO) tasked with driving growth at high-achieving firms, only 38% use real-time analytics and AI in their decision-making.
Digital communications giant Cisco Systems, Inc. serves as a great example of a company that’s making the broad-based cultural changes needed to support data-driven decision making. It’s taking the wraps off new collaborative work centers in which CEO Chuck Robbins says the company’s network backbone plays a key role, with advances like conference room sensors that measure ambient noise and air quality.
In addition, the company replaced what had been a fragmented approach to decision making for its customers with a single, central customer database. The repository’s streamlined information flows through the company, providing a full picture of customer needs and transactions for the 20,000 sales employees and 10,000 users from channel partners who access the repository.
- Make CX your starting point for data and AI. The customer experience (CX) is a natural place to begin data-driven decision-making. For one thing, customer-facing applications are already an area in which many companies are not only generating reams of data but are also increasingly embracing, or at least piloting, AI and analytics.
For another, when it comes to areas of CX such as self-service—where AI-driven chatbots can impact customer satisfaction and reduce top-line expenses—customers emphatically prefer more convenience than businesses are providing.
According to a 2022 survey by NICE, a maker of contact center platforms, 53% of businesses surveyed said their customers are very satisfied with their self-service offerings—but only 15% of consumers agree. Perhaps more startling, 81% of consumers want more self-service options, while 40% of businesses think they already have enough. By operationalizing the move to data-driven decision-making in CX, enterprises can close this perception gap.
- Don’t overlook internal business processes. Data plays a key role here, too. By mining data on their business processes, businesses can not only reevaluate workflows but also spot areas that could be optimized and made more efficient.
For example, many companies embraced data and AI to reengineer their supply chains to identify new sources and routes amid last year’s supply chain squeeze. With the increase in remote work, businesses also have access to a pool of workplace data and analytics from productivity applications from Microsoft and Zoom. Such data can help companies improve the employee experience by identifying drags on productivity and creating better work environments.
Join us at our quarterly Cognizant Data Officer Executive Forum on June 1. Interested in joining our CDO Executive Forum? Contact Allison Hupp at firstname.lastname@example.org for inquiries.