The double helix of data strategy
Why it’s vital to have a blend of strategic thinking and data savviness
Xero was born as a cloud-based accounting software company, built to collect data (like automatic bank feeds), organise data (invoices, payments and tax returns), and synthesise data into information (balance sheets and accounts receivable). Perhaps you’ve heard of the phrase ‘data as the new oil’, or even ‘data as oxygen’? Well, I think of data as Xero’s genetic code. Today, our databases securely host trillions of transactions for millions of businesses around the world. In short, data is in our DNA.
As we’ve grown, we’ve quickly evolved from being an accounting software company to a small business platform. It’s a subtle shift that has required us not only to consider how we collect, organise and synthesise data, but also how we draw insights from it to improve the lives of our customers.
So, not only do we have to look internally at the way we manage data within our platform, but externally at how we best extend these insights through products and partnerships.
The rapid pace of data and machine learning technologies, coupled with the hyper-growth of our company, means the possibilities of a small business platform are almost infinite. New products, new global markets, new features, new industry sectors — you name it, theoretically, we could do it.
With this in mind, the question for us has changed.
How do we decide what data products we should be investing in? How do we grow our platform while staying true to our values? Navigating the answers to these questions is data strategy.
Strategy is the art of making hard choices
“More companies die of indigestion than starvation.” — Bill Hewlett (of Hewlett & Packard)
That quote from Bill Hewlett perfectly encapsulates the struggle of too much opportunity. Our options are either one of two things: we could try to work on everything and die of exhaustion, never finishing anything or adding value, or we could make good strategic choices.
Sometimes it’s easy — like asking a potential app partner to build to our API and join the Xero App Store. More often than not though, the decisions we make are complex. To help us narrow down the opportunities available, we’re building new mental models of what is possible with data.
These models allow us to clearly evaluate opportunities, assessing things like financial viability, commercial feasibility, technical limitations and — importantly — whether it aligns to our values on things like data privacy, transparency and ethics. Ultimately, we want to build shared patterns that help our teams to categorise opportunities quickly and effectively, spending their time in the best places.
The double helix model of data and strategy
Data is the absolute essence of our small business platform — similar in concept to the DNA strands in the nucleus of our cells. Just like the winding double helix of DNA, data strategy is the outcome of two complementary threads: strategic thinking and data expertise.
In practice, this is the outcome of considering both customer needs and engineering capabilities, competitors’ offerings and our available training data, commercial opportunities and ethical standards.
It’s a muscle that we’re building at Xero, in order to combine the skills in strategy with the thinking in engineering, product and science. Without that deep connection, we risk making decisions that can’t be implemented, or toiling on interesting problems that will never see the light of day due to lack of viability or customer demand.
Building a common vocabulary and shared respect
The first step we’re taking to establish a deep connection between data and strategy is to build a common vocabulary and a shared understanding of each other’s craft and how we work. Even the words ‘data’ and ‘strategy’ have different meanings depending on where you’re from — so taking the time to think about the Xero platform and what we mean by ‘partner’ or ‘customer consent’ is a vital step to get us all on the same page.
Once we have a shared vocabulary, we can better explore the different flavours of data products available, such as product features backed by machine learning, insights dashboards, or partnerships with financial service providers to make better lending decisions. This will allow us to build those mental models of data and decide which opportunities we think are most desirable for our customers, and most viable to execute, given everything else we’re working on.
I think data and strategy have a lot to learn from one another, and building a common vocabulary and shared respect is something that shouldn’t be limited to people working at Xero. If you’re working in data, don’t underestimate the benefits of knowing what your customers need, want and are willing to pay for. Think of what your company and competitors are doing in the real world. Good things happen when you have empathy for others and speak their language.
The future of data strategy at Xero
Building deep connections between strategy and data expertise is just the first step in our journey. Using the double helix model also opens up other opportunities for collaboration. For example, we’re working closely with people in our ethics and risk teams to build guardrails around things like using data in automated decision making, so we can evaluate all the potential risks and new obligations that these products may bring.
There is also an opportunity to work with corporate development teams and create an evidence-based approach to valuing our data assets and capabilities. Looking at data sets through a business lens raises many questions — from ethics, privacy and contracts, to architecture, engineering and integration. Having a standardised approach to evaluating the potential value of data can help us make better decisions and give us new perspectives on topics like open data and data portability.
Ultimately, when it comes to data strategy, we know that today’s answers might not be right tomorrow.
As governments introduce new regulations, technology possibilities expand, and customer expectations continue to grow, our data strategy needs to continually evolve.
Some see data opportunities as being a trade-off between being trusted and insightful. We see a third option — a strategic framework that will help us become both the most trusted and most insightful small business platform; a double helix approach where these concepts don’t create tensions, but instead complement one another.
We’re hiring folks who think deeply about data supply chains, the nuances of manufacturing and distributing data products and what it means to build a platform on ethical, transparent data sharing. They will collaborate with our teams in partnerships, strategy and ecosystem to build playbooks, and make better decisions around the feasibility, viability and responsibility of all our data sharing arrangements, and our machine learning-driven products.
If you want to be a part of this work and help to shape the future of data at Xero, we’re actively recruiting for a number of data roles now. Join us.
