How many times over the course of your career have you heard that it’s crucial for business leaders to be “data literate”?
Since the dawn of the big data era, when organizations began to expand and refine the use of data analysis and analytics techniques to support their decision-making process, it’s become almost mandatory that executives and managers be able to to read, work with, analyze, and argue with data. Indeed, the idea that business leaders possess a high level of data literacy — if not fluency — is now taken as read.
And this makes total sense. Given the mind-warping amount of data available to decision-makers, and the obvious advantages data and data analysis provides in terms of driving business efficiencies and improvements, of course we want the people making the tough calls to understand what their data teams are showing them.
But what about the data teams themselves? Obviously, they’re fluent in the data itself… but do they know what it means in terms of its business value? Do they understand how and why it can shift business practices to become more efficient and/or more profitable?
In fact, do they understand how your business makes money at all?
Data Teams Need to Become Business Literate
The more ingrained data-driven decision-making becomes at your organization, the more important it is that your data teams understand the business context of the data they’re collecting, analyzing, and presenting. In other words, just as your executives need to be data literate, in order to get the most value from your data, your data teams need to become business literate, too.
Every person who works on a data team at your organization needs to understand how your business works, because then they’ll have context for what their data actually means and represents, and that context transforms the data into business knowledge.
Also, when your data experts understand your business, and how the data they collect and analyze is used to make decisions that reverberate through different, interconnected departments, they’ll better understand the value your data provides and the reason behind data requests they’re receiving and the questions they’re being asked.
And on top of that, your data experts’ increased business knowledge will spur them to ask more meaningful questions of your leadership, resulting in more specific, exact data answers. And this, in turn, will result in greater insights about your organizations’ practices, hopefully leading to improved performance.
How Do You Teach Business Literacy to Your Data Teams? Follow the Money.
The onus for teaching business literacy to data teams falls on the business itself. When new data hires are onboarded, part of their introduction to the company should be an education in how the business actually makes money.
For example: “Our company makes money by selling our product. The product we sell is a widget, which we manufacture for $5 and sell for $10. We sell our widgets to customers. To find customers, our marketing team advertises to them. When a customer responds to one of our ads, they become a lead, and our sales team reaches out to them to nurture their interest. Once a sale is made, that lead becomes a customer, who pays us money. We then work to retain those customers through our customer service department.”
By explaining how the business makes money, your new data hire will understand how, for example, improving the performance of advertisements results in more widget sales and increases revenue, or how driving efficiency to lower the manufacturing cost of widgets results in greater profit.
Diving even deeper, the next step would be learning what systems are used to support each step of your business process: When does data go into a customer relationship management (CRM) system, and where does it come from? How is that data moved into an order and payment system? Do sales and customer service use the same system to manage leads and customers? Learning the answers to these types of questions and gaining knowledge of the business process is the key to truly understanding the flow of data within an organization.
Data teams need to understand how the overall business works. And data workers need to be more curious — and even critical — while still being empathetic. When this happens, instead of delivering and analyzing data in a vacuum, data workers see how their work drives value and impacts crucial steps in your businesses operations.
Data Literacy and Business Literacy: Crucial Skills for a Data-Driven Business
It’s now universally accepted that modern business leaders and decision-makers understand how to interpret the data generated by their organization. But it’s equally important that these same organization’s data workers understand the context and meaning of that data within the business from which it’s drawn.
Because when your business teams are data literate and your data teams are business literate, their common language of business knowledge will ensure each is providing the greatest value to your data-driven enterprise.
Want to hear more from Principal Scientist Juan Sequeda? Check out the data.world-sponsored podcast Catalog and Cocktails on Casted!