Data Tip #1 – Your Digital Value Chain
September 01, 2013 by Jennifer Cobb
McKinsey & Company recently released a report, Measuring the full impact of digital capital, which argues that many assets that used to be considered intangible – such as knowledge assets -- are now critical to business innovation, growth and competitiveness. They call these assets “digital capital,” which they define as the resources for building “new products and services for the digital economy.” McKinsey estimates that digital capital is responsible for more than 1/3 of global GDP growth in 2012.
Thriving in the digital economy means adopting a “data first” mindset where data brings new insights and efficiencies. Most organizations have significant data – in both digital and analog forms -- that can be harvested and aggregated to generate insights and new digital products and services.
How can you begin harnessing the data you already have in your organization? The process starts by defining and auditing the key digital value chains that run through your company or organization.
The Digital Value Chain
A digital value chain is a set of processes designed to transform raw data into actionable information that can drive better decisions and insights. Most companies have many actual or potential value chains related to different business processes and workflows, ranging from supply chain to manufacturing, shipping, ordering, marketing and branding and customer service.
Here are some tips to begin thinking more constructively about your data and how it can drive value for your business or organization.
- Start with a question. As you can see from the diagram, every value chain begins with inputs. The original inputs can be a mix of digital, analog, structured and unstructured data. It is wise to think broadly at first about WHAT inputs you need, not HOW you will get them into your system. What information do you need to gain insights into your business process? Are there data sets from other departments, divisions or channels that could amplify what your data can tell you? Once you know what you need, you can worry about how to get it into your digital systems of record.
- Care about quality. If you don’t care about the accuracy of your data from the very beginning, all of your careful collection, mapping and analysis will be useless. In general, without good data, you will not get helpful intelligence.
- Apply the right tools. Once your data has been digitized, it needs to be processed. If you need to correlate across disparate data sets to find new efficiencies and product opportunities, you will need a different set of tools than you will for tracking brand identity or social media awareness. And don’t forget about presentation. Most data is easier for people to understand when it is presented in ways that they can absorb.
- It’s not a chain; it’s a cycle. While the data value chain is presented linearly here, most data value chains function as cycles. There are continually new inputs added, new questions being asked, and new audiences that will consume the information. An important part of understanding your data value chain is thinking about how resilient and adaptive it is to new opportunities and stresses.
While all of this may seem self-evident, it is important to understand that no matter what business you are in, your digital value chains are not tangential to your success or a “nice to have." Rather, digital data is central to your success. As McKinsey reminds us, one of the best ways to get serious about your digital assets is to think of them as a critical part of your corporate capital. Wise and adaptive companies will view digital processes and data “as assets rather than additional areas of spending.” This is a new mindset, but one that will position you to thrive in a rapidly changing economic landscape.