The Role of Leadership in Building a Data-Driven Culture

The Role of Leadership in Building a Data-Driven Culture

11/27/2024 - 11:33

Leaders are essential in building a data-driven culture, combining data analytics, employee empowerment, and transformational leadership. This approach emphasizes data-based decisions, boosting organizational performance, but requires careful balancing of empowerment with training to avoid reliance on intuition over insights.
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We all know that managers and leaders are crucial for digital transformation, especially when it comes to creating a data-driven culture in organizations. But what does that actually involve? What kind of leadership is needed? And how does it work with empowering employees? These were the questions researchers at the Logistics domain of BUas aimed to answer, using information from the BUas Logistics Research Panel. The results were unexpected.

A data-driven culture values decisions based on data insights rather than gut feelings. Research shows that this approach improves supply chain performance and resilience. The researchers believed two main ingredients were necessary for such a culture:

  1. Data analytic capability – the ability to gather and understand insights from data.
  2. Employee empowerment – giving employees the freedom and confidence to make decisions.

They also thought that transformational leadership would boost both these factors. Transformational leaders are those who inspire their teams with a clear vision, offer guidance, and encourage creative thinking.

What the Study Found

The study confirmed that transformational leaders were good at using data analytic capabilities to create a data-driven culture. However, they found something surprising: transformational leadership and employee empowerment didn’t work well together. When employees felt empowered under this type of leadership, they tended to rely more on their instincts rather than data for decision-making.

Key Lessons for Developing a Data-Driven Culture

  1. Invest in Data Analytics: Organizations must have strong data tools and insights to support a data-driven approach.
  2. Use Transformational Leadership: Leaders who inspire, coach, and encourage intellectual growth help build a culture focused on data.
  3. Balance Empowerment with Training: Empowering employees is helpful only if they have the right tools and training to make decisions based on data, not intuition.

This research was recognized with the Outstanding Research Award at the Bled eConference in June 2024.

Have a look at the full research paper: Kokkinou_et_al_Cultivating_a_Data_Driven_Culture_Exploring_the_Role_of_Data_Analytic_Capability_Employee.pdf