How can CFO’s and finance executives nurture a data-driven culture in their company?
Data-driven organizations are on the rise. In a world where data is king, it's no surprise that data-driven companies are thriving. The more we understand about ourselves and our customers, the better we can serve them. That's why finance leaders need to embrace a data-driven organization to remain competitive in today's marketplace.
But what does that mean? What are some steps finance leaders can take to begin their transformation? And more importantly, how will these changes help them serve customers better?
We tackle those questions below. But first, let's define what a "data-driven organization" means.
What does Data-Driven Organization mean?
A data-driven organization uses the information it has to make informed decisions and accurately predict future outcomes.
The first step in becoming a more data-driven organization is committing to the idea that information drives value. 88% of finance leaders agree that an increase in company performance can be directly tied to insights gleaned from data.
High potential finance leaders make it clear that they believe in the power of information to drive results. Those who don't are at risk of getting passed over for promotion, as 63% of CFOs say they're willing to hire externally for this role.
Data-driven companies acknowledge that the path to better financial performance begins with a solid strategy and actionable insights. By making better-informed decisions with data, companies can grow revenue quickly and efficiently, everyone in an organization should have access to as much data as possible. This data should be presented in a straightforward and easy-to-understand format so that people who aren't familiar with the ins and outs of finance - such as product managers - can still use it to inform their decisions.
Companies don't succeed by playing where they've always played - they win by exploring new frontiers.
How Senior Finance Executives Can Embrace a Data-Driven Culture in their Organization?
In a data-driven organization, the core competencies of finance leaders are not just to analyze and understand the numbers. They have to be able to communicate with other departments for their analytical insights to create organizational value.
Finance executives must play a role in helping other departments leverage the power of data by providing them with analytics that provide a clear insight into what is happening within their area of responsibility. They also need to make sure they build strong relationships with these other departments because, without these relationships, it will be hard for any department or individual contributor to take action on this information. For example, if an HR professional has been struggling with hiring qualified candidates and has been asking for help from finance leadership, having a dialogue about the specific costs associated with hiring a new person over an extended period will be more likely to have a meaningful impact on decision making.
3 Steps Finance Leaders can take to begin their transformation into Data-Driven Organization
While finance professionals may have difficulty building these relationships, there are several ways they can help their peers identify the opportunities as well as develop the required skills for leveraging data and analytics in their respective areas of expertise.
First, finance professionals should be willing to actively seek opportunities to support other parts of the business and establish a reputation as someone who can be counted on for help whenever needed.
Second, finance professionals should consider sharing their skills with others in informal ways such as through lunch-and-learn sessions or one-on-one mentoring. These activities may also help the finance professionals develop a reputation as someone who can be counted on to share knowledge and skills.
Finally, finance professionals should create formal opportunities for their peers to learn about data and analytics by sponsoring or hosting training sessions or demonstrations of new tools or methods as they become available.
These activities allow finance professionals to expand their roles beyond data custodians, to become true partners in the business.
How will these changes help Finance Leaders in serving their customers better?
The opportunities that data and analytics provide to finance professionals - and, thus, their companies - are enormous. The financial data that companies collect has the potential to deliver insights on how well they're doing at every point in the value creation process: from initial customer interest through product delivery and after-sales service.
The expanded role of finance professionals is one of the areas where digital transformation becomes critical. Digital tools are allowing finance teams to transform themselves from data custodians to strategic business partners who can use their deep operational insights to drive revenue growth, improve customer satisfaction and reduce costs for their businesses.
These days Finance Leaders need to be able to deliver more than just financial reporting, budgets, and forecasts. They need to be able to incorporate their finance teams in the digital transformation effort, taking advantage of new digital capabilities that are emerging every day. It's not just about using familiar tools for accounting, collaboration, planning, and budgeting as part of a broader digital strategy - although those components are critical as well.
Data-driven organizations are embracing the power of data to drive better decision-making. The future is now, and you can take your organization into this new era by learning how to leverage data for success. As finance leaders, one of the most important things you can do is help your company embrace a data-driven organization. Data will give insights into what’s working and not working for your business, which in turn will allow you to make smart decisions that lead to success.