McKinsey Analytics

Catch them if you can:

How leaders in data
and analytics have
pulled ahead
As data and analytics transform industries at an ever-quicker pace,
the strategies and organizational cultures of leading companies offer
others a road map for success.

© wsfurlan/Getty Images

September 2019
 While it may come as no surprise that data and How are these leading companies managing to
analytics are reshaping industry competition capitalize on data and analytics, and what can other
and organizations’ core businesses at an accelerating organizations do to catch up? Above all, the
pace, the persistently lackluster response to this responses from high performers indicate that their
phenomenon by most companies should raise some leaders are creating both data and analytics
eyebrows. In our latest McKinsey Global Survey strategies for the long haul. These organizations are
on the topic,1 respondents say that since our 2017 also making data a core part of employees’ work
survey,2 the changes data and analytics have flows and mind-sets by educating them as part of
brought to their industries are growing in both mag- a broader effort to build a strong data-driven
nitude and scope. Yet they also indicate that many culture. All the while, they are ensuring that high-
of their companies are still responding to these shifts quality data and modern technological foundations
with ad hoc initiatives and one-off actions, rather are in place to support these efforts at scale.
than through long-term strategic adjustments that
are required for sustainable success in an evolving
business environment. Competitive threats are accelerating—
and becoming more diverse
The survey suggests that companies still dragging Across industries, respondents see the use of data
their feet do so at their own risk, because the gap and analytics increasingly upending the competitive
between leaders and laggards just keeps growing. landscape. Forty-seven percent say that data and
According to the results, companies with the analytics have significantly or fundamentally changed
greatest overall growth in revenue and earnings the nature of competition in their industries in the
receive a significant proportion of that boost past three years. While this middling figure indicates
from data and analytics. Respondents from these we’re still in the early days of the shift, it increased
high-performing organizations are three times a whopping 38 percent since the previous survey.
more likely than others to say their data and analytics When asked which competitive shifts they’re seeing,
initiatives have contributed at least 20 percent to respondents most often cite new entrants launching
earnings before interest and taxes (EBIT) over the analytics-based businesses—as they did
past three years.3 previously—but also note that other changes are

According to the results, companies

with the greatest overall growth
in revenue and earnings receive
a significant proportion of that boost
from data and analytics.

1
The online survey was in the field from December 6 to December 21, 2018, and garnered responses from 575 C-level executives and senior
managers representing the full range of regions, industries, and company sizes. To adjust for differences in response rates, the data are
weighted by the contribution of each respondent’s nation to global GDP.
2
“Fueling growth through data monetization,” December 2017, McKinsey.com.
3
We define a high-performing company as one that, according to respondents, has seen annual rates of organic revenue growth and growth in
earnings before interest and taxes of 10 percent or more in the past three years.

2 Catch them if you can: How leaders in data and analytics have pulled ahead
 quickly becoming more commonplace (Exhibit 1). Leaders warm up by crafting an
For example, respondents are almost 2.5 times more endurance strategy
likely than before to report traditional competitors A thoughtful strategy is, of course, critical to
launching entirely new data and analytics businesses success in nearly any business endeavor, and data
and pooling their data via a shared utility. Forty and analytics initiatives are no different. But the
percent also note that companies are forming results highlight the particular perils of responding
data-related partnerships along the value chain, a haphazardly to the competitive shifts driven by
91 percent increase from just one year before. data and analytics. Among respondents whose
companies have not yet met their data and analytics
Despite the rise of a range of competitive threats, the objectives, a growing share acknowledge that lack
results indicate that many companies are still of a strategy for these areas is a significant obstacle
Survey 2019 scrambling in their efforts to address them. Four in to success. And in a shift from the previous survey,
Data and analytics ten respondents say their companies have only respondents most often identify the creation of
Exhibit 1 of 5 responded to these changes in an ad hoc fashion.4 strategy as the most critical element in achieving

Exhibit 1

Since the previous survey, several competitive changes due to data and analytics
have become more common.
% of respondents reporting a change in nature of industry competition 2017 2018 % change,
brought about by data and analytics in past 3 years1 2017–18

