Data: our new best friend

In summary, words alone are not enough (not even these ones). But, words combined with data science, analytics and visualisation techniques can, we believe, enable better decisions by Boards of directors.

How? By better identifying trends, variations, variable impacts, outcomes, and then communicating it - transforming information into real insight – by way of using data visualisation approaches which helps directors be objective, exercise independent judgement, be less biased and quicker to get the information that really matters and to connect with other information. It’s not a substitute for decision making and personal judgement, but it is a means to support those decisions involving a company’s purpose, values, cultures and its non-financial or social performance.

They say that you can’t manage what you don’t measure. But, Boards are not short of information. Often, they have too much information, much too much. Or worse, they don’t have the right information. Someone isn’t willing to speak up. A difficult message is hidden or encoded, internal language, obscured by jargon. With hindsight it's apparent (at least to a regulator), but not at the time.

Information in words helps, but words alone don’t:

• show trends or consistencies;
• explain variances;
• demonstrate measurable improvements or deteriorations;
• connect information (also known as ‘joining the dots’);
• stress test or show vulnerabilities to outcomes, whether through individual, systemic or unexpected risks;
• support assessments of effectiveness; or
• evidence impact.

Data science and analytics can help with all of this. They are not a magic governance alchemy. And, they are not a substitute for commercial judgement, being entrepreneurial or setting a risk appetite. But they do support objectivity and decision making, and they can help to counter (but not eradicate) human bias.

Words have other problems. The mind only has the patience for a certain number and in a certain form. Unlike in murder mystery, a Board paper needs the ending at the start, clear and plain, with no mystery, intrigue or false clues.

Even then, words can be used to hide other words. It’s a British skill, such as “The manufacturing division is performing quite well.” means “We need to close it down”. Or, “We invest in technology, as appropriate” means “We don’t use technology but want you to think we do.”.

Data science and analytics rely on inputs, and in this the technology is improving to help take unstructured data and turn it into something which can be used with greater ease. Valuing the insights which may exist within the data a business owns is an investment well worth making, as is understanding where the gaps are, and building a data architecture, (in other words a system for collecting the right data in the right way), which helps to paint a better and more comprehensive picture. Harnessing data science capabilities to build these frameworks and in turn to harvest the insights is a tool which all Boards will in time expect to be at their disposal.

But raw data alone is not enough. Data visualisation techniques – that is, how you communicate often complex data and information using design methodologies and graphic representation - help different decisions to be made and better decisions to be made. Why? Because the mind can more easily and more quickly get to the information that matters. Go back to the list above of things that words alone can’t do. A variance in budget or performance or a trend is better understood by presenting and explaining figures and other data in a visually effective manner.

Data visualisation is not a substitute for words. Red, Amber and Green coding helps. But it doesn’t tell you what’s Red/Amber or Amber/Green. And, there are some other trends making data ever more important. Hardly a day goes by without some other pronouncement about Environment, Social and Governance (ESG) factors. The UK and elsewhere are moving away from enlightened shareholder value to a purpose driven approach which creates value for stakeholders (not just shareholders) and impacts positively the community and society generally. In the welcome rush to focus on long-term sustainable success our new best friend, data, enables:

• conflicts between stakeholder interests to be weighed up objectively;
• impact and outcomes on the community and society, including actions and furtherance of the UN Sustainable Development Goals, to be measured; and
• in time comparisons to be made between companies, but in the meantime, companies can communicate the ESG data they want to even though they face multiple, increasing and sometimes conflicting requests for ESG information from investors, lenders, NGOs, governments and other stakeholders.

So, enough words. What should we do about all this? The approach we are developing is to combine the corporate governance and broader ESG legal expertise at Simmons & Simmons with the data science, analytics and visualisation expertise of our new SRA regulated, legal engineering business, Simmons Wavelength.

We think it is possible to use data to support better Board decisions on culture, values, whistleblowing, workforce, stakeholder and supplier engagement, sustainable impact and much more. If data is the new fuel for the 4th industrial revolution age, it is vital that Boards are able to use it to inform themselves to make sustainable, purposeful, and long term decisions.

See also Good governance: Protecting your data (and your organisation) from The Big Data Race.