What is the Data Driven approach?
A data-driven approach refers to decisions that are based on analysis and interpretation of hard data rather than on observation. This ensures that solutions and plans are supported by information, and not just by feelings or anecdotal evidence. Therefore, data-driven approach is the practice of collecting and analyzing data to deduce conclusions and solutions in order to predict the future by using past and current information. Without data, we can make false assumptions based on tendentious opinions. Today, businesses use Big Data analysis, diagnostic modeling, and data processing to stand out in the competitive market.
Thanks to the new technological advancements processes such as storing, processing, and analyzing data have become faster and cheaper. You should bear in mind that creating a data-driven culture is essential for any enterprise to move forward and become a successful organization. A data-driven culture involves the use of data in decision making treating data as a strategic asset of the company by making data widely available and accessible. This approach focuses on capturing, cleaning, and using meaningful data from across the business. Having a strong foundation of data is critical for differentiating the business through artificial intelligence (AI) and machine learning (ML).
Benefits of data-driven decision-making
You will take decisions supported by updated information
By collecting and analyzing data, you will reach a confident decision backed by information and facts. Data will also allow you to better understand the impact that any decision you make will have on your business.
Data is logical and concrete in a way that intuition simply are not. Confident decisions allow organization to commit to a particular vision or strategy without being concerned about making wrong decisions. Nevertheless, just because a decision is based on data does not mean it will always be correct. To take good decisions, the data collection process and analysis should be flawless. Any decision based on inaccurate data would be detrimental for the organization. That is why the impact of every business decision should be regularly measured and monitored.
Your business can save money
There are many reasons a business might choose to become a data-driven organization. According to a recent survey of Fortune 1,000 conducted by NewVantage Partners for the Harvard Business Review, of the organizations, which began projects designed to decrease expenses, more than 49 percent have seen value from their projects. Other initiatives have shown mixed results. According to Randy Bean, CEO and managing partner of consultancy firm NewVantage Partners “big data is already being used to improve operational efficiency and the ability to make informed decisions based on the very latest up-to-the-moment information is rapidly becoming the mainstream norm.”
You and your team will become more proactive
Data will help you identifying business opportunities before your competition does, or detecting threats before they become too serious.The right types and quantities of data will leverage your existing resources; expand and multiply to produce new resources and work in a more proactive way.
Promotes collaboration between different teams
A data-driven culture is crucial to improve collaboration between different teams in a company. The insights obtained through advanced and predictive analytics and data analytics can help other members of the organization in their daily work and connect the ideas of different departments. Creating a data-driven culture across the enterprise is essential to move beyond just a few successful data initiatives and islands of excellence limited to certain business areas.
How to apply a data driven culture in organizations?
A data-driven culture embraces the use of data in decision-making and treats it as a strategic asset of the company by making it widely available and accessible. This approach focuses on capturing, cleaning, and curating meaningful data from across the business and promotes experimentation to learn and improve. A strong foundation of data is fundamental for differentiating the business from the competitors and it helps everyone perform better.
How to create a data-driven culture?
A data-driven culture not only understands and values the use of data in decision-making; it also embraces a culture of innovation and relevant conversations across departments.
Below we have listed some steps that every organization can take to foster an environment.
Get the leadership team in
Great companies lead by example from the top, and to build a data-driven culture, you will need business leaders to support and get actively involved in it. Leaders will need to understand that a data-driven culture goes beyond using data to justify a decision but using it as the main driver to make a decision. This will allow a better organization of the business units and will ease collaborations throughout between the different departments.
Set your data-driven goals
Data is not a final product; it is a medium to reach other goals. You can have all the data in the world but, unless you use it wisely, it means nothing. In order to integrate data into your production, marketing and sales strategies, you will need to set goals and parameters. For instance, if you want to increase revenue, you need to collect and analyze sales data to see the figures, and see how to re-orientate your catalog accordingly. Concisely, data is a tool that will help you make better decisions.
Conduct specialized training
Understanding and using data can be something new for most workers. The role of department leaders is to push the team towards a data-driven culture through conversations and workshops to educate employees on how to read, understand and process data that they will work with during their daily tasks. Additionally, organizations can rotate their data specialists across the various departments to break down barriers between the IT department and commercial units of the business. This will help to develop an environment of trust and collaboration
Enable data democratization
In a data-driven culture, all executives can easily access the data they need to make better decisions. Data democratization requires a data program structured to be self-aware, protocols to ensure that end users exposed to certain data understand it, and data security to safeguard all relevant information.
The challenge of data democratization can be easily resolved by using an intuitive business intelligence platform that is powered by analytics.
Use the right tools to analyze data
Analyzing data may be complex if you do not have the right tool. Today, you will find a large collection of tools in the market that can help you get the most out of your data. Using the right tools can turn your data into readable charts that will make data accessible to anyone who needs it. If you do not have the right tool set, you will not get most out of your data.
How to improve your data analysis strategy?
To improve your data analysis skills and simplify your decisions, we suggest to follow these steps in your data analysis process.
Determine what to measure
By answering this question, you likely need to answer many sub-questions such as:
- Decide how to measure it
- Establish the timeframe
- Choose the factors that will be included
Collect data
With your question clearly defined and your priorities established, you can start collecting your data. Before that, determine what information could be collected from existing databases or sources on hand and collect that data first.
If you need to gather data via observation or interviews, then develop an interview template ahead of time to ensure consistency and save time. Always keep your collected data organized in a log with collection dates and add any source notes as you go.
Analyze data
After you have collected the right data, it is time for deeper analysis. Begin by manipulating your data in different ways, such as plotting it out and finding correlations or by creating a pivot table in Excel. A pivot table lets you sort and filter data by different variables and lets you calculate the mean, maximum, minimum and standard deviation and more. As you manipulate data, you may find you have the exact information you need. However, sometimes you will realized that you need to collect more data. Either way, this initial analysis of trends, correlations, and variations will help you focus your analysis on better answering the relevant questions.
Interpret results
After analyzing, it is the time to interpret your results. As you interpret the results of your data, ask yourself these key questions:
Does the data answer your original question? How?
Does the data help you defend against any objections? How?
Are there any limitation on your conclusions, any angles you have not considered?
After answering all these questions, the only remaining step is to use the results of your data analysis process to decide the best course of action.
By following these five steps in your data analysis process, you are likely to make better decisions for your organization because these will backed by data that has been precisely collected and analyzed. With practice, your data analysis will get faster and more accurate and you and your team will make better, more informed and effective decisions.
