Data literacy has become one of the most valuable skill sets for today’s innovative employee. According to an article in Harvard Business Review, the ability to both understand and speak meaningfully about data is increasingly important in the 21st century—and not just for data managers. Employees who are data literate are often better able to help their companies manage and use data effectively, which can help a company reduce operational costs and achieve competitive advantages.
Not just for data managers
Data literacy is a form of critical thinking. When applied at any job level or task, it can make the difference between deriving meaningful information from data and wasting a valuable opportunity. Whether you’re in marketing, finance, IT, product development, human resources, sales, or operations, data is very often the launching point for properly assessing a situation and dealing with any challenge from a position of knowledge and power.
Consider how data is making a difference in the way decisions are being made throughout the organization.
- Marketers who may have once been limited to a finite set of undifferentiated campaigns now have the ability to develop highly personalized messaging based on a real-time data view of the customer, creating more engaging and richer customer experiences.
- Sales operations teams have the ability to deliver and speak to key decision-making data that enables the more effective pursuit of new business markets, territory assignments, and channel coverage.
- Human resources directors have the ability to deliver critical business insight with the wealth of data available on recruitment, career progression, training, productivity, and employee sentiment.
Many business leaders see the benefits of developing a data-driven organization. In fact, more than 40 percent of insurers have adopted a business intelligence (BI) model fueled by effective data management, placing insurers, as a whole, among the industries with the highest rate of BI adoption.1
Overcoming business challenges
The industry consulting firm Gartner defines data literacy as “the ability to read, write, and communicate data in context, including an understanding of data sources and constructs, analytical methods and techniques applied—and the ability to describe the use case, application, and resulting value.” That’s why data-driven companies that encourage employees to be data literate are generally better positioned to overcome the many industrywide challenges, such as:
- long lead times to adapt IT systems to changing strategies
- overly laborious processes that lead to inefficiencies
- siloed data systems that prevent truly unified operations
- rapidly changing regulations that often present difficulties handling compliance and regulatory requirements
- changing customer expectations for speed and convenience
- pressures on business and corporate performance, including gross margin, return on assets (ROA), return on equity (ROE), and return on sales (ROS)
In a recent survey, the Insurance Data Management Association (IDMA) developed questions designed to assess the level of data literacy across the property/casualty insurance industry. Some of those questions included:
- What sources of data do you use? Are they accurate, reliable, and current?
- Who is responsible for acquiring, cleansing, enhancing, transforming, and warehousing data? If just your “data manager,” are you missing opportunities to make a bigger impact?
- Can you analyze and respond to data needs? If so, can you do it with speed and accuracy?
- Can you comfortably explain statistical concepts such as central tendency, causation, and correlation?
- What are some of the steps in developing a machine learning model?
- What is artificial intelligence (AI) bias? What are other aspects of ethical data use?
- Does your company have high-quality data? How do you know?
An employee’s responses to these questions could help uncover the need to build or refresh knowledge on statistical concepts, data analytics, or the general use of data throughout your enterprise.
Data quality: A prerequisite for data literacy
As organizations strive to become more data-driven, broad and comprehensive data literacy can very often enhance growth, innovation, and talent development. That’s why data literacy is everyone’s responsibility. However, a prerequisite to data literacy is having quality data. Recent research has shown that 84 percent of top-performing companies are concerned about the quality of their data.2 Insurers need a data management system that helps to make sure the information within the system is of the highest quality possible. Such a system must focus on effective management and enrichment of data, capable analytics, and people who can make sense of it all and put it to proper use.
Verisk offers data management services that can help insurers discover and exploit the full value of their data. For more information, please visit our website.
Verisk is also a corporate member company of the Insurance Data Management Association (IDMA). Richard Morales, the author of this article, currently serves as president of the IDMA.
- Forbes webinar, How Improving Data Quality Can Improve Your Business.