These days, everyone wants to talk about data, data science, data literacy and how important they all are for an organization. We can firmly say that data literacy’s pretty much as important as basic reading and writing was back in time. Today, data is the universal language in the new digital economy. However, data literacy is the biggest hindrance to accelerating enterprise data and AI innovation. There is a chasmal skill gap that companies are facing in terms of data. But are we really sure what it means? What exactly is data literacy and how can you know if your employees and company are data-literate?
What is Data Literacy and can we say that we are Data Literate?
Markus Rytkölä from Qlik defines data literacy as the ability to read data, work with data, analyze data and argue with data. “It’s like reading a text, we know how to read and understand, but when we read data, we read graphs and analyses, and it might be a bit harder – and that what data literacy is all about”, says Markus. The ability to translate and derive meaningful insights from data into useful information that will benefit the company.
Many companies believe they solve their data literacy problem with hiring a handful of data scientists that mine insights. But a company is data-literate when the majority of employees know their way around data. Unfortunately, the reality is that there is no widespread data literacy across today’s organisations.
Encouraged by this burning challenge, Qlik, a software company specializing in business intelligence & data visualization, conducted a study to find out just how much companies are data literate. The findings from the study showed that workers’ data literacy is tightly connected to corporate performance. Companies that scored the highest on the data literacy scale have a higher market value and improved ROI.
It’s like reading a text, we know how to read and understand, but when we read data, we read graphs and analyses, and it might be a bit harder – and that what data literacy is all about.
As to regional data literacy, Europe is the leader when it comes to data literacy, with the UK, Germany and France as the most advanced in data literacy. But Singapore proved to be the most data literate individual nation in the world, performing exceptionally compared to the rest Asian countries.
But looking at an organisational level, the results were disheartening. Only 24% of senior decision makers have passed the data literacy test. And the stakes are not looking good for digital natives too – survey results show that only 22% are data literate. The consequences of these data literacy shortcomings are not harmless. They can cause organisations to lose several hundred million dollars.
Data Literacy and Corporate Performance
Data literacy correlates with corporate performance. Having a high level of data literacy across the company positively impacts gross margin, return-on-assets and return-on-equity.
Data literate enterprises experience an increase in enterprise value by 3-5%. Firms with increased value also see improvements in productivity, democratising data across the organisation and data-driven decision making.
There is no shortcut [to data literacy], it’s training and education.
Common Data Literacy shortcomings
Some of the other most pronounced downfalls with companies and data literacy are:
- Understanding data – Companies fall short by connecting the importance they put on and understanding the potential of data to drive business and economic outcomes. Although 93% of decision-makers consider data to be important for their industry and it’s crucial for employees to be data literate, yet less than a third of them believe data literacy is important for a successful economy.
- Investing in data skills – Companies recognize the need to have data literacy skills in their workforce. Despite this, a mere 24% of employees globally are able to understand, read, analyse and argue with data. And although 78% of employees are willing to invest in their data knowledge, companies are offering are failing to encourage them to become more confident with data, and only 34% of them are offering any kind of data literacy training. What’s even more disappointing, that only 36% of companies are willing to pay a higher salary to employees who are data literate.
- The gap in data-driven decision-making – Almost all business leaders acknowledge that data is important for their industry and in the decision-making, but only 8% of them have done something with how data is used in their company. Even those companies that do have data literate employees, fail to turn it into usable information.
- Effective use of data technologies – Data technology certainly facilitate the process of analyzing and interpreting data. But the tool is only effective as the person using it. Companies need employees that know how to handle data processing tools, generate insights and use them in the decision-making process.
How to assess if your company is Data Literate
So taking into consideration the global data literacy score, how can you benchmark your company’s data literacy level. Markus gives an explanation of the Pillars of Corporate Data Literacy that Qlik has identified in order to determine the level of data literacy. They are a part of the Corporate Data Literacy Score, which presents a data literacy index of measure of how much a company is ready to start working with, analyzing and understanding data.
The three pillars of Corporate Data Literacy are:
- Data literacy skills – obtaining data skills through hiring data literate people or training
- Data-driven decision making – entails data decentralisation which means giving access to data to employees that need it to make decisions and data resources by which valuable insights are captured and presented in a way that can help with data-driven decisions.
- Data dispersion – refers to how widespread is the use of data across the organisation.
The corporate data literacy score was developed as part of the Data Literacy Project by Qlik. The project provides a tool for individuals or companies to measure their personal data literacy level and take appropriate action based on the score. Decision-makers can assess how much their employees are comfortable to work with data and analytics, to argue with data and discuss it, expounds Markus.
Data literate enterprises experience an increase in enterprise value by 3-5%.
What you can do to improve your Corporate Data Literacy
Companies that want to survive in the data-rich world, must take actions to invest in their data literacy and use the potential that data has to inform their business decisions. Now that we’ve become aware of the huge disparity in data literacy within organisations on a global level, let’s see what can be done to decrease or eliminate the gap altogether.
“There is no shortcut [to data literacy], it’s training and education,” puts it simply Markus. And there are various options at organisations’ disposal. They can make use of traditional classroom training, online training, online content, courses, etc.
Companies need to assess where they stand with data literacy. The Data Literacy project provides companies with a useful tool to self-assess their overall data literacy. With the tool, businesses can compare their results with other companies from the same country or industry.
A mere 24% of employees globally are able to understand, read, analyse and argue with data.
And lastly, communication is the key. The change towards data literacy should be openly communicated to the employees, and it should be done in an immediate way and with examples of what’s in it for them. Employees need to understand that data literacy not only benefits the company, but also works towards their personal development.
And of course, this is not a one-time thing, it’s a continuous process that corresponds to the changing data scene and the needs of the organisation.