When considering a data strategy, most executives and GCs think first about their data mountain. But it’s the cultural and mindset changes that will have the biggest impact on the success of your data journey – not your data or your technology applications and systems.
The biggest element of any data strategy that is usually misunderstood and always underestimated is that of a mindset change. GCs, procurement, finance, and C-level executives need to undergo a cultural change and adapt how they think about risk, how they use data to analyze that risk, and what they do to manage that risk. We will discuss six ways in which cultural change is the most essential ingredient in a successful data strategy.
Step 1 of your Data Strategy: Democratize your data
The first element of cultural change concerns the democratization of data – a fancy way of saying that data from across an organization is available to everyone. Using a contract as an example, in a traditional sense, it’s procurement’s job to negotiate it; it’s legal’s job to document it; and it’s finance’s job to enforce it. And each of those departments would have the data that was relevant to their role in securing that contract, effectively siloing the data.
With data democratization, the data is shared, or pooled effectively, so that all of the relevant contract data, whether clauses, deal amounts or terms are available to all departments – everybody can access the same information. This breakdown of professional verticals is happening today. Corporations can see how powerful it is to have their data in one place and accessible to those who need it. Democratized data is easier to analyze and helps every department make more informed decisions, uncover new opportunities, or discover areas of increased risk, whether that’s for contract negotiation, due diligence on an acquisition, or hiring as part of a recruitment program.
Ask yourself ‘So what?’ when implementing your Data Strategy
When we talk about a data strategy, most executives will immediately start to think about the data. Where is it? How can we access it? Is it the right kind of data? What will any data analysis discover? And this is where the second cultural mindset change occurs.
The first questions to ask aren’t about the data. The first consideration for your data strategy is what is the business question you want to answer? It’s the ‘So what?’ factor; you’re planning a data strategy – so what?
Think about why you are doing this – what do you want to find out that can help drive your business? And then think about ‘What now?’ Once you have the data what are you going to do?
These sound like simple questions; the media is littered with examples of organizations that have spent millions of dollars on a data strategy because they thought they should. They ended up with lots of information, none of which could help propel their business forward or help them manage risk.
Get your data strategy journey right
It’s only once these ‘So what?,’ ‘Why bother?’ – type questions have been answered that you can locate the data sources that will help answer those business questions, and uncover or confirm any major areas of risk exposure. Once you know where the data is, the next step is to hire or train data experts.
The reality today is that we’ve now moved into a position where mathematics and applied statistics are equally as important as actual legal experience within our legal practices.
From there, your data experts should create a collection point – a data lake. While now a much-overused term, this allows all your data to be in a single repository that can be more easily and accurately analyzed.
It is only at this stage that you need to deploy the legal analytical overlay across the business verticals and those isolated units. The challenge for most organizations is that they do this journey backward; they forget to ask the business question and go straight to data gathering and data lakes. The mindset change around the data journey is one of the most difficult, but that conducting your strategy in this order is fundamental to the success of a data strategy.
Don’t worry about the tools
“Data matures like wine, and the applications we use mature like fish,” according to James Governor, co-founder, and analyst at Redmonk. What Governor means is that the tools you use to gather, analyze, and store your data will change and are, to some extent, irrelevant. But the data, even old data, is always useful.
The cultural change here is that GCs and the C-suite often feel they need to understand every inch of how something works – checking the detail is an innate part of the job. But in a data strategy, you don’t always need to know or understand how the tools work, or the speeds and feeds around the technology. As one panelist put it, everyone’s got a nice car, but very few of us know what goes on under to hood. It’s about getting us from A to B – it doesn’t matter if it has six cylinders or four or is turbocharged – the only thing that matters is that it can get you there.
And it’s the same with your data strategy. The tools, especially from a visualization perspective, are becoming ubiquitous; from Tableau to Microsoft’s Power BI, to QlikView. Essentially from a contract management standpoint, they all give visibility over the portfolio of agreements to ultimately get to the real point. It’s not ‘finally the five provisions in my force majeure clause’; it’s actually, ‘can I now perform a risk analysis on it by subject matter, expertise, in-house law firms or GCs?’ The tools are simply a method of either expediting the time it takes to get the answers to your business and risk questions.
Do your risk math
But it’s not just about having usable, visualized data. These tools enable GCs and C-level executives to quantify and extrapolate risk from their data quickly, but you have to start thinking about risk in a new way to see the advantages of your data strategy.
For example, is risk 1% of 100 or 10% of 10? What is the accumulated risk of that and what is your real corporate and commercial exposure? And then you have your portfolio risk to consider.
Risk needs to be considered as both a number and an accumulative multiplier. Risk has a value attached to it and a number of risks in combination aren’t just the sum of its parts. For example, if you tick 5 of the 10 boxes on a force majeure clause today, that doesn’t mean you are 50% there.
The impact of risk across a contract at various stages of its lifetime, at various stages of economic value and performance, is different at different points. Not only that, but risk is viewed differently across the business; the disparity between procurement, legal, and finance is vast. Risk is managed differently across those divisions and commercial analytics is challenging unless you understand what that means for those different stakeholders.
But, ultimately, it’s all corporate risk. And, as mentioned earlier, with traditional internal verticals breaking down, this has the advantage of helping to lower vertical risk responsibility. Accounts shouldn’t just be responsible for the financial risk, and GCs for the legal ones. What your data strategy does is accumulate this risk to make it easier to assess, manage and therefore mitigate.
Manage the change
No new strategy is complete without an element of change management. Adapting your culture to be more holistic, to get stakeholders to work together and formulate the business questions for your data to answer is not easy. And why, when many are already stretched in terms of time and resource, should it be legal working on a data strategy? Or the answer could be ‘why not legal?’
Other panelists spoke of internal task forces that are driven by legal or the C-suite and include members from across the business – corporate, legal, finance, HR – through to people who work in the field or the factory. Everyone has a significant role in the task force, whether it’s to give information or to become a champion and help encourage those in their teams that may be resistant to the change. Setting up a task force from the start ensures that change management is integrated throughout the process.
Another panelist spoke of having an upfront communications plan and investing in engagement with internal employees and external customers before any actions or tools are deployed, to make sure everyone is on board with the journey before they start.
It’s time to think differently
However you engage your employees, your team and your customers on your data journey, changing the internal culture and mindset around data forms the foundation of strategic success.
By thinking differently, you can answer the business questions that will provide commercial value. By interrogating the data and asking different questions from the same data set, you can ensure all stakeholder agendas are addressed.
Ultimately, by changing the way you think about, analyze and use your data you’ll demonstrate a powerful message to senior leadership and drive home the commercial value of why legal needs to be at the heart of your data strategy.
We’ve helped thousands of customers to think differently about their data. To find out how we can help you change your mindset, and propel your business through a successful data strategy, contact us now.