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As featured on BusinessMirror: The power of data literacy

For quite some time now, data and its usage have been a major concern, attracting considerable attention across all sectors and industries. In today’s landscape, a vast majority of companies are actively engaged in collecting and dealing with an incredible amount of data. Yet, it is 2023 and except for those that are data-oriented by design, few companies are able to fully grasp the importance of their data and extract maximum value from it.

Does that sound normal to you? Since everyone is making a big deal about data, we should all be very good at making sense of it, right? But the thing is, we are not. A simple look at statistics tells us that most companies are still struggling to implement a comprehensive and actionable data-driven strategy. The (main) reason for this is crystal clear; people simply do not have the necessary data skills and capabilities and even worse, they do not receive sufficient training to develop them. 

A study shows that the percentage of workers who feel confident in using and expressing their data skills is only 21%. Among company leaders, this percentage does not even increase by fifteen percent. Only 34% of them feel able to take decisions and create measurable value from their company’s data.

How can companies exploit the full potential of their data? The answer is simple: by turning their employees (regardless of their level or role) into data literate people. The idea isn’t to transform them all into data experts capable of designing the most advanced algorithms. Instead, it is for them to develop the necessary skill set to understand their company’s data and use it on a day-to-day basis to make informed decisions and perform better in their job. 

What is data literacy?

One of the key enablers of becoming data-driven is the concept of data literacy. It is the key to successfully reorienting the business strategy around data. But concretely, what does it mean?

Data literacy is the ability to understand, engage, analyze and reason with data. In other words, it means being capable of interpreting data in whatever form it takes (charts, fields in a database, dashboards, etc.). It is also knowing how to use or work with data on a day-to-day basis, applying the right analytical methodologies to extract information and thinking about it critically. This last part does not only mean being capable of asking the right questions from data or questioning the data itself, but also, and it is an important dimension, being able to efficiently communicate about data and its interpretation to others.

When an organization or company fails to foster a data-literate culture, several uncomfortable situations, from minor concerns to real problems, can arise. Among them, we typically find:

  • Inaccurate decision-making: without a solid understanding of data and its interpretation, top management can misinterpret strategic reports and take decisions based on personal opinions or anecdotal evidence rather than reliable data. This can lead to weak or misguided decision-making, negatively impacting business and/or performance outcomes.
  • Lack of trust and credibility: without a data literate culture, people within the organization may not understand the importance of carefully handling data. This can lead to situations where, for example, employees publicly disclose confidential data, causing reputational damage for the company.
  • Missed opportunities: failing to engage with data effectively can result in missed opportunities for innovation and growth. In this case, a typical example can be a company investing a significant amount of money in a solution or a tool that is not used by the employees. Not because they do not want to, but because they do not understand its added value. Another example is a company failing to invest in AI solutions because people don’t understand what is behind it and therefore find it ‘scary’. This could lead to the company potentially becoming irrelevant in a few years.
  • Inefficient ways of working: we often see situations where employees waste energy in redoing the same work multiple times, and waste time with manual tasks which could easily be automated to improve their daily work.
  • Ineffective communication and collaboration: a lack of data literacy can prevent effective communication and collaboration within and between teams. Too often this leads to scenarios where, for example, different employees are working locally on different versions of the same data product, losing the overall view of the changes made and leading to errors. Or different employees recreating an already existing report because they don’t know it exists or do not understand what it contains or means.

The main benefits of high data literacy

While many company leaders talk about the importance of data for their businesses, in practice few actually use it.  Not only are they not data literate themselves, but they don't seem to sponsor sufficient support (trainings, awareness and knowledge sharing sessions) for their employees to become data literate. This is a significant mistake when we know that data literacy is a key factor in effectively using data to achieve desired business outcomes.

When a company commits to making the necessary changes to increase its employees’ literacy, it reaps a series of benefits. First and foremost, data literate employees are better equipped to understand and interpret the vast amounts of data generated by their company. This enables them to make informed decisions and identify valuable insights that can drive business growth. Secondly, employees who possess data skills fulfil their roles and perform better in their day-to-day jobs, causing successful business outcomes with less time and effort. Since those employees have learned to understand and see data as an asset, they also know how it should be managed and used, increasing the probability of success for the data/digital/IT projects they work on. In addition, regardless of their level or role, employees who feel supported in their data journey, acknowledged for their new skills, and empowered to create value, are far more likely to remain loyal and contribute to the future of the company that trained them. It is definitely a win-win situation for both sides that should be sought in the short and long term.

The excerpt was taken from the KPMG Thought Leadership publication: https://kpmg.com/be/en/home/insights/2023/07/lh-the-power-of-data-literacy.html

© 2023 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.