Data Driven Strategy - Strategy Development Tips Part 1

Since 2005, we have continuously benchmarked and evaluated the digital excellence of the communications of dozens of large companies. We will soon be discussing the KPIs, results and methods for the fiftieth time at our conferences with only those responsible for content and marketing. That's all kinds of experience that we're happy to share in our "Data Driven Strategy" series. We wish you useful tips, stimulating reading and look forward to feedback!

What is this series about?

With "Data Driven Strategy" we shed light on some fundamental questions and problems that arise in communications and marketing departments as soon as digital media with their masses of data collide with teams of analog people .

The conflicts of the two worlds are not easy to resolve. Data and people like to ignore each other. "Digital" prefers to automate itself, completely undisturbed by human ideas, whims and messiness (creativity). Teams, on the other hand, feel constrained, controlled, and sounded out by data and the increasingly blunt but increasingly powerful algorithms ('artificial intelligence'). The result: IT and 'data nerds encapsulate themselves and code programs devoid of ideas. And marketing managers hardly use data at all, if at all, then only to confirm their own position in the hierarchy, i.e. for self-legitimation. It won't stay that way.

It's clear to everyone today that if you don't take advantage of the benefits and potential that data offers, you won't survive. So how does data become the engine of change in communication and marketing?

This series attempts to provide initial answers. It is guided by the layers of our current model for developing a data-driven strategy. We call our model the "Survival Pyramid". It focuses specifically on the organizational apsects of "Data Driven" and aims to simplify the development of a data-driven organization and corresponding processes. A relvant read for all marketing managers who face challenges in their companies that are labeled "digital".

What is the survival pyramid?

Our survival pyramid is a layered model for developing data-driven value in communications and marketing departments.

As a strategy tool, the model already fulfills in its name an essential requirement for every strategy process: every strategy must have a goal. Our goal is to ensure the continued existence of the organization under digitization conditions. We therefore understand "survival" entirely in the sense of evolutionary theory.

In the context of corporate organizations, organic further development is usually the most sensible goal. After all, a great deal of value already exists, the greatest of which is know-how and employees. Both should be used and expanded as far as possible in a digitized environment. On the other hand, anyone who is looking for "disruption," which is also a creative act, or exponential growth fantasies (field hockey stick curves), as they were painted on beer coasters in the Silicon Valley gold rush era, in order to establish monopolies, should start from scratch and move onto the startup stage.

What does "Survival" have to do with "Data Driven Strategy"?

At its core, survival means greatly improving the responsiveness and adaptability of the marketing organization. It is necessary because in the digitalized market there are more and more signals to which companies must respond. Marketing and communications must adapt to an ever-increasing number of different needs and target groups. Market and media environments have already changed extremely as a result of digitalization, especially in the last decade. Yet the number of target groups and feedback channels continues to multiply. Chaos.

All signals, feedbacks and information reach the departments of the companies in the form of data. There, they can and must be processed in such a way that media communication and digital marketing are adapted to the reported conditions. That is "optimization" and it is always based on data. If you don't optimize, you lose. But how is that supposed to work in a corporate organization that is breaking down into more and more departments, functions and systems, just like digitalized society and media around it?

If you don't know how data can be used in your own company, you don't stand a chance in the competition.

The challenge is obvious; anyone who wants to use data in the organization must massively rebuild, centralize and network at the same time. Dealing with data requires extremely high flexibility in processes. This is the "agility" everyone is talking about. The vast amounts of data-based feedback from the market require a changed organizational structure and modified, agile processes. That's why organizational transformation is always at the core of "Data Driven." A data-driven marketing strategy is first an organizational issue, more of that later.

The goal of "Data Driven" is "the fittest marketing".

Adaptation is the basis for the success of organisms. Nothing else expresses Darwin's "survival of the fittest". The most adaptable (and not "the fittest," as mistakenly translated for ideological reasons) is more successful and survives. This is also true in marketing and media. The goal of every strategic digitization initiative is a more adaptable, more flexible and faster organization for content and marketing.

The Survival Pyramid - without a goal everything is nothing.

As a layer model, the survival pyramid shows the levels to achieve improved adaptability. When we enter the layers, the path begins at the lowest level, in the basement, in the engine room, with the data and its sources.

Data is the new oil, I have to extract it first. So let's turn to data sources and data sourcing first. The questions are: What data can I source? What do the marketing teams have access to? Those are the most important questions, the beginning of everything, right? Wrong.

There can be no value creation from data that you don't use.

Of course, the assured availability of data, the ownership of data, is the foundation of any data-based strategy. But the starting point is different and it is surprisingly often ignored in practice, almost always even, a fatal mistake. The starting point is to ask what the data is actually going to be used for. It is the use of the data, not its presence, that decides everything. Data that is not used cannot create value.

Two instances can be considered as possible users of data:

  1. Machines in the form of computers, bots, platforms, algorithms
  2. People in the form of teams.
    (Individuals in the form of experts or top managers come into question only to a limited extent. Some use data only as part of a selective responsibility; others can use data to specify strategy and goals, but are not directly involved in implementation and optimization).

Starting point of strategy development: who should use the data for what?

Who should use data for what purpose? Who should actually optimize what when it ? Any data-based strategy development must start with this question. If it is computers that are to process data, we are dealing with a technical project that will revolve around the development of service architectures and software, which we do not want to consider further at this point. Let's talk about the teams or organizational units.

Which people and functions in the company should use data to optimize their results? This question sounds simple, but in reality it is the most complicated. Because the teams in marketing and communications consist of very different players and responsibilities, they are organized with a high degree of division of labor and are very distributed.

In no other functional area, not in purchasing, production or sales, is there as little standardization as in marketing. This is due to the airy nature of the communication business, but it is also due to the large number of internal players from central departments and business units, from content, design, brand, media and IT. But it's also due to external players, agencies, of which every company has at least half a dozen, now mostly digital. All this makes marketing and communications the last wilderness of digital processes.

If you want to use data to create digital value in this fragmented environment, you inevitably have to bundle responsibility. The simplest way to do this was once to outsource responsibility to an agency. In the age of social media and proprietary digital sales channels, that's no longer an option. On top of the variety of data sources, you either have too many internal players and interests or too much dependence on external service providers. Something new is needed.

"Data Driven" starts with reorganization

So companies need to establish new central digital units, which are called by metaphors depending on the model, such as: Digital "X", Competence Center, Campaign Room, Digital Hub, Studio, Newsroom, Content Factory, and many more. No matter what these units are called, they bundle digital process responsibility, work in a project-oriented, interdisciplinary, and agile manner, and they are on the right track. Only in this way can data be used, only in this way can it bring about change and actually generate value.

Where these new forms of collaboration do not (yet) exist, "data" remains a topic for nerdy and powerless experts (analysts, data scientists). Check yourself: do you also revise your "reporting" every year and add new "KPIs"? This is a sure sign that nothing follows from the data. They are used for appeals and then forgotten.

This unproductive form of "data driven" determines everyday life in many large companies. Most, however, take "digital" seriously and have already tackled their internal transformation, the conversion to more powerful digital units. Once such a unit has been created or is in the planning stages, the organizational unit where data can make a difference has been identified. So the strategy development can get underway.

You can read about how Data Driven Strategy starts and what is critical at the lowest level of data sourcing in the next "Datafy".

Part 2 of our series follows.