Steps to Data-Driven Business Decisions

February 09, 2023 3:44 PM

Do you want to improve your decision-making process? Nowadays, intuition is no longer sufficient for staying in the game. Instead, many companies realize that data must be at the core of their decision-making.

With technology being the basis for the majority of what you do, you'll be able to utilize the data it creates to understand precisely what's going on within your company and use the data to help your business become more flexible by experimenting with different scenarios and their results.

To enjoy the benefits, there is no need to become an expert in data science. Instead, you can follow a few simple actions to help your business get a better discipline of decision intelligence.

Instinct over Data: What You Can Gain from Data-Driven Choices

Nowadays, leading businesses across the globe use data to make decisions about their businesses. They're ahead because they've got an advantage over their competition. After all, they've shifted their attention to data instead of using business knowledge alone.

There are fewer top-performing businesses (40 percent) than laggards, and laggards base the majority of their business decisions on their gut or personal experience (70 percent). Also, companies that make decisions based on data perform better than those based on intuition.

Here are a few of the advantages you can gain from making your organization data-driven:

Be competitive in a market that makes use of data.

Data-driven companies are more customer-driven and gain a better understanding of their customers and their journeys.

Cost-effective: It is expensive to store large amounts of data, particularly when only using it for compliance reasons.

Find opportunities that you may have missed or are unaware of, and assist your company in growing and developing continuously.

Improve your agility and be more able to react to market conditions.

Keep data from leading you astray in the garden

It's important to remember that the vast quantities of data you have access to are only sometimes a good indicator of improvement in how you conduct business.

Data is only worth what you can draw from it. Unfortunately, with all the data being tossed around, it's easy to steer yourself in the wrong direction.

The first step to extracting the most value from this data is knowing the correct data to use. The metrics you employ (what you track, for instance, are pages viewed or converted) can determine just how effective your data-driven decision-making is. The metrics you need to look at are those areas within your company that are most important for its development.

Here are a few questions you should ask:

Is the data representative, and where did it come from?

Are your assumptions still valid with a different set of results if you've based them on the information?

Do independent variables alter the results?

Could you try an alternative approach to analysis?

How to become more data-driven in just 5 steps

With these in view, let's be more data-driven, shall we?

Step 1: Strategy

Data-driven decision-making begins with an essential strategy. This will help you concentrate your attention by filtering out any data that is not beneficial to your business.

Start by identifying your goals: what data can it provide you with? For example, you're seeking new leads or need to determine which processes are working and which ones aren't.

Consider your company's goals and then create a plan around them. That means you will be able to handle data's many possibilities.

Step 2: Determine the most critical areas

Information comes into your business from all directions, from interactions with customers to the computers used by your staff. Therefore, it is essential to control the many sources of data and determine which areas are likely to bring the most value. Which is crucial to achieving your overall business strategy? The answer may be financial or operational, for example.

Step 3: Data-targeting

After you've identified the areas of your company that will benefit most from analytics and the problems you'd like to solve, now is the time to decide on the proper data sets to answer your burning questions.

This is about looking through your existing data and determining which sources offer the most valuable data. This can help you streamline your data. When departments use different systems, incorrect data reporting may occur. The most efficient systems can analyze data from different sources.

The ability to target data according to your business goals can help you keep the cost of data storage low and ensure that you're gaining relevant information.

Be aware of the costs and ensure you satisfy your board by focusing solely on the data you need.

Step 4: Collecting and analyzing the data

Determine the key people who are responsible for managing the information. These are usually the department heads. However, the most critical information will be gathered at all levels and obtained from both external and internal sources, ensuring that you will have a complete picture of what's happening across the company.

To effectively analyze the data, you may require an integrated system for connecting all the data sources. The level of knowledge you require will be contingent on the type of data you're required to study. The more complicated the question, the more specialist abilities you'll require.

On the other hand, simple analytics could require more than an understanding of Excel, for instance. Therefore, specific analytical platforms provide access to ensure that everyone has access to data, which will aid in connecting the entire workforce and help create an even more connected organization.

The more easily accessible the data is, the more likely it is that those who access it will find patterns in it.

Step 5: Converting insights into actions

How you present the knowledge you've gleaned from your information will determine the amount you'll benefit from these insights.

Many software tools for businesses can combine massive amounts of information and make it available to make your findings easier to digest for decision-makers.

It's not just about showing beautiful images but rather visualizing the information in an easily recognizable manner, allowing you to understand what actions are required to be taken and how the information will be utilized in business.

Let data-based lessons shape your business

Being a data-driven company is more challenging than just waking up and utilizing data to inform your business decision-making. It's about more than choosing the right analytical tools to provide insight from data. First, however, it's essential to have the appropriate technology structure in place.