In the last few years numerous thought leaders have begun touting the value of Big Data, which involves extracting useful information from within and without a company. The real benefit they tell us is that with this data you will be able to make data-driven decisions – which are supposed to be better than regular decisions. While the idea having more evidence (ie data) to back up your business decisions certainly sounds great, actually figuring out how to implement it on the ground is more challenging.
What does it mean to be data-driven?
Becoming a data-driven company is about more than just collecting data and looking at it occasionally. To be truly data-driven, businesses need to need to approach every decision by analyzing relevant data and letting the conclusions that data brings drive the direction of the company.
Every employee should be expected to collect, analyze, and learn from data on a regular basis. Data should be shared and used for planning and reporting purposes along with internal monitoring against goals and objectives for telling your story.
Why is it important to be data-driven?
The simple answer is that making decisions based on evidence is far more reliable than ones based on instinct, assumptions, or perceptions which can be biased. Using the data-driven approach you will be able to identify trends over time which can inform effective practices, help you become aware of issues, and illuminate possible innovations or solutions. A study from the MIT Center for Digital Business found that organizations driven most by data-based decision making had 4% higher productivity rates and 6% higher profits.
Data can also provide a good benchmark for staff to connect their actions to business results, which will reveal new opportunities for improvement. Performance appraisals can then be based on measurable accomplishments and managers are able to see how well the whole organization is doing and where the organization’s strengths and weaknesses lie.
As Fred Shilmover, founder and CEO of Salesforce analytics company InsightSquared, said in an interview with Inc:
“You can either take advantage of that data and make better decisions or you can ignore it and get left behind.”
4 steps for a data-driven strategy
1. Get your hands on as much data as possible
The first step to making data-driven decisions is having data. Considering how inexpensive cloud-based software platforms are, there’s really no excuse not to collect and store as much data as possible. Maybe it will be useful, and maybe it won’t; but you’ll never know unless you add it to your analysis.
When pulling data you should look at both the data you are generating internally (Google Analytics, Salesforce, Site conversions, stored customer data) and data you can collect from external sources (social media, competitor data, market data, etc). Today’s data collection and analysis tools allow you to turn just about anything into data, so let your imagination run wild.
2. Set measurable goals
Setting goals that are measurable (ie increase revenue by 20%), forces you to analyze why you failed to reach a goal. The only way to prove what went wrong is to look at the data. This should help you start to see which variables affect which parts of your business. Everything you do should have some measurable output. These “goals” aren’t just high-level, they should also be used for individual projects and personal goal setting. This not only helps you to evaluate your performance, but should help your employees feel that they are contributing to the company bottom line.
3. Make sure data is available to everyone
Once you’ve collected and stored all of that data, you need to make sure it is available to everyone in your organization. Data shouldn’t just be in the hands of the data scientists of the IT department. In order to foster a data-driven culture, each department needs to take ownership of the data they need to make the decisions relevant to them. For this to be possible, training employees to be more data literate is highly important.
Elissa Fink, chief marketing officer at Tableau Software said:
Leading companies realize that being successful means giving people the opportunity to work with data. Making data available and easy to use for all employees can transform an organization’s culture. It’s good for the company’s bottom line.
To support making data available to everyone, you need a C-level person who is responsible for your data strategy. Someone from your management team needs to champion data-driven decision making and using top-down mandates and guidance to drive the shift in culture.
4. Hire data scientists
You should aim to integrate data into every part of your organization, but to really get the deep insights out of your data you should also employ some data experts. Your employees should be data literate, but you can’t expect them all to master complex algorithms and data mining techniques. For that you will need to try and find yourself some data scientists. You should look for people who can blend an in-depth knowledge of the business as a whole with data science, insight, marketing and strategy. Someone who can not only convert unstructured data to structured data and perform quantitative analysis on it, but also help an organization think about what data sources to investigate, what customers really need in data and analysis requirements, and how best to incorporate big data-based products and services into an effective business model.
Make it a priority
The best way to become a data-driven company is to make it a priority, starting with the highest levels of management. Everyone in your organization needs to buy in to the data-driven approach. That means you need to foster a culture of data-driven decision making.
Forward-looking companies are those that are integrating data into their day-to-day operations. They place data at the heart of almost all important decisions. And they tolerate questioning—even dissent—about business decisions being made, as long as the questioning is based on data and analysis. That is what it means to be a data-driven business.
What else would you add? Leave a comment for us below!