You cannot manage what you don’t measure.
Following on from a very interesting discussion on the 859 ioD Breakfast in Surrey – “Deciding to decide”, I thought I will write this blog. Considering all the different factors of decision making we spoke about, like listening to your gut, emotional intelligence, being aware of blind spot etc., I have to say, my main one is data being the centre of that decision making.
Every organisation, from Fortune 500 to one-man band, generate data these days. It doesn’t matter the size of the organisation, if you have a website, a social media presence, payment transactions or any transactional data, then you are generating enough data to analyse your customers, its user experience, web traffic and more.
Data and Analytics are disrupting existing business models and ecosystems. From using granular data to personalise products and services to scaling digital platform to match buyers and sellers, companies are using data to enable faster and facts-based decision making.
Consider retailing, Booksellers in physical stores could always track which books sold and which did not. If they had a loyalty program, they could tie some of those purchases to individual customers. And that was about it. Once online shopping took off, understanding customer behaviour increased dramatically. Online retailers could track every single move of their customers, what they bought, what else they looked at, how they navigated through the site, how much they were influenced by recommendations, reviews and promotions. It is this wealth of information about customers choice that made the possibility of developing algorithms which could suggest what the customer would read next. Traditional retailers simply couldn’t access or act on this kind of information in a timely manner. It is no wonder that Amazon put many traditional bookstores out of business.
The familiarity of data driven companies like Amazon, Netflix, Google to name a few, almost masks its power. A generation ago, business executives could only dream of having such information to strategize their marketing campaign or training customer service agents. As tools and philosophies of data spread, they are changing long-standing ideas about the value of experience, the nature of expertise, and the practice of management. Smart leaders across industries will see using data for what it is: a management revolution.
Data driven decisions are better decisions, it is as simple as that. Using data enables managers to decide based on evidence rather than intuition. Senior decision makers must embrace evidence-based decision making, hire scientists who can find patterns in data , improve business process and translate them into useful business information.
According to Entrepreneur, organisations that use data at the centre of decision making generally has a profit increase of 8-10% and a 10% reduction of overall cost.
According to Forbes
- 79% of enterprise executives say that not embracing data will cause companies to lose competitive position and risk extinction.
- 83% of enterprise executives say they’ve pursued data projects to gain a competitive advantage.
- Nearly 50% of businesses say data and analytics have fundamentally changed business processes in sales and marketing.
- Data warehouse optimisation is considered the most important data analytics use case and is considered critical by 70% of businesses.
Data driven decision making should not just be limited to larger organisations, even small organisations can leverage use of data to make better and smarter decisions. For example, a small event organisation firm, analysed their website data and saw that even though their number of men visitors outstripped women, a greater percentage of women were purchasers. Also, ticket sales for events were highest in the last 2 weeks before an event and most sales happened early morning or late evening. That information was critical to align their future marketing campaigns, target audience and discount offerings.
The amalgamation of an increasingly complicated world, the vast proliferation of data and the pressing desire to stay at the forefront of competition has prompted organisations to focus on using data to drive strategic business decisions. Rather than “going with gut” when maintaining inventory, pricing solutions, or hiring talent, companies are embracing analytics and systematic statistical reasoning to make decisions to improve efficiency, risk management and profits.
Topping the list of data driven decisions are better strategic decisions (69%), improved control of operational processes (54%), a better understanding of customers (52%) and cost reductions (47%).
In 2017, the Economist claimed that data replaced oil as the world’s most valuable source, however unlike oil, data can be easily extracted and the supplies are endless. What’s more, unlike oil, we can use data multiple times and generate different and new insights from it. This comparison leads us to conclude that we should collect and store as much data as possible. However, if we only do that, without tagging or using it in our strategic decision making, its value will be far less significant than that of oil.
Going from a mindset driven by intuition and gut to one driven by data and facts requires time and practice, however, by having consistent, automated and deliberate systems in place, businesses of all size can utilise their data to feed into strategy, sales, marketing and product development decisions.
Does your organisation collect any transactional data? Do you use it to get insights into your customer behaviour? If not, why not?
About the Author: Sarbani is Managing Director of ei²® a consultancy specialising in #data #insights #performance