3 Lessons from Investing that can be applied to Data Governance

The other day, my partner and I were chatting about the markets. You know how it is — the recent dip in the Indian market has everyone talking. Should we invest more? Should we pull out? Should we consider small cap now? While I’m not one to panic over short-term fluctuations, it did get me thinking about something completely different: data governance. Sounds strange, right? But the more I pondered it, the more I realised just how many parallels there are between investing and building a solid data governance framework.

From a 10,000ft above, Investing and Data Governance (DG) might seem like disparate fields, but take a closer look and you’ll realise that they share surprising similarities. Both require patience, a long-term vision, and a fundamental understanding of the underlying principles to truly reap the rewards. This blog post explores these parallels, demonstrating how the mindset and strategies employed in successful investing can be applied to building a robust data governance framework.

Image Souce: Kalaido.ai

The Power of Compounding: Patience is a Virtue

1. Time: The Essential Ingredient:

• Investing: The magic of compound interest is undeniable. Small, consistent investments, when left to grow over time, can yield substantial returns. However, this growth isn’t immediate. It requires patience and a long-term perspective. Seeking quick wins often leads to risky ventures and potential losses.
• Data Governance: Similarly, data governance initiatives don’t deliver overnight transformations. Building a strong data foundation, establishing clear policies, and fostering a data-driven culture takes time and consistent effort. While short-term improvements are possible, the significant benefits of effective DG, such as improved decision-making and operational efficiency, materialise over the long haul.

2. Short-Term Gains vs. Long-Term Growth:

• Investing: While short-term market fluctuations can be tempting to capitalise on, chasing quick profits often distracts from long-term investment strategies. Sustainable growth comes from consistent, well-planned investments held over time.
• Data Governance: Quick fixes and ad-hoc solutions in data management might seem appealing in the short term. However, in my experience, these often create more problems than they solve in the long run. A well-defined DG strategy, though requiring initial investment and patience, delivers significantly greater returns in terms of data quality, accessibility, and business value.

3. The Importance of Patience:

• Investing: Patience is paramount in investing. Market volatility is inevitable, but reacting emotionally to short-term dips can derail long-term goals. Disciplined investors understand the importance of staying the course and allowing their investments to compound over time. ( We have all seen examples of Warren Buffet, Charlie Munger, Rakesh Jhunjhunwala etc.)
• Data Governance: Similarly, building a successful DG program requires patience. There will be challenges, setbacks, and resistance to change. Persistence and a clear vision are essential to navigate these hurdles and realise the full potential of data governance.

Strategic Investments: Understanding the Landscape

1. Knowledge is Key: Know the business

• Investing: Successful investing requires understanding the businesses you’re investing in. Researching the company’s financials, competitive landscape, and long-term prospects is crucial for making informed decisions.
• Data Governance: Effective data governance requires a deep understanding of the business and its data needs. Identifying critical data assets, understanding data flows, and aligning DG initiatives with business objectives are essential for success. And a caution for consultants — don’t copy paste same approach to every client!

2. Common Sense over Specialised Skills:

• Investing: While financial expertise can be beneficial, sound investment decisions often rely more on common sense, critical thinking, and a disciplined approach. (Don’t just blindly follow the tips from financial influencers on social media)
• Data Governance: Similarly, while specialised data management skills are valuable, a strong DG program can be built with a foundation of common sense on what has to be done, clear communication, and a focus on practical solutions.

Building a Strong Foundation: Culture and Discipline

1. The Power of Culture:

• Investing: A culture of saving and disciplined investing is essential for long-term financial success. This involves setting financial goals, budgeting, and consistently contributing to investments. Consistency is the key.
• Data Governance: A data-driven culture is the cornerstone of effective data governance. This involves fostering a shared understanding of the value of data, promoting data literacy, and encouraging responsible data practices among workforce.

2. The Role of Discipline:

• Investing: Disciplined investing involves sticking to your investment plan, even during market downturns. It requires resisting the urge to make impulsive decisions based on fear or greed.
• Data Governance: Disciplined data governance involves adhering to established policies and procedures, consistently monitoring data quality, and enforcing data governance standards.

The Pillars of Success: People, Process, and Technology

Data governance thrives on the interplay of people (data stewards, business users), well-defined processes (policies, procedures, workflows), and enabling technologies (data catalogs, data quality tools). These three pillars work together to ensure data quality, accessibility, and usability. Just like in investment world, there are models on how an individual interprets data and make decisions often supported by technology to facilitate rapid decision making.

Conclusion:

The parallels between investing and data governance are striking. Both require a long-term perspective, patience, a deep understanding of the underlying principles, and a strong foundation built on culture and discipline. By adopting the mindset of a strategic investor, organisations can unlock the true potential of their data assets and achieve sustainable success in the data-driven world.

What do you think and are there any other parallels you can think of between investing and data governance?

P.S. : The idea, draft outline are mine however the content has been refined using AI.