Summary: Businesses have access to more data than ever before. But, many businesses still aren’t capitalizing on this data. They haven’t yet figured out how to turn their data into a competitive advantage. In this article, we explore steps you can take to create a true “data-driven” business.
Over the last few years, we’ve seen a data explosion. Businesses have access to more data than ever before.
As data continues to grow, we’ve seen another concept emerge: The data-driven business. Everywhere you look, more and more thought leaders are touting the benefits of becoming “data-driven.”
The question is: What is a data driven company, and why is it important?
A data driven company isn’t one that simply collects data and glances at it from time to time. A data-driven company is one that uses data to drive their decision-making process. Before making a decision, they analyze relevant data and let the conclusions drive that decision.
Now, this goes far beyond executive-level decisions. It extends across the business. Employees must analyze and learn from the data they have available to them. Insights from this data must be easily shareable across the business.
Why is this so important?
In many companies, decisions are driven by seniority and opinions. Those with the highest rank in the company will usually win out…even if their decision is the wrong one.
Data can fix this problem. As explained below, it is the great equalizer in the decision-making process. It can give anyone a voice, even if they’re not a high-ranking employee.
“Without data, company decisions are shaped in an unhealthy way by the persuasiveness or seniority of individual team members,” explains Travis Kimmel, CEO, co-founder, and product visionary behind GitPrime. “For example, let’s say a company is redesigning their marketing website. In the absence of concrete data about user behavior, a senior executive can sway the direction with their positional power, or a designer based on their personal aesthetic. Data can equalize the power dynamics within a company and give people a voice regardless of position. In a data-driven organization, any team member can bring supporting data into discussions, which allows the best ideas rise to the top, regardless of their origin.”
In short, a data-driven company makes better decisions, because their choices are based on facts rather than opinions and rank.
The next question: How do you become a data-driven company? Today, let’s explore that topic. Here are 7 steps to help your company become “data-driven.”
1. Understand your current state
These days, many companies claim to be “data driven.” But, when you really get down into the details…they’re not. They haven’t reached the point where data is easily accessible to anyone. Their decisions still aren’t guided by data.
The first step towards becoming a data driven company is an understanding of your current state. Is your data accessible to anyone in your organization? Do you have the tools, people, processes in place to become a data driven organization? How are decisions currently made?
You’ll never become a true data-driven company if you falsely believe you’re already there. Take an honest assessment of your business and determine where you are in the process.
2. Set clear goals
Some businesses think that becoming “data-driven” is the end goal. They focus their time and money into making their data accessible.
But, once that happens…then what?
The problem with this approach: Becoming “data-driven” is not the end goal. As explained below, becoming a data-driven company is a method to solve and tackle problems in your organization. Before you start, however, you must identify which problems need solving.
“The phrase ‘you can’t improve what you don’t measure’ applies to financials, operations, product or marketing – and can even be applied to workplace culture,” explains Ilit Raz, CEO of Joonko. “This is why setting the goal of being a “data-driven company” is a big mistake. It is unclear, ambiguous and where confusion begins. Becoming a “data-driven company” is not a goal, it’s a method to solve and tackle issues in the organization, and this is the first step CEOs should take. Ask yourself, what do you want to tackle/solve/improve? Do you want to boost your company’s sales conversions? Or maximize R&D performance? Maybe you have the goal of solving workplace discrimination as it happens? Any question can be relevant and any goal you set is possible to obtain by leveraging your company’s data, but this is where you must start.”
3. Take inventory of your current data
If you’re like most companies, your data exists in a variety of locations. Sometimes, data lives in siloes, spread across multiple departments.
For instance, the marketing department might run over a different system than the HR department. The sales department might use a piece of software that the accounting department would love…but they can’t use it with their system. Or, perhaps the shipping department and the receiving department use similar, yet incompatible software packages.
Now, those are examples of common data sources. But, did you realize that you probably have access to more data than you realize? As explained below, underutilized data can provide you with some amazing benefits.
“A good example of an underutilized data in a company is event data which is used in process mining,” says Marja Rajamäki, Business Development Manager, Process Intelligence at QPR Software. “Practically all IT systems create and save event data which tells what actions have been completed within a system. This data can create transparency and visibility on how operations in an organization are actually performed, where the bottlenecks are, and how processes should be improved to meet management’s vision and goals. This is definitely an area where companies still have a lot of ground to cover – and a lot to achieve.”
4. Consolidate your data
Once you’ve taken inventory of your current data, and understand where it lives…what’s next? Before you can capitalize on this data, you must get it into one place.
Why is this so important? There’s a great quote in more data than you realize that sums it up nicely: “If you don’t have all your stuff in one place, you can’t do much with it. The idea is that corporations are sitting on disparate data sources that are in silos. In order to create an effective big data strategy, corporations must think about how to link these data sources through a unified platform. Where possible, common elements of different data sources should be linked together to enable smart analysis. However, all data must be available for analysis. If analysis is done only on selected data sources, the findings may be partial, non-validated, inconclusive and potentially misleading.”
5. Make data access pervasive
One of the roadblocks towards becoming a data-driven company is a lack of data access for employees. In many companies, employees must still make reporting requests to the IT department, and then sit around and wait for their data.
If you truly want to become a data-driven company, you must provide controlled, self-service options for your employees. These are tools that employees can use to access the data they need (when they need it). IT can control data and user access, but can turn the data access and reporting over to the end users.
“Increasingly, organizations are trying to put analytics tools in the hands of more users, not just IT or traditional business analysts,” says Peter Sprague, Vice President of Product Marketing at Pyramid Analytics. “Like other technology functions that have become self-service rather than IT-dependent, there is a ‘network effect’ at work in which the value of the intelligence is proportional to the number of individuals who have access to it. In the end, pervasive business intelligence is about an enterprise environment that engages more users, increases efficiencies, and ultimately, enables them to make smarter, data-driven decisions. In this data-saturated world, pervasive business intelligence is not an option; it’s a necessity for organizations seeking to be data-driven.”
6. Start small
I get it…this is an overwhelming topic. You can’t go from 0 to data driven overnight, especially if you’re not close to being data driven. Some businesses see all of the work in front of them, and give up before they start.
If you want to become data-driven, start small. Pick an aspect of your business that will provide the most payback, and start there. Don’t try to fix the problem all at once. You’ll overwhelm your users.
“Just start simply,” says Tim Young, Lead Consultant, Young Instructive Statistical Consulting. “Often I see businesses buy in big and start using complex relational databases and reports that come out as convoluted spreadsheets. This level of complexity, for a staff that isn’t familiar with it, will hinder buy-in.”
7. Start from the top
Finally, here’s one of the most important facts you must understand. Becoming a data-driven company isn’t just about technology. You can’t simply deploy analytics tools and instantly become “data-driven.” It starts from the top down. It’s a culture shift.
If your business leaders don’t embrace the idea, you will not become a data-driven company. Simple as that. If they continue to make decisions based on opinion and instinct (rather than data), the rest of the business will notice.
Before you begin the journey, make sure everyone is on board. Remember, becoming a data-driven company starts from the top.
These are just 7 tips for becoming a data-driven business, but the list could be longer. Would you add anything to this list? If you would like to add anything to this list, I’d love to hear it. Feel free to share in the comments.
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