Today, data literacy has become an essential business skill. PwC research revealed that highly data-driven organisations are three times more likely to report improvement in their decision making processes. Despite this, 62% of business leaders still rely on experience and advice rather than data when making decisions.
While it may feel natural to trust our instincts when making business decisions, it’s just not sensible in today’s business environment. It’s prudent that leaders in your organisation leverage data analytics to increase speed to insight and ultimately action. Those that commit to turning data into action are the ones that will be able to transform their business.
What exactly does it mean to be data-driven?
It’s important to have a firm understanding of the language of data analytics in order to empower how you use this knowledge to your advantage.
Let’s start by defining a common buzzword in data analytics, "big data". Simply put, big data refers to large, fast and complex data sets. These data sets are often so voluminous that they can't be managed by traditional data processing software. Any amount of content can be considered big data as long as a large amount of information can be extracted from it. By leveraging big data, businesses can address problems in ways they couldn't before.
So what does it mean to be data-driven? This term refers to the process of collecting data, drawing patterns from that data, then using all that information to make inferences that influence decision making.
Data-driven decision making (DDDM) is thus the process of making strategic decisions based on data analysis and interpretation rather than intuition and observation alone.
How do you make data-driven decisions?
Use this five-step process to effectively utilise data in your organisation.
1. Define the objective
You’ll need to identify what questions need to be answered in order to achieve your business goals. Ask yourself what challenges you’re facing in your organisation, given the industry and competitive landscape. Having this foundational knowledge is what will help you make better deductions with your data
2. Define what to analyse
Ask yourself, “what information do I want?”. You’ll likely be collecting information from a variety of sources making it necessary to coordinate them in order to extract the needed information.
3. Transform and clean the data
Data cleaning refers to the process of preparing data for analysis by removing or correcting data that is incorrect, incomplete or irrelevant. In this step, you’ll essentially be turning raw data into meaningful information.
4. Conduct data analysis
This is the step where you analyse your information using statistical models. You’ll use your data to answer the questions you identified earlier in the process. Data visualisation can come in handy during this process. Make use of tools such as histograms, bar and line graphs when looking to draw insights from your data.
5. Translate data insights into action
The last step of this process will involve drawing insights that drive action or change in your organisation. While learning new information from your data is important, affirming or disproving previous assumptions is just as useful.
What are some of the benefits of data-driven decision making?
How can making use of data when making decisions benefit your organisation?
1. Cost reduction
One of the best benefits of utilising data in your organisation is the decrease in expenses. When drawing insights from your data, you can identify cost-cutting opportunities in all areas of your business. You’ll be able to understand which strategy needs more resources or which other one needs less budget. Your data might also reveal how a particular product or service underperforms over others. With this information, you can address any issues customers might have and improve sales in your organisation.
2. Increased speed
Lacking effective data to support your decisions can slow down your business. Data-driven organisations can make decisions quicker and with much more confidence since they have the hard evidence to back up their ideas.
3. Continuous improvement
Data-driven decision making can lead to constant improvement. Business leaders that make use of big data can implement incremental improvements, monitor crucial metrics and make further changes based on the outcome of their data-driven decisions. All this enhances the overall performance of their organisations.
4. Collaborative decision making
Data can help create a shared vision and a decentralised decision-making system in your business. By equipping various departments in your organisation with the right information and insights, you’ll foster collaboration among employees and speed up the decision making process.
5. Planning
Data-driven decisions are what will help transform your static plan into a system that is both efficient and ready for the future. Once you arm your business with the right data, numbers, statistics, trends and any other relevant insights, you’ll be able to create the right strategies that will propel your business to success.
The continued growth of big data and data analytics solutions has brought us to the data-driven era. Several companies are turning to data to inform and accelerate their decision making, and so should you.
We here at IMS Africa can help your organisation in analysing appropriate data and information through monitoring and measurement. We’ll enable you to:
Assess your organizational performance against established plans and stated objectives.
Identify areas for improvement, therefore reducing cost and line defects while improving efficiency, service delivery and profitability.
Determine the root cause of the problems in your organisation and the most appropriate corrective or preventive action to take.
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