Traditional Traditional Companies are Traditional Companies are Traditional New entrants are
competitors are competitors are forming data- competitors are extracting novel competitors are launching data
launching new pooling their related partnerships launching new insights from gaining material and analytics
data and analytics respective data into along value chain products that data that were edge by using businesses that
businesses a shared utility include analytics traditionally data and analytics undermine
services unrelated or to improve core traditional
sitting in different business competitors’ value
systems propositions

52
50
44
40 41 41 40
36 36

27
21
18 17

+144 +143 +91 +52 +14 +11

+4

1
Question was not asked of respondents who said data and analytics have not changed nature of competition in their industries in past 3 years, or those who
said “don’t know.” In 2017, n = 496; in 2018, n = 548.

Another 6 percent of respondents say their companies have not yet begun to address the competitive shifts due to data and analytics.
4

3 Catch them if you can: How leaders in data and analytics have pulled ahead
 their companies’ objectives (Exhibit 2). Of those at nearly three in ten doing so, up from 15 percent in
companies that have met their objectives, 21 percent the last survey. Indeed, respondents from high-
of respondents rank having a strategy for data performing companies are 57 percent more likely
and analytics as their number-one key to success— than their peers to report altering their long-term
up from 14 percent in the last survey. strategy in response to data and analytics; in
the previous survey, they were just as likely as those
A look at the high performers’ practices underscores at non-high-performing companies to do so. The
the importance of strategy. Respondents at these high performers also understand the value of imple-
Survey 2019 companies are more likely than before to rank strat- menting a formal strategy that aligns activities among
Data and analytics egy as the primary reason for their success, with data, analytics, and the business: 60 percent of them
Exhibit 2 of 5

Exhibit 2

The creation of a strategy now ranks as the number-one challenge to—and reason for—
companies’ success at data and analytics.
Most significant actions that influence data and analytics outcomes,1 2017 2018
ranked 1st, % of respondents
Contributors to success with data and analytics (asked of those who reported being effective at meeting objectives)

21
18 18
14
11 11 10
8
6 6

Constructing a Ensuring senior- Designing effective data Developing a workforce Getting business users
strategy to pursue management architecture/technology that understands how to to apply analytics
data and analytics leadership of infrastructure to support use analytics insights consistently in
analytics analytics activities day-to-day work

Challenges to success with data and analytics (asked of those who reported being ineffective at meeting objectives)

24

17
14 15
11 11 11 10 9
6

Constructing a Designing effective data Securing talent with Ensuring senior- Developing a workforce
strategy to pursue architecture/technology skills required to management that understands how to
data and analytics infrastructure to support develop data and leadership of use analytics
analytics activities analytics projects analytics

1
Out of 12 actions that were presented as answer choices. Respondents who said their organizations have been ineffective at meeting their primary data-and-analytics
objectives were asked which actions posed the most significant challenges; in 2017, n = 146; in 2018, n = 147. Those who said their organizations have been effective
were asked which actions contributed most significantly to that effectiveness; in 2017, n = 274; in 2018, n = 304.

4 Catch them if you can: How leaders in data and analytics have pulled ahead
 say these strategies are mostly or completely aligned, consistently use data as a basis for their decision
compared with just 44 percent at other companies. making. Those from the companies that have
succeeded in implementing this are nearly twice as
likely as others to report reaching their data and
Leaders build strength through analytics objectives and nearly 1.5 times more likely
a powerful data culture to report revenue growth of at least 10 percent in
While a focus on strategy is important, the results the past three years.
indicate that another key to success is creating a
data culture, or a set of practices that brings together The greatest differences in implementation of
data talent, tools, and decision making so that data certain data practices between high performers and
become the default support for company operations.5 other companies provide further clues about which
We asked about ten best practices that help practices matter most. For example, respondents at
establish a data culture, and the high-performing high-performing organizations are much more
companies are ahead of their peers in adopting and likely to report having a data leader in the C-suite,
implementing all but one of them. making data and self-service tools accessible to
frontline employees, and creating an organizational
Survey 2019 Of the ten practices, respondents across companies culture that supports rapid iteration and tolerates
Data and analytics contend that the most critical is having employees failure (Exhibit 3).
Exhibit 3 of 5

