Data-Driven Decision Making: The Roadmap to Success
Human intuition is often the romanticized method for making “the right” decisions in modern society and work. However, getting in the habit of basing a choice on a gut feeling alone can rob an organization of realizing its full potential. It can also lead to losing a huge part of its empowerment and success in the long run.
What is certain is that data-driven decision-making and relying on data as a forefront instrument to provide value, identify opportunities, and encourage creativity in the overall strategy is the approach for eliminating errors in the long run. Moreover, creating a data-driven culture in an organization can lead to the next level of transformation providing agility and empowerment. In this article, we shine a light on how you can adopt a data-driven decision-making approach and what tools can help you achieve it.
Table of Contents
- What is data-driven culture?
- What is data-driven decision-making?
- Why data-driven decision-making is important?
- Benefits of data-driven decision making
- Steps to building a data-driven culture
- How Slingshot Enables Data-Driven Decision Making
What Is Data-Driven Culture?
At organization level, data-driven culture is the method of using data as the main source for insights throughout each department and by every employee. To put it simply: it’s the choice to treat data as the central guiding light in the darkness of almost infinite possibilities. Illuminating the right direction by relying on data and removing gut feelings as a leading factor is what data-driven culture is all about.
In the process of data-driven decision making, many techniques are used across companies, including, but not limited to:
- Collecting data based on measurable goals or KPIs
- Analyzing patterns and extracting valuable and relevant conclusions
- Gathering facts from insights and basing strategies on them across all divisions in the company and across all teams regardless of their function
- Using the data as a central adviser in the decision-making process
Choosing data as a strategy and making it the fundamental frame of reference in selecting the way ahead is what data-driven culture is all about.
What Is Data-Driven Decision-Making?
We already established that data-driven decision-making is the choice to use data as the primary informant and the strategy to base future decisions on. You can rely on several methods of guiding your strategic business decisions with data at the helm, like:
- Business Intelligence tools that help your data-driven decision making by keeping data at arm’s length.
- Using data points, metrics, and facts to inform business choices.
- Making data accessible to everyone in the organization so that they can hop on the same strategy.
- Grouping historical information and making judgments based on what’s worked in the past.
All of these and more create a data-driven decision-making strategy that eliminates gut feeling as a factor and focuses on facts. And given that facts don’t ever lie, we can say each company basing its future steps on them has chosen the most stable stepping stone possible.
“By 2023, data literacy will become an explicit and necessary driver of business value, demonstrated by its formal inclusion in over 80% of data and analytics strategies and change management programs.”
Today, data and analytics are changing the basis of competition and improving the core operations of any organization while at the same time launching entirely new business models. Increasingly the role of data and analytics is no longer being a stand-alone discipline but a catalyst for digital strategy or transformation.
Why Data-Driven Decision-Making Is Important?
Today, the amount of collected information has never been greater or more easily managed. Taking advantage of that seems only logical, but there are many reasons why data-driven decision making is essential for organizations worldwide. Here are some of the key ones.
- Analytics is becoming increasingly important for business success
- Data and analytics capabilities have made a huge leap forward in recent years with new self-service tools, simpler integration of data sources, real-time reporting, interactive data visualizations
- Enterprises develop data proficiency, analytics agility, and community.
- Data is making a transformative impact on organizations through analysis and insights.
The transformation itself is no easy feat but combining data and analytics in the decision-making process is a huge leap forward for any company. And because in business there is always an element of risk, basing that risk on data makes the outcome much less vulnerable to something going wrong. Trusting data to direct your decisions means not starting from scratch, but relying on something that has worked well before, or simply taking it into account. That way, data helps you do what works and implement smart strategies leading to inevitable success.
Benefits of Data-Driven Decision Making
А data-driven culture can help an organization make sound decisions rather quickly, which can improve the outcomes and save money. Data-driven decision-making leaves no room for experimentation and therefore the risk is insignificant. There is a study by MIT professor Erik Brynjolfsson which discovered that companies that embrace data-driven decision-making have output and productivity that is 5-6% higher.
Here are some of the benefits companies see when they build a data-driven culture:
- Make more confident decisions: when you can better understand the impact of your decisions, you will be more confident in making them.
- Become more proactive: data-driven insights can help you identify business opportunities, detect customer journey leaks, and proactively identify weaknesses in your product before they grow into serious problems.
- Achieve greater success and longevity: with regular insights into market changes or trends, organizations become more agile and can pivot and maximize their resources for success.
- Gain awareness and transparency: keep everyone in your organization in the know, aware of company goals, customer satisfaction, and more.
- Answer the why: gain a deeper insight into your customer’s journeys, identify funnel leaks and success points to drive acquisition.
- Identify new revenues of growth: Tying company insights into market trends can help discover new revenue streams.
However, these benefits don’t just happen when you purchase a business intelligence tool. To unlock them, you need to truly establish a data-driven culture.
Steps to Building a Data-Driven Culture
If you want to foster a data-centric ecosystem that constantly leans on data to enhance performance, you’ll want to focus on the following 6 key steps and follow them with consistency.
- From the top down
If a data-driven mindset isn’t embraced by a company’s leadership, it’s unlikely it will filter down to the rest of the organization. This is because adopting a data perspective involves significant changes to how each part of a business operates.
