"And then what?"
The recently-appointed Chief Data Officer at a regional bank looked at me as if I'd just asked him whether he still loved his wife.
But it was a typical question for me, a version of the well-worn "What's the desired outcome?" we'd all learned as junior consultants back in the day. Predictable as the question is, I'm always a little vexed when it makes C-level executives uncomfortable.
The "data is a corporate asset" aphorism has traveled to the C-suite faster than the express elevator in your headquarters building. And why not? Executives understand that data is a critical component of running their businesses more effectively, getting new customers, and driving innovation.
Many of these executives find comfort in the idea that there is an economic value to data, allowing them to apply accounting and operational principles to data that they apply to other assets oh-so-well. Yes, data has value. And yes, that value may be tangible or intangible. But before executives approve efforts to calculate that value they should ask themselves the following question:
If we embark on quantifying data's value, how will we use the result?
My "...and then what?" question to the CDO was a variation of this. I was really asking him how he and his team would apply the results of a data valuation exercise. Because quantifying data can be a Trojan horse for other often more basic questions, including:
- What data do we have? Often data quantification is a euphemism for conducting a basic data inventory of what data exists, what state it's in, where it originates, and how it's managed. By couching all this as "data valuation," companies add complexity, and often months or even years of additional work that will never pay off.
- How do we prioritize the data? Many companies understand that they need to invest in data, just like they invest in other assets. Trouble is, they don't know where to begin. Assuming that data should be prioritized based on its monetary value is risky. It's also subjective, inviting political debates between departments, a frequent outcome of which is all parties agreeing to disagree and retreating back to their silos.
- How do we convince executives that our data is important and requires investment? This is often the struggle of smart people who spend their time finding, accessing, reconciling, correcting, provisioning, and validating data. They often rely on their own internal relationships and manual processes to turn raw data into consumable information. They might not have the organizational authority to convince executives of the importance of data. Thus they feel that promising a financial valuation of data will pique executives' interest.
- How can we become a digital business if we don't get our arms around our data? It's true that mobile devices, sensors, engines, and smart appliances generate data as well as consume it. But linking the monetary value of existing data and new data emitted from digital devices won't necessarily make you more digital-ready. In fact, it could slow you down.
- How do we come to consensus about where to start? Some companies that launch a data valuation effort often use it as a pretext for getting people across organizations to agree on an action plan, or to simply make them more data-aware.
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