How to Cultivate a Data-Inclusive Culture
Data is often the lifeblood of modern organizations, but a company’s culture must take both its risks and rewards to heart.
In an increasingly digital world, data is a key asset for companies, allowing organizations to understand their own — and their consumers’ — behaviors in novel and more complete ways. The downside, of course, is that having all this data exposes institutions to a considerable amount of risk.
A data breach of any type can create distrust, hurt stock prices, and result in scrutiny and disciplinary action from regulators. In their push to manage and minimize risk, organizations often resort to a myopic focus on regulatory compliance. For example, out of fear that an employee could accidentally send sensitive information to the wrong client, a company might prohibit employees from sending attachments. But such a solution would be a mistake, one that would drastically hinder the ability to get work done.
At the Katzenbach Center, a center of excellence for organizational culture and leadership at Strategy&, PwC’s strategy consulting business, we encourage a more holistic approach to data, fostered by a culture that honors data’s place as a significant asset while also respecting its risks. To build data behaviors that are authentic to your organization’s strategy and ways of working, you must tap into the latent cultural energy already at play. Then your organization can begin to foster positive data habits and rituals to drive improved business performance.
The Tricky Business of Culture
Culture is an integral part of launching your organization’s full potential, including the ways in which it employs data. It is the interlocking, self-reinforcing pattern of how people act at work, based on a set of shared assumptions that they all agree is acceptable or not. If strategy is how you get where you are going, and operations are what you need to put in place to support that strategy, culture is everything that doesn’t fit neatly into those categories. Organizations with distinctive and aligned cultures are twice as likely to report superior execution, show higher profitability, and display growth as those that don’t.
But culture can be a tricky matter. It appeals to emotions, something many leaders aren’t accustomed to dealing with, and it is slow to change. The book The Critical Few: Energize Your Company’s Culture by Choosing What Really Matters, by Jon Katzenbach, Gretchen Anderson, and James Thomas, addresses these issues and outlines how senior leaders can harness the emotional energy of employees, which is necessary to catalyze and accelerate change.
Getting an entire organization to “act your way to the future,” as the book says, may be a very slow process, but it is indeed what organizations are asking for. According to responses to the Katzenbach Center’s 2018 Global Culture Survey, for which more than 2,000 individuals (representing 50 territories and almost as many industries) were questioned, 80 percent of respondents reported that they believe that their organization’s culture must change notably in order for the company to meet its goals. That’s up significantly from the 51 percent who answered a similar question with such a strong affirmative the last time the survey was conducted five years ago.
Culture is an integral part of launching your organization’s full potential, including the ways in which it employs data.
So, with all of this in mind, how do you go about navigating the tricky business of evolving toward a data-inclusive culture? You must work with your organization to align business strategy with behaviors, engage employees at all levels and across departments, and remember to take things slowly. At the end, you will find a data-inclusive culture has emerged that improves your company’s commercial performance and helps minimize risk exposure.
Align Business and Data Strategy
Your organization’s strategy for how it handles data must be aligned with your business strategy, and the two must be mutually reinforcing. For organizations that see data as a real (or potential) asset, these strategies will integrate commercial aspirations and compliance requirements as a single, shared, and desired outcome. Further, it can be helpful, as you devise the data strategy, to consider what behavior changes (e.g., ways of working) will be required of employees at key levels and locations. Defining the aspirational future will enable senior leaders to decide which elements of the culture will support the change and which ones might not. This can inform some of the decisions you make about how to design the program and implement changes.
Since the financial crisis, a number of banks and financial-services institutions have faced legal and reputational challenges because of decisions made by their own leaders and employees. The problem has been seen as endemic to the industry. Sometimes, disreputable and even fraudulent behavior is encouraged by incentives and other rewards that lead employees to cross an ethical line. This is often exacerbated by new technologies and vast amounts of customer data that are relatively easy to abuse. In just about every serious case, the problem can be traced back to the organization's culture. There is no group of shared values and routines that make it clear how to behave in these organizations — or if they do exist, these values are not generally regarded as important.
Instead of operating with a handful of disconnected directives, strategies, and ways of working, your organization can marry behavior and strategy in order to use its data safely and to the benefit of your company.
Devising and implementing your data strategy is best done by creating a team made up of cross-functional members and stakeholders. Such a team should include diverse views and be aimed at enabling cross-functional coordination. The formation and work of the team also can serve to break down organizational silos wherever possible.
We have seen organizations jump to acquire the latest cutting-edge technology in the hopes of capitalizing on data opportunities. But often the efforts are, again, myopic, driven by a single department, and not connected to the organization’s broader strategy. As a direct result of failing to coordinate with other parts of the business, organizations often will miss the opportunity to harness existing data to develop a deeper understanding of the customers and insights related to their business.
In fact, the Katzenbach Center’s 2018 Global Culture Survey reveals that the biggest challenge to culture evolution is having certain areas of an organization more on board with an initiative than others.
The solution is to instead bring in members of diverse teams throughout the organization to share the current state of how things actually work and make holistic decisions about how to move forward to best capitalize on data. This way, every department feels heard and is part of the process.
Take Your Time
Once you align strategy with behavior and get the information you need from your cross-functional teams, it’s time to put it all together. You may be eager to put things in motion and see some results, but we caution companies against a “big bang” approach. Instead we suggest that the program be executed using an agile, or iterative, approach. The rationale is twofold: First, the rapidly changing competitive landscape necessitates constantly evolving solutions. Second, implementing these strategies requires people in your organization to change their behaviors — and even in the best of situations, people do not change behaviors very much, very fast.
Baked into the iterative approach is the allowance for failure and brutal honesty. In order to test and iterate, people in an organization need to feel that they have permission to fail, and that they won’t be punished for doing so. In fact, in some cases, they need to feel that they might be rewarded for their failures. Further, communicating these fast failures is equally valuable, although often difficult. As one executive told us, “We often want to spread good news and the idea that everything is going well.” To that end, leaders sometimes avoid mentioning failures by showing only the best data or arguing that the measurement itself is insufficient. As a result, the initiative — and, in turn, the whole organization — suffers.
Your people need you, as their leader, to walk the walk. If integrity and honesty is to be embraced, as is fast failure, you must be honest about when failure takes place in your organization. Your people will see that you stand by your word that it is OK to fail and that there are things to be learned from the situation. This shows that you are supporting a transparent culture.
Rise to the Top
Evolving a data-inclusive culture requires nothing less than a revolution in a myopic organizational culture and in ways of working. But by moving through the recommendations we’ve outlined here, you will be able to successfully employ your company’s data and related technology. At the same time, you’ll be confident that your firm and its employees are able to satisfy regulatory requirements.