It used to be that investments in data quality projects or solutions were often difficult to justify, primarily because it’s hard to directly tie revenue increases or cost savings to data quality improvements. Nowadays, however, there is broad recognition, supported by analyst firms and our own research, that data quality is a key requirement for optimum decisioning. We also find that putting strong and comprehensive data quality processes in place is ever more important and urgent. Those that do, gain a competitive advantage.
Change is increasing rapidly, making it harder to create practical long-term plans or prepare for the unknown. The COVID-19 pandemic, the war in Ukraine, climate change and weather disruptions, the great resignation (47.4 million Americans in 2021), and the rapid rise in inflation are just a few macro examples of events that continue to drive unpredictable outcomes. Such events fuel marketplace changes, combined with technology evolution and digitization, impact investment decisions, consumer preferences, and government responses. At the same time, the pace of software development, the use of AI/ML and low-code/no-code approaches, and continuous improvements related to agile methods are driving ever faster developments and competitive responses.
Resilience management replaces long-term planning
Over the past year, we’ve written about the need for greater business agility to cope with and capitalize on changing consumer behaviors and needs, as well as to address the growing market impact of artificial intelligence and machine learning in consumer-facing applications. Yet as we progressed through the year it became apparent that a new and even stronger requirement had emerged, the need for organizational resilience.
It’s no longer enough to be able to make business decisions quickly. Organizations need the ability to react to all circumstances with sufficient resources (human, financial, technology, and more) to successfully weather a wide range of unpredictable events. More than just long-term planning, business resilience allows companies to adapt quickly, maintain operations, and protect people, resources, and their reputation. Resilient firms are most likely to survive economic downturns and uncertainty.
Although US unemployment is back to pre-pandemic levels, inflation has risen, and growth has slowed for numerous firms who failed to prepare adequately for unpredicted change—in turn, these organizations have already had to lay off thousands of workers this year. To survive and prosper in this environment, firms must build resilience to changing conditions in their operations. They must be proactive and plan for a variety of scenarios, stress testing their potential responses to ensure that each function within the organization knows its role and can react according to the circumstances. Plans must include forward-looking strategies, such as the identification of new and emerging areas for growth, not just defensive ones designed to minimize loss. In other words, switching resources or pivoting versus curtailing investment and executing cutbacks
Organizational foresight is key to success
Above all, resilience requires the development of foresight capabilities across the organization. This includes:
- Gathering and studying data related to crisis scenarios
- Modeling the impact of such crises
- Determining and testing different resilience strategies to provide a variety of options
- Using these capabilities on an ongoing basis to be prepared for future challenges in the most effective fashion
Crises can affect businesses directly, as when the economy takes a downturn, a pandemic impacts staffing or a weather event forces closure of workplaces or stores. They can also affect businesses indirectly and often long after the direct impact, as when consumers’ needs change, staffing becomes harder, or financing becomes more expensive.
The recent pandemic drove changes in consumer behaviors that affected many businesses. Restaurants closed, eCommerce accelerated, and digital banking became the strong preference of younger consumers. Many firms introduced work-from-home policies, where that was possible, impacting transportation, gyms, restaurants and bars, and numerous other businesses. Looking forward, it’s not difficult to imagine future crises that could have similar effects
Data management and data quality are critical success factors
Average US temperatures are expected to continue to rise. This is changing the agricultural landscape and impacting food availability and prices, altering consumer needs and purchasing behavior, allowing the wider spread of diseases such as Zika, and increasing the likelihood of forest fires and flooding, for example. To anticipate potential business impacts, firms need a comprehensive and accurate view of where their customers are, what they purchase under normal circumstances, how they purchase and interact with the business, how vulnerable they may be, and so on. It’s not simply the impact on employees and premises that matters but also the effects on customers. What will their needs be when crises occur? How will your existing business be impacted? What new opportunities may arise?
Predicting or anticipating the impact of crises will be hard to do—it requires significant foresight. The first element is recognizing that the data intended for us is up-to-date and accurate. Crises can occur at any time. Before plan B is implemented (assuming that there is a plan B and C), it’s important to check and verify assumptions—this is not the time to discover a messy or incomplete customer database. Do you have reliable and speedy ways to communicate with consumers to test new services or promote new capabilities? Are you confident that the plan of action will address their changing needs?
Creating a competitive advantage
Confidence in the resilience strategy, with business functions on board, crisis response place can be put into action. These plans should include all necessary elements—such as robust financials, improved security (especially IT security), front-line department flexibility to adjust strategies according to market conditions, and alternative plans should they be needed. Such preparation and foresight will create a competitive advantage and drive superior business performance, versus slower and less insightful competitors.
To ensure your data is fit to meet your needs in these changing times, focus efforts on:
- Employee data literacy and democratization – The more people that interact with the data the more likely that errors will be spotted. With data literacy and democratization in place, risk can be minimized, and benefits can grow like the ability to understand customers and identify changing situations faster.
- Business decision-making agility – With data-driven guidance, pushing informed and sanctioned decision-making down in the organization speeds the decision-making process and improves customer experience.
- Advanced data science – Advanced data science can model and predict decision outcomes and business risk including automating mundane data quality tasks to free time for analysis and putting appropriate solutions in place to capture valid data at the point of entry.
- Data accuracy, governance, and trust – By monitoring data quality and ensuring data is fit for purpose, an organization can be ready for anything.
- DevOps, DataOps, MLOps – These agile methodologies will help speed development cycles, ensure rapid time to market, and deliver excellent customer experiences
The core of organizational resilience lies in quickly being able to assess changes, capitalize on new and emerging opportunities, and minimize the risk of potential loss. Rapid reaction requires access to trusted data as well as the necessary business skills to interpret and act on it.
How Experian can help
Data validation solutions
Experian’s validation, geolocation, and consumer data solutions can help clients make better judgments about the impact of economic change impacting their customers. For example, they can do this by assisting in the planning of assortment changes at individual stores, based on local consumer circumstances and needs; to provide the location and consumer attributes necessary to plan logistics strategies for grocery deliveries despite climate challenges; or, to assist financial institutions in estimating the impact of new fintech solutions or super apps on customers in different locations, age groups, and income brackets.
Data quality platform
Experian’s data quality platform, Aperture Data Studio, can monitor the quality of data being used across the organization, eliminate duplication, and harmonize records, feeding accurate data into governance solutions and helping to ensure trust. By automating mundane data quality tasks, Aperture Data Studio will help improve data scientists’ and engineers’ job satisfaction levels, enabling organizations to better attract and retain the skills they need to be agile and resilient.
