How Data Driven Decisions will Benefit Your Business
The idea of “intuition,” or simply recognizing whether something is right or wrong, has been associated with a tremendous amount of prestige, significance, and power in society.
While intuition may be helpful, it would be a mistake to make all of your decisions based solely on gut instinct.
Although intuition can provide a hunch or spark leading you down a specific direction, data allows you to check, understand, and measure your findings.
As shown in a PwC survey of more than 1,000 senior managers, data-driven companies are three times more likely than those that depend less on data to report substantial changes in their decision-making process.
The advantages of being making data driven decisions and some steps you may take to be more analytical in your operations are outlined below.
What Is Data Driven Decision Making?
The process of using data to guide your decision-making and confirm a course of action before committing to it is known as data driven decision making.
This can be seen in a variety of ways in industry. For instance, a business might:
Gather survey responses to determine the goods, services, and features their customers want.
Conduct usability research to see how consumers interact with the product or service and find any problems that need to be addressed before an entire release.
To test the waters and learn how a product could perform in the market launch a new item or service in a test market. Analyze changes in demographic data to see if there are any opportunities or challenges to your market.
Several variables, including the business priorities and the types and quality of data you have access to, will determine how data can be integrated into the decision-making process.
Data collection and analysis have long been relevant in companies and organizations at the enterprise level. However, with over 2.5 quintillion bytes of data generated every day, it’s never been easier for businesses of all sizes to capture, evaluate, and interpret data into real, actionable insights. Although data-driven decision-making has existed in some form or another in the industry for decades, it is a genuinely modern concept.
Benefits of Data Driven Decisions
1. Making More Confident Decisions
You’ll find that once you start gathering and analyzing data, it’s much easier to make confident decisions about practically any business problem, whether you’re deciding to launch or discontinue a product, change your advertising message, branch into a new market, or something else entirely.
Data serves a variety of purposes. On the one hand, it lets you compare what is currently available, enabling you to understand better the effect of any decision you make on your business.
Furthermore, evidence is logical and concrete in a way that intuition and gut instinct are not. You can instil trust in yourself and your organization as a whole by eliminating the intangible elements from your business decisions.
This assurance helps the company completely commit to a vision or plan without fear of making the wrong decision.
The fact that a decision is based on evidence does not guarantee that it is correct.
Although the data could reveal a trend or indicate a specific result, any decision based on the data would be incorrect if the data collection process or interpretation is faulty.
As a result, the effect of any business decision should be calculated and tracked regularly.
2. Develops a More Proactive Approach
It’s possible that the first time you use a data driven decision making process, it’ll be reactionary. The data tells a story to which you and your company must react.
Although this is important in and of itself, it isn’t the only role that data and analysis can play in your business.
It’s possible to use data more constructively with enough practice and the suitable types and amounts of data—for example, by finding market opportunities before your competitors do or by recognizing risks before they become too extreme.
3. Saves Money
There are countless reasons why a business might decide to invest in a significant data initiative and make its processes more data-driven.
According to the survey, using data to reduce expenditures is one of the most successful programs.
More than 49% of companies that started cost-cutting programs saw results. Other programs, on the other hand, have yielded mixed results.
How Do You Make Your Business More Data-Driven?
You may take several steps to achieve your objective of being more data-driven in your business strategy. Here are a few instances of how you should use an analytical attitude to approach your everyday tasks.
1. Look for Patterns in Unexpected Places
At its heart, data analysis is an effort to find a trend within, or a link between, various data points. Insights and assumptions can be derived from these trends and associations.
Making a deliberate effort to be more analytical—both in business and in your personal life—is the first step toward being more data-driven. Although this will seem to be an easy task, it requires practice.
Look for trends in the data around you, whether you’re at work skimming over financial statements, in line at the post office, or travelling by bus.
Once you’ve identified specific trends, practice extrapolating observations and attempting to deduce why they exist. This essential exercise will assist you in becoming more data-driven in other aspects of your life.
2. Ensure Every Decision Is Based On the Data
Whenever you’re faced with a decision, whether it’s a business or a personal one, try to avoid relying on gut instinct or previous actions. Make a deliberate attempt to adopt an analytical approach instead.
Determine what data you have that can be used to help you make a decision. If no data exists, think about how you would be able to gather it on your own.
Once you have the information, evaluate it and use any observations to aid in your decision-making. As with the pattern-spotting exercise, the aim is to gain enough experience with analysis that it becomes a regular part of your decision-making process.
3. Visualize the Data’s Meaning
The process of data analysis contains a lot of visualization. A table of numbers is almost difficult to interpret. You’ll quickly identify patterns and conclude the data if you use engaging visuals like charts and graphs.
Learn about popular data visualization techniques and methods, and practice making visualizations for any data you have on hand.
This can be as easy as constructing a graph to visualize your monthly spending patterns and then drawing conclusions from it. You can then use these outcomes to create a monthly personal budget.
You’ll have made a data-driven decision after completing the exercise.
4. Consider Furthering Your Education
Suppose the prospect of learning how to integrate data into your decision-making process on your own makes you nervous. In that case, there are various training opportunities available to help you improve the data science skills you’ll need to succeed.
Conclusion
Although there are many advantages to data driven decisions, it’s important to remember that you don’t have to go all-in to get there.
You will become more data-driven and excel at your company by starting tiny, benchmarking your results, recording everything, and adapting as you go.
About the Author
Eugen Spivak is a multi-award-winning author, business strategist, and a business coach. Eugen is the founder of the Canadian Institute of International Business, an organization focused on a better way to learn business!
Study With Us!
We offer practical courses in various areas of business. Our instructors have at least 10 years of practical experience in their fields.
