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Data Literacy: Why It’s Crucial for Your Business Success

Data literacy is your ability to read, understand, write, and communicate data as meaningful information. As the use of data and analytics becomes more common throughout the business world, building these skills within all teams will be a critical competitive advantage that will make or break businesses. In this text, we cover how it affects every aspect of your business and share a process that will help you increase the data literacy levels in your company.

Imagine going through a foreign country without knowing how to read a map. No matter how precise the map is, you still don’t know where exactly you are and which exit to take. So, you end up missing all the greatest sights (or arrive just after closing time). 

It’s the same when it comes to leading a business. No matter how much data your company collects, your chances of becoming a market leader are close to zero if you don’t know how to turn it into actionable insights. So you end up trailing your competitors.

And the gap is getting wider thanks to the rise of data-driven organizations – companies using cutting-edge AI and machine learning, as well as data analytics technologies to unlock the full potential of their data.  

Read more: How to Build a Data-Driven Company: The Ultimate Guide

But according to GlobeNewswire, even though 85% of executives say data literacy will become crucial to business success, only one in five employees believes their company is preparing them for a more data-oriented and automated work environment.

As a result, building data capacity within teams will be a critical competitive advantage that will make or break businesses in the future.

Here’s everything you should know about data literacy skills. 

What is Data Literacy?

Data literacy is your ability to read, understand, write, and communicate data as meaningful information. Data-related skills will become increasingly important as the use of data and analytics becomes more common throughout the business world. The reason is that you can’t have data specialists in every room where decisions are made. 

To bridge this gap, your teams need to know:

  • what kind of data is at their disposal
  • how they can use it
  • what challenges they might encounter while using it

They should also understand how to combine various sources efficiently and whether they could enrich the available information with third-party insights. 

Another thing you should never forget when working with data is the importance of context. Context is what gives data meaning and provides you with actionable insights. How?

Imagine seeing a 30% increase in sales – great news, right? But does it sound as good if you know it’s five times lower than your main competitor’s? 

The goal is to turn raw data into lasting business value. So if your teams lack the skills to understand and transform data into insights, it’ll be much harder for you to remain competitive in a landscape that increasingly relies on advanced technologies.

Why is Data Literacy Important?

The amount of data businesses generate gets bigger every day. So why are so many companies still struggling to convert data into valuable insights?

The answer – they collect and store as much information as possible without having a plan for how to use it. Of course, this increases the overall IT costs as data needs to be stored somewhere, but it also makes it harder to recognize valuable insights lost in the background noise.

On the other hand, data literacy empowers your teams to identify and focus on valuable, relevant, and accurate data. They can then use it to create new opportunities, solve problems, or develop new products and services. It also allows your business to understand and stay ahead of industry transformation and equip your employees with up-to-date skills and knowledge. 

But data literacy also plays a role in overcoming resistance in case of significant internal changes or restructuring initiatives. According to McKinsey, teams are more likely to embrace changes when they understand them. Moreover, data literacy reinforces critical thinking and helps people set apart relevant information. 

As a result, high data literacy levels make it easier to get the necessary buy-in from your teams. 

In contrast, teams lacking data literacy skills make it harder to establish a thriving data culture and derive helpful insights from data. Because of that, businesses can’t fully benefit from their (often quite expensive) tech investments without first developing a well-rounded employee learning and development program. 

Here is how you can work on increasing the data literacy levels of your teams. 

How to Improve Data Literacy in Your Company

Teams across your company need different data literacy skills to do their job. Furthermore, where your business (or even the entire industry) is when it comes to digital transformation will also significantly affect the skills your people need. 

All these factors will influence the shape and scope of your data literacy program and point you to the skills different teams need to develop to achieve your business objectives. 

Start by Assessing your Data Literacy Levels 

An excellent first step is assessing the data literacy levels across your company. The results will help you understand the status quo and identify the gaps between current skill levels and where they need to be to maximize value for the company. 

As we mentioned, different teams require different skills and data literacy levels, which you must keep in mind when planning the assessment. The testing should cover a mix of skills (like numeracy, data visualization, or generating insights) and consider varying levels of expertise. 

For example, your finance people don’t need to know how a machine learning algorithm works, but for your data scientists – it’s a must. 

Establish Clear Objectives

Once you’ve established a baseline, it’s time to see which skills and teams require the most attention. Here you should take advantage of your data and analytics teams to determine improvement goals based on the assessment results and business needs and priorities. 

If you are unsure what to prioritize, a skills gap analysis might provide the necessary context. The analysis identifies skills that are crucial to your business based on two questions:

  • Which skills does your company value? 
  • What skills do your teams need to do their job well now and in the future?

Once done, you will have a much clearer picture as you’ll understand how the skills of specific teams and job roles connect with your business goals.

Develop a Data Literacy Program

Now that you know your priorities, it’s time to plan and roll out a data literacy program. The program is actually the sum of your employees’ individual learning pathways based on their skills and goals.

But before you start rolling it out, get the buy-in of your fluent data speakers, such as business analysts, translators, and data architects. They will serve as mediators between you and key stakeholders and ensure everyone understands how developing data literacy benefits them. 

Once the data literacy program is underway, you need to conduct periodic reassessments to understand if the data literacy levels are rising. The results will also identify new priority areas for you to focus on with future programs. 

This iteration creates a continuous learning cycle, as you will keep adjusting the data literacy program based on new findings. 

Prioritize a Culture of Curiosity and Humbleness

Contrary to popular belief, data literacy is about more than data. Although your teams need the skills to understand and leverage the available information, they should also have soft skills – such as creativity, curiosity, teamwork, and critical thinking. 

Otherwise, they might struggle to understand different viewpoints and refuse to question their assumptions regarding data. As a result, they will find it challenging to understand the context surrounding the data – and we have already covered why this is crucial for extracting actionable insights. That’s why you should work on establishing a culture of curiosity and encourage people to challenge their perspectives.