Exhibit 3

The data practices that most differentiate high performers from others involve data leadership
in the C-suite, broadly accessible data, and a culture that tolerates failure.
Current data practices at respondents’ organizations,1 At high-performing organizations2 At all other organizations
% of respondents
70%
65%
46
43
70%
32
27 26
64%
60%
19 18
16
11 10

C-suite team Data are broadly Organizational culture Hiring criteria for Hiring criteria for
includes at least accessible to supports rapid testing non-management roles management roles
1 data leader frontline employees and iteration based include proficiency in include proficiency in
whenever needed on data and tolerates data-related topics data-related topics
fast failure

1
Out of 10 practices that were presented as answer choices. For respondents at high-performing organizations, n = 170; for all other respondents, n = 405.
2
Respondents who said their organizations (a) have had an average annual organic growth rate of 10% or more over past 3 years and (b) have had an average
annual growth rate in earnings before interest and taxes of 10% or more over past 3 years.

5
Alejandro Díaz, Kayvaun Rowshankish, and Tamim Saleh, “Why data culture matters,” McKinsey Quarterly, September 2018, McKinsey.com.

5 Catch them if you can: How leaders in data and analytics have pulled ahead
 Education also is a key differentiator, as developing need by respondents at the high-performing
a workforce with both data and analytics knowledge organizations as well as other companies. As in the
is among the top five challenges to reaching a previous survey, companies’ biggest talent needs
company’s objectives. Where respondents say their are business users with analytics skills, while
organizations struggle to encourage daily data respondents outside the C-suite also cite a need
use, those at the non-high-performing companies for more data scientists and translators.6 And
are twice as likely as high performers to attribute while automation is becoming more prevalent in all
this to a lack of company-wide education on data aspects of digital life,7 management of the data
topics. They are also less likely than the high driving these changes is still largely a human-run
performers to say that employees at all levels— activity—further underscoring the need for
executives, managers, or those on the front line—are great data talent. Over half of respondents report
educated on data topics (Exhibit 4). that their companies’ key data-management
processes—from ingesting and cleaning data to
Survey 2019 Another aspect of creating a data culture is attracting tracking data quality, reporting, and visualization—
Data and analytics and retaining the best talent, cited as a pressing are at most somewhat automated.
Exhibit 4 of 5

Exhibit 4

At high-performing organizations, employees at all levels are better educated on data concepts.
Organizations’ employees understand data 44%
concepts very well or completely, 62
% of respondents1 39%
53
At high-performing organizations2 At all other organizations

43
38
12%
28
25

Executives Managers Frontline employees

1
For respondents at high-performing organizations, n = 170; for all other respondents, n = 405.
2
Respondents who said their organizations (a) have had an average annual organic growth rate of 10% or more over past 3 years and (b) have had an average
annual growth rate in earnings before interest and taxes of 10% or more over past 3 years.

6
We define “translators” as employees with both technical and domain expertise.
For more information, see “Harnessing automation for a future that works,” McKinsey Global Institute, January 2017, on McKinsey.com;
7

and “Skill shift: Automation and the future of the workforce,” McKinsey Global Institute, May 2018, on McKinsey.com.

