A Crash Course on Data Literacy: Why It's So Important

Today, our society thrives off data – from decision making to data analytics, whether for public policy, business strategy or personal finance, data forms the foundation of contemporary society. It is the fuel for the fourth industrial revolution, and knowing how to work with it has become more important than ever for many organisations across all industries.

The inseparability that data has for our current age is already indicated by the vast array of courses, such as a Master of Data Analytics, which specialise in mastering the handling and inner workings of data. But it is also important for everyone, and especially business owners, to become acquainted with forming a basic understanding and knowledge of how to use it – this is where the concept of data literacy comes in.

What is Data Literacy?

Data literacy has been defined to be the ability to understand data and data practices in a sufficient manner that allows one to read, interpret, communicate and use data meaningfully and effectively.

There are five levels to data literacy:

1. Data unaware – individuals and organisations being oblivious to the potential data holds.
2. Data aware – individuals and organisations having a degree of recognition of the value of data and have taken steps towards harnessing it.
3. Data capable – individuals and organisations already having a solid foundation for the utilisation of data and the capacity to collect, analyse and interpret.
4. Data proficient – individuals and organisations demonstrating an advanced level of data literacy, which means maximising their use across all boards.
5. Data-driven – individuals and organisations are taking full leverage of data as a strategic asset and have been deeply embedded in their operations.

However, what being data literate looks like in practice, more or less includes:

• Working and interpreting data to make decisions through it.
• Conveying the significance (or comparable insignificance) of certain data to others.
• Knowing the world around you by using data.
• The ability to capture, store and process data.

As such, data literacy is something that enables both individuals and organisations to have precision in gathering the right data and to connect the right data to extract meaningful and relevant insights. Of course, this is even more important for the latter, as well as businesses, that need to engage in long-term planning and strategy making.

Why Data Literacy is Important

The value data literacy holds for our age today is precisely due to the reality that it has become so embedded within our everyday lives – in fact, humans have become increasingly datafied with the constant use of digital technologies and media.

According to Forrester’s Data and Cultural and Literacy Survey in 2023, organisations are looking for more data-literate people to achieve their strategic objectives, an important indicator of the increasing value society is placing on the value of skill.

But let’s look at some of the reasons why data literacy matters today, even for people who do not have the word ‘data’ in their title or endeavours in general.

Better Decision-Making

The most often mentioned and obvious value data literacy has is that it can significantly improve both individuals and organisations in their decision-making processes. Being able to read data, one can draw meaningful insights and make evidence-based decisions to form a better organisational strategy, as opposed to just making guesses or assumptions. Data literacy can even be crucial for making personal decisions as well. It can serve as a tool to inform how you can, for example, choose a health plan, how to budget and so on.

Being data literate means you can engage in data-driven decision-making rather than relying on assumptions or gut feelings

Enhancing Productivity

By visualising analytical data, it can significantly streamline how the data is interpreted and therefore increase performance. Being data literate allows employees to identify patterns, trends and diagnose their root causes. In such a way, organisations can solve problems and form strategies to combat these challenges in a far more efficient and quicker manner. Having a data-literate mindset can be profoundly useful in the process of data storytelling, that is, translating complex data analyses and sets into compelling narratives that can unlock the potential for creating more productive yet effective outcomes and results.

Innovation and Creativity

Data can be a key channel towards fostering innovation and creativity. Through data literacy, organisations must take a mindset that thinks critically, experiments, and creates new ideas with the data that sits in front of them. Organisations can build a reputation that benefits individuals as well, since they can be the first to interact with the new opportunities and technologies created through data analysis and interpretation. Integrating data literacy into one’s personal life can also help reveal many patterns and obstacles you may not have realised existed, which can then provide pathways into creating more creative and effective problem-solving skills and habits, informing daily life.

Communication

Data can be highly complex and convoluted – being data literate enables one to better communicate these sets as clearly and concisely as possible. We already see this in practice with how data is visualised in the form of statistics and graphs every day; for organisations, they improve collaboration, and for readers or consumers of data, they empower the ways to navigate the twenty-first century.

The Future is Going to Be Data

Ultimately speaking, data is not going to go away any time soon – in fact, it is going to be ever more entrenched in our world in the future. Experts have already predicted that big data will continue to grow exponentially, which will lead to data science skills possibly becoming as common as Excel usage skills are today. It is particularly important for organisations and businesses today to close the gap in data literacy training programs as well as maximise the utilisation of data to their advantage – otherwise, these companies and bodies will just keep falling behind these inevitable trends.

The future of data science shows how organizations will increasingly depend on data-literate professionals

Towards Data Literacy Through Data-Driven Culture – And Vice Versa

The essential pathway towards greater data literacy skills is by cultivating a data-driven society and culture. Of course, while it is an inevitable future trajectory, organisations and individuals should be ahead of the curve in terms of moulding a culture that places data as one of its foundational building blocks.

At the same time, anchoring on data literacy is the foundation towards a thriving data-driven culture; it is only through literacy that one can understand, analyse, and effectively use data in all its vagaries and march towards a truly real twenty-first-century community.