How to align your data strategy with your business strategy?

When reading about data strategy, the first comment that always comes up is the fact that the data strategy has to align with the business strategy.

Definitions of data strategy and data architecture

First lets put some descriptions in place of what data strategy is and what data architecture is? Strategy is an overused and vague term. The way I like to think of data strategy is the plan you put in place to generate more value from your data. This value comes in three ways: more income, less costs or peace of mind. Data architecture can also mean different things to different people. I would say it is the way in which different systems work together to support the data strategy.

Align on business strategy

When reading about data strategy, the first comment that always comes up is the fact that the data strategy has to align with the business strategy. So if a data strategy is a way to generate value from data, a business strategy should be plan to generate more value altogether, meaning for your customers, employees and shareholders - depending on the organization you're in, the order of these can vary.

But what if your business strategy is not actionable?

But then we often encounter the challenge that the business strategy is not very concrete, or not very well articulated. This is especially the case in very large organizations that have a very broad product or service offering in different markets. Do you have several different business units with different goals? Then we would hope these separate business units are organized around a clearly described goal and market.

Then the overarching business strategy might be an inspirational but vague statement that fits all these - not necessarily aligned - BU strategies. In itself that's not a problem, but if the BU's don't have a plan in place how they will generate more value for the customers, employees or shareholders, you might have an issue on your hand you have to deal with.

First develop clear business strategies for your business units. Work with persona, business model canvas and value proposition design to get this done before hoping to come to a data strategy that makes any sense. Once you have a clear business strategy for your different BU's, you can start to think about including data in the mix - if you haven't already.

Three value disciplines

In general here are three large buckets of business strategy that are chosen based on the way value is created for the customer: product leadership, operational excellence or customer intimacy. Product leadership: you focus on technological innovation, a short time-to-market and a superior brand. Operational excellence: you have a highly reliable organization and a low total cost of ownership. Customer intimacy: you have the best customer service and high customer satisfaction. In the next section of this article we will go into an example how you can use data to drive customer intimacy.