6 Catch them if you can: How leaders in data and analytics have pulled ahead
 One additional feature of a data-driven culture is Looking ahead
ensuring that the company’s underlying technology The survey results show that high-performing
can support its efforts in exploiting data and organizations are outdoing others in achieving their
analytics. According to the results, the high- data and analytics goals and using strategy and
performing companies are much more likely than a strong data culture to distance themselves from
their peers to have deployed a modern data competitors. For executives at all other companies,
architecture (Exhibit 5). In fact, data architecture here are some steps to take to improve the use
is the second-highest-ranked challenge of data and analytics—and catch up with the leaders
(after strategy) to reaching a company’s data and before it’s too late:
analytics goals.
—— Make data available. The survey points to the
We know from experience that a robust data archi- importance of getting data out of silos and
tecture allows organizations to support the rapid into advanced-analytics-based tools, as well
collection and sharing of data that enables frontline as into the hands of decision makers and
employees to access and utilize the data they even external partners across the supply chain.
need.8 It also helps to establish and maintain the To do this well often requires reconfiguring
high levels of data quality required to support organizational processes to allow the rapid
effective data-based decision making. Our results sharing of data, for example, by setting
bear out the important role data quality plays in up a data marketplace; building technical
driving analytics adoption: high-performing respon- infrastructure; making use of automation
dents report better data quality than their peers to identify, catalog, and manage data at scale;
at other companies, and across respondents, low and employing common querying and
Survey 2019 data quality was the factor most often cited as visualization tools across the enterprise to
Data and analytics the biggest impediment to getting employees to use support widespread data use.
data consistently for decision making.
Exhibit 5 of 5

Exhibit 5

The deployment of a modern data architecture, which supports data- and analytics-related
efforts at scale, is more common among high-performing companies.
Organizations’ current deployment of data architecture, % of respondents1
Elements of modern data
architecture3 as pilots or in Elements of modern data
Traditional data architecture 2 individual business units architecture at scale

At high-performing organizations4 37 35 25

At all other organizations 53 26 17

1
For respondents at high-performing organizations, n = 170; for all other respondents, n = 405. Respondents who said “don’t know” are not shown.
2
Eg, relational database management systems.
3
Eg, Hadoop, Spark, nonrelational databases/NoSQL.
4
Respondents who said their organizations (a) have had an average annual organic growth rate of 10% or more over past 3 years and (b) have had an average
annual growth rate in earnings before interest and taxes of 10% or more over past 3 years.

8
Mikael Hagstroem, Matthias Roggendorf, Tamim Saleh, and Jason Sharma, “A smarter way to jump into data lakes,” August 2017, McKinsey.com.

7 Catch them if you can: How leaders in data and analytics have pulled ahead
 —— Treat data as a product with real return on note that fewer than half of all respondents
investment. Business leaders often view data as report adopting each of the ten top practices of
a raw material that supports analytics and data culture that we asked about.9 Even high
decision making. Instead, they should treat data performers have room to grow. While nearly two-
as an internal product to be packaged and thirds of respondents at high-performing
distributed to groups across the enterprise, and companies say their companies report effective-
manage it as such. Just as a consumer-product ness at encouraging employees to use data
manager’s remit is to create multiple revenue for making daily decisions, only 13 percent say
streams across channels, segments, and markets, they were very effective. Rather than tackle
the owner of each data domain should serve this gap all at once and risk creating large-scale
as the data product manager, with his or her per- disruptions, companies must focus on evolving
formance tied to revenue, satisfaction, quality their data cultures and competency incrementally.
and other similar measures. They can do so by ensuring that new and
existing hires are educated in the use of data and
—— Take an agile approach to data transformation. analytics and by consistently communicating
While our high-performing companies have from the C-suite the importance of applying
adopted data-culture practices more often than these tools every day.
other survey respondents, it’s important to

The survey content and analysis were developed by Josh Gottlieb, a practice manager in McKinsey’s Houston office, and Allen
Weinberg, a senior partner in the New York office.

They wish to thank Lyndon Adams and Toby Sykes for their contributions to this work.

Designed by Global Editorial Services

Copyright © 2019 McKinsey & Company. All rights reserved.

9
In addition to the five practices shown in Exhibit 3, these include data being used consistently as a basis for decision making, regular discussions
taking place between company leaders and the leaders of data initiatives, an individual or team being clearly accountable for overseeing
the organization’s data (that is, quality and provisioning), a set of self-service tools for manipulating and visualizing data being available to
employees across the organization, and the organization providing company-wide education on data-related topics.

8 Catch them if you can: How leaders in data and analytics have pulled ahead