The crucial relationship between data and better business conversations
Business communication has radically evolved over the last few decades, with the advent of emails, teleconferencing, instant messaging and increasingly advanced video conferencing platforms. The last 18 months has catalysed further innovation in how we communicate. But despite being more connected than ever, there are concerns about the social and digital chasms hiding beneath the surface of increased chatter.
Our appreciation of the ability of data analytics to capture the facts is not brand new. The fallout from the 2008 financial crisis pointed to a desperate need to revolutionise boardroom decision-making to avoid the potentially catastrophic consequences of overoptimism and pluralistic ignorance that lead to risk-taking.
But now, the pandemic has spotlighted the critical importance of data not just to business leaders, but to everyone. Our society’s ability to capture and use Covid-19 data to reveal insights that have saved lives has been phenomenal, resulting in widespread recognition that data should be a key driver when making decisions.
However, our ability to make data-driven decisions depends on data literacy, access to information and tools available. These factors contribute to an uncertain picture of the quality of today’s executives’ business conversations, and a question mark over how much importance is placed on data-driven decision making
A data culture is not created by simply giving employees access to the required ingredients – the C-suite must lead by example.
Defining a quality business conversation
Tableau wanted to measure the effectiveness of today’s business conversations. They found that almost 90% of C-suite executives agree that a quality business conversation should have clear objectives, is honest and transparent, and leads to an outcome. Significantly Tableau also found that most executives (81%) feel that an effective business conversation needs to include hard data. Six in 10 rank softer skills, such as the ability to listen and be open-minded, as the most important in quality conversations. However, over half also value hard skills, including the ability to understand insights from data as well as knowledge of the industry/sector (both 54%). The fact that understanding data-led insights ranked as high as industry knowledge comes as little surprise after a recent UK Government report revealed almost half (48%) of businesses are recruiting for data-related roles.
The pandemic has spotlighted the critical importance of data not just to business leaders, but to everyone. Our society’s ability to capture and use Covid-19 data to reveal insights that have saved lives has been phenomenal, resulting in widespread recognition that data should be a key driver when making decisions.
The barriers to productive business conversations
64% of executives believe that opportunities for informal conversations i.e. ‘watercooler’ moments have been significantly impacted by the pandemic. This has undoubtedly affected the development of positive rapport and trust within teams. But it is not just the relational side of business conversations that have been impacted.
On a more technical note, the research found that half of the executives feel that the pandemic revealed gaps in information sharing between teams. The second greatest barrier to quality business conversations was a lack of data or information about the topic at hand, trumped only by frustration over meetings dragging on without resulting in a solution.
These information gaps are being widened by the pandemic-induced physical divide accompanied by a pre-existing digital divide, caused by fragmented technology systems and siloed data across businesses. It is critical that access to the same data is possible, or business leaders are more likely to make decisions based on biased data sets - for example making globally relevant decisions based only on the sales data from a few countries which might differ dramatically in others.
Without access to the full picture, and without the tools and skills to mine for insights, businesses are losing out on creating a shared perspective that fosters a sense of shared vision, trust, and mutual alignment from stakeholders.
Establishing a data culture
Over 75% of business leaders surveyed agreed that data is important because it reduces uncertainty and promotes accuracy. It keeps people focused on what matters to the business, and builds trust. Business conversations that do not rely on empirical data for facts and insights are at risk of being steered by people who are - consciously or unconsciously - selective in the information that backs up their argument. This is called confirmation bias, and while data insights might still be used selectively in conversation, if everyone has access to the same data it is much harder to bend the truth.
But the importance executives placed on the inclusion and understanding of data in their business conversations is at odds with how widely data is used to make decisions across their organisations. Very few had well-established data cultures in place, with only 19% claiming that everyone across their business uses data in decision making. One in 10 believed data analytics were not used at all in their company.
But why does this gap exist, and why is it so extreme? A third of leaders (34%) claimed that a combined lack of data literacy, ability to generate data insights and trust in data were the top three reasons for their failure to create a data culture. The nation’s increasing data skills gap has been reflected in other research, with the Government identifying that almost half of UK businesses struggle to recruit people with data skills.
Almost a third of respondents claimed that ‘too much’ data was a barrier. This may indicate that businesses simply don’t have the digital skills or tools to use data analysis and effective visualisation for insights. Leaders are overloaded with information and find themselves trapped in ‘decision paralysis’. This, coupled with the finding that information sharing presents a real issue, points once again to the overwhelming challenge of breaking down data silos across large businesses, with data from different business divisions becoming stranded on disparate digital islands. Without access to the full picture, and without the tools and skills to mine for insights, businesses are losing out on creating a shared perspective that fosters a sense of shared vision, trust, and mutual alignment from stakeholders.
It is critical that access to the same data is possible, or business leaders are more likely to make decisions based on biased data sets - for example making globally relevant decisions based only on the sales data from a few countries which might differ dramatically in others.
How businesses can move forward
Human decision-making is ultimately reason-based, whether in certainty, conflict or in normative arguments. Reasoned-based arguments are essential in the making of decisions, and when people are faced with the need to choose, they look for strict reasons that justify their choice. At least some of these should be based on data and weighted appropriately according to importance, in order to ‘de-bias’ business conversations. However, it is also important that decisions are contextualised and considered against ESG (environmental, social, and governance) values, and the wellbeing of all stakeholders - particularly marginalised groups. Data can go a long way in helping businesses chase profit, but this should not come at the cost of human values or wellbeing.
While investing in new data analysis tools, cloud-based data lakes, and training will go a long way, establishing a true data culture must come from the top. Tableau’s research lays bare that business leaders can talk the talk but there’s a long way to go until they fully walk the walk. Until employees see executives making decisions with data and telling corporate stories supported by hard statistics, nobody can expect the wider business to follow. A data culture is not created by simply giving employees access to the required ingredients – the C-suite must lead by example.