To make sure the strategy for data-driven decision-making is adopted in every corner of your company, it needs to come from the top. It may mean that executives will no longer accept decisions made by managers without data that backs up their plans. It may mean that executives set aside time for themselves and their employees to learn new data skills. The important foundation is that a strong message comes from the company leaders communicating that this is a high priority.
- Trust is a factor
“By 2020, 90% of corporate strategies will explicitly mention information as a critical enterprise asset and analytics as an essential competency.” – Gartner
Trust is another important principle in data-driven companies. All parts of a company, from the workers through managers and up to executives, must trust that the data is accurate and reliable.
This ultimately is inspired by data stewards, employees throughout the company that has a facility with data analytics and instill trust in others that the information is accurate. It’s also facilitated by a single source of truth, a source that everyone trusts so that colleagues avoid the “he-said-she-said” trap and reduce time spent hunting for data.
- Commitment is key
Building a data-driven culture cannot be a set-it-and-forget-it process. It depends on a long-term commitment from everyone in the organization. To ensure this commitment long term companies must:
- Ensure analytics ties back to critical business efforts
- Keep data at the forefront of employee coaching
- Make sure team goals are always present for gauging team performance
- Invest in AI technologies that will keep data ever-present
- Metrics (that matter)
Along with the importance of data and metrics, you should also keep in mind that it’s not just any metrics that matter; you must be judicious in which data you focus on and how you expect your employees to use it.
As Jerry Z. Muller noted in his book, The Tyranny of Metrics: “Trying to force people to conform their work to pre-established numerical goals tends to stifle innovation and creativity—-valuable qualities in most settings. And it almost inevitably leads to a valuation of short-term goals over long-term purposes.”
Avoid this by following these key ideas:
- Choose the right KPIs to measure success; if you measure the wrong KPIs, you’ll never get the answers that you need
- Research and look at historical data to set realistic goals
- Identify new technology needed for the organization to access and analyze data
- Assign data administrators responsible for ensuring accurate data and providing the proper access to the organization
- Data Literacy
Adjusting to working with data means changing the way we operate in our day-to-day activities. This means that people may not have the needed skills to be data-driven out of the box.
Developing a data literacy plan across organizations means ensuring that employees understand what data means and how to read business charts and graphics.
“Every beginner possesses a great potential to be an expert in his or her chosen field.”
―Lailah Gifty Akita, Think Great: Be Great!
Data can only make an impact if it’s incorporated into the decision-making process. Training employees on “how” to get to data is just the beginning. The real goal is to turn that data into “actionable insight” and here are some questions to help you see what you need to achieve it:
- What tools do you currently have or need to acquire?
- Is data readily available? REST APIs, Odata, direct connections?
- Does my team understand data visualizations?
- Do we hire a data scientist or build from within?
- Can we do effective Data Storytelling?
To achieve truly meaningful adoption and usage of data, find the key stakeholders in the business that have the visibility and data mindset, give them data literacy training, and empower them to promote a data-driven culture in your organization.
Data-Driven Decision-Making Examples
The decisions that we make every day for our products and services are endless. How can you make sure that before these decisions go into action that is data-driven? Here are three examples:
- Looking to shift marketing funds into a new territory? Make sure that choice is based on the search volume for target keywords, historical leads for your product or service coming from that territory, conversion rates from leads to new seats, and more. Don’t shift budget off gut instinct or one conversation.
- Looking to improve product experience? Take a look at your application’s data to see where people are getting stuck the most or maybe aren’t even using certain features
- Want to make a change to your website? Well, don’t just make changes just cause you think they are a good idea. Run A/B tests to provide users with different experiences and see what version performs the best and make your decisions based on that.
How Slingshot Enables Data-Driven Decision Making
If you’re wondering if there is a magic wand that brings all we talked about so far seamlessly together – the answer is: no.
There is, however, a magic application.
Slingshot is the platform that serves as a uniting tool for whatever type of data-driven strategy your company needs. By combining all necessary mechanisms so an organization can thrive in projects, minimize risk, and have all project and/or progress information at a glance, the app simply makes things better and more effective, with no disruptions.
Here is a quick overview of how Slingshot integrates into the idea for data-driven strategy within an organization:
- It eliminates the need for multiple applications usage that are not always well-integrated
- It diminishes the danger of desynchronization between team members
- It presents a project’s progress, goals, stages, and analytics at each point of its development with one glance
- It unites all of your digital assets in one application and allows you to share them with team members as well as with outside collaborators with ease
- Works with Office 365, Google Suite and is infused with AI so it takes your data to the next level and helps teams go from insights to action in a matter of seconds
Slingshot is simultaneously a business intelligence tool that provides you with dashboards and analytics, a chat platform for easy collaboration, a project management software, and a planning tool for the team, helping with ownership, division of tasks, and keeping tabs on progress and/or issues. Connecting to the data in a meaningful way leading to actions has never been easier. And that is, ultimately, what data-driven culture is all about – putting facts at the forefront in an intelligent way, with analysis, creativity, and drive for success.Tags: analytics, application, data-driven culture, data-driven decision, productivity Categories: Content, How To, Project Management, Team Productivity