Becoming More Data-Driven

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Recently, I gave a presentation on data and analytics at a large global shared services conference. The fact that I was presenting on an advanced topic dealing with a complex issue at a shared services conference says a lot about how far shared services has come, but I have written about that in the past. In this article, I want to discuss how companies can make progress towards the lofty goal of becoming more analytical, relying on data to make decisions, harnessing the power of big data – in other words, how companies can become more data-driven.

What does it mean to be data-driven?

Like seemingly every discussion about advanced topics in analytics, some definitions are in order. It’s as though someone walked by and said “big data” in a crowd; it means different things to different people. I like a behavioral science approach, meaning that decisions are based on fact, not intuition, which we know can be influenced by bias and other decision-making problems.

Part of being data-driven means embracing the concept of the “data supply chain.”1 This means that we need to have an understanding of the business problem we are trying to solve, but then we must start at the source of the supply chain – the data – and work through reporting, analytics and decisions that ultimately solve the problem.

Why be Data-Driven?

One of the most commonly quoted statistics when evaluating the benefits of being data-driven comes from MIT Sloan, which found in its research that data-driven companies were 5-6% more productive than their non-data-driven competitors.2

Unfortunately, defining return on investment in analytics and big data projects is not that simple. In many cases, it is difficult to isolate the decisions we made with more data against all the other moving variables in our businesses.

Perhaps the easiest way to assess the benefits of being data-driven is to look at recognized companies who are utilizing data and analytics as a core competency: companies such as Google, Facebook, Proctor and Gamble, and Disney. If we don’t keep up with these companies, will we even be around to wonder if we should have backed up more of our decisions with data?

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What Can Companies Do?

Many companies need to embrace a new way of thinking, a new culture. I think the gaming industry fits squarely in this group. How many of us in the gaming industry celebrate the maverick, the entrepreneur? These are people who make decisions with their gut instinct – who needs data and analysis?

I think Andrew McAfee, MIT professor and author (most recently, The Second Machine Age) says it best. He frames the battle as one for the “soul of the enterprise.” On one side are HIPPOs – Highest Paid Person’s Opinion; on the other side are the geeks, machines, and outsiders. HIPPOs love gut feel, they love confidence and trust decisions by guys who look like John Wayne (not the geeks), they trust people who were born and raised in their industry and in their company, and they don’t trust it unless they can see it with their own eyes (so algorithms are instantly discounted).

But changing culture is difficult. Many companies have embraced innovation, diversity/inclusion, and other foundational principles that can lead to embracing more advanced data driven concepts. But change needs to start at the top, and longtime executives in the C-suite can have a hard time changing decision-making habits that have been around their entire careers.

What Can YOU Do?

In my mind, very simple advice applies: Focus on the foundation. If you are in IT where you are working with databases, build simple pilots that can show the business how to model source data into something that can be analyzed easily. If you are in a reporting team, find the easiest business intelligence tool and learn how to do basic reports and serve them to the business with actionable insights, like explanations for large variances. If you are in the business, make sure transactions get processed right so that good source data exists to do analysis on.

In the spirit of McAfee’s battle for the soul, we also need to become more data-driven leaders. That means we need to educate ourselves about machine learning, embrace outside views, and fight the urge to believe the most confident and loudest voice.

At MGM, we have established a team to bridge IT and the business and be responsible for data quality and data governance. It’s not sexy, but we believe that configuring source systems to standards, ensuring business requirements are simple and understandable, and getting business users to embrace data quality will lead to the ability to make more intelligent decisions with better data.

Solid data foundations aren’t sexy, but they make for a much better analytics house!

1 Accenture, “Building an Analytics-Driven Organization,” 2013. 2 See Erik Brynjolfsson and Andrew McAfee, “Big data: The management revolution,” Harvard Business Review, October 2012, Volume 90, Number 10, pp. 61–67; and Dominic Barton and David Court, “Making advanced analytics work for you,” Harvard Business Review, October 2012, Volume 90, Number 10, pp. 78–83.

Rick Arpin

Rick Arpin

Rick Arpin is the Senior Vice President and Corporate Controller at MGM Resorts International. Mr. Arpin’s responsibilities include oversight of the company’s Finance Shared Services Center and all aspects of external reporting, along with assisting in corporate finance matters. He was recently named to Treasury and Risk Magazine’s “40 Under 40” list.

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