In the realm of data management, Derek Strauss, the esteemed Chief Data Officer at TD Ameritrade, shares invaluable insights accumulated over his extensive 20-year career. In a captivating twist, he employs an intriguing analogy to elucidate the true significance of data governance—a concept often misunderstood as merely a policing function.

Tragedy of the Commons: Understanding the Common Resource

The notion of common land has been a prominent feature in numerous societies, whether it be historical agricultural grounds in European feudal societies, shared grazing lands utilized by African herders, or communal resources like forests and natural reserves. These commons represent resources accessible to all members of the community.

For the sustainability of shared resources, each individual must contribute to their responsible use. When certain individuals exploit the resource beyond sustainable limits, the entire system collapses. Instances of this can be witnessed in overfishing leading to depleted cod stocks in the North Atlantic, overgrazing of communal lands, or the improper disposal of waste in public spaces such as roadsides and parks.

In practice, many communities have effectively managed their commons. They recognize the mutual interest in preserving these resources, whether for communal grazing, recreational purposes, or access to natural assets like fishing grounds. To maintain a viable resource, communities often develop unwritten laws or policies that set guidelines for acceptable use, sometimes even turning these guidelines into enforceable regulations through policing. In most cases, however, the flourishing of commons results from a shared understanding that it benefits the entire community.

Data as a Common Resource

Just like common land, data serves as a shared resource within any organization. Every business process generates data—from initial customer contact to successful sales, delivery of products or services, billing, post-sales support, and even auxiliary processes like legal and compliance.

Each process may employ different systems and involve individuals with varying data requirements, occasionally leading to conflicting priorities. Initially, the common interest aids in maintaining data standards and quality, ensuring adequate support for each process and individual. However, as companies grow in complexity and size, maintaining these standards becomes increasingly challenging, often leading to a lack of awareness among data producers about the downstream impact of their actions.

Research indicates that data-related issues consume up to 12% of many companies’ revenue—a true tragedy of the data commons.

The Role of Data Governance

To avert the tragedy of the data commons and unlock the true value of enterprise data, data governance plays a pivotal role. It ensures that every individual within the organization acts in alignment with the company’s goals and values when producing and consuming data.

Data governance fosters a common understanding of acceptable data usage, identifies opportunities for rationalization, prioritizes data management investments to support business objectives, and pinpoints and manages data-related risks before they escalate into larger issues.

By defining key performance indicators (KPIs) and accountability measures, data governance transforms corporate goals into individual responsibilities, thereby preserving enterprise data as a valuable and sustainable resource.