Exploring and making business decisions based on data offers multiple advantages for a company. Based on a survey by the Economist intelligent Unit, it was concluded that companies that have adopted the data-driven culture are rating themselves substantially ahead of their peers in terms of finances. It was found out in the same survey that most successful companies that have embraced the data-driven culture tend to make the most of the use of data-driven culture by providing essential training and encouraging the sharing of data to all its departments and employees. On this note, we try to find out ‘What is a data-driven company and how to become one?’
What is a Data-driven Company?
A data-driven company is an enterprise that cultivates the culture of continually using data and business intelligence to make all business decisions. All the departments and employees in the company would have access to the data, where the company would encourage them to embrace, explore and examine them in their day to day business activities and decision making.
To be a complete data-driven company, the goal of the business should be to reach a stage where the company requires approaching each decision by analyzing relevant data and the usage of data becomes a natural part of the workflow of all the employees and departments. Be it in the form of specialist level Big Data or secondary research reports, everyone in the enterprise should be able to exploit and explore the data independently, even if they are working on a big or different data sources. The key is in ensuring and practicing availability and usage of all relevant data in order to make proper business decisions.
The author of the Economist Intelligence Unit report, Fostering a Data-Driven Culture, Jim Giles said that “There is still a perception that a data specialist, perhaps a recent statistics graduate, should be parachuted in to an organization to advise on how to work magic with data, much as a computer security expert would be called on to help shore up a company’s IT networks”.
He said that it is absolutely an incorrect perception and further added that “Forward-looking companies are integrating data into their day-to-day operations. They are placing data at the heart of almost all important decisions. And they are tolerant of questioning—even dissent—about business decisions being made, as long as the questioning is based on data and their analysis. This is what it means to adopt a data-driven culture”
Importance of being a data-driven company
It has become enormously important, for companies to change their strategies and become a data-driven company run by Big Data and business intelligence. The importance is in the factor that being data-driven, as a company, you can decisions based on substantiation or proof, which should be way more reliable than decisions based on assumptions or perceptions. A survey conducted by Economist Intelligence Unit reporter and author Jim Giles, in Fostering a Data-Driven Culture, revealed that there is a clear link between the financial performance and the usage of data. The survey shows that when asked to evaluate the importance of data 43% say that data is inestimably important for strategic decision making, while another 40% said that being data-driven can be extensively useful for competitive intelligence, marketing and communications, as well as finance and accounting. MIT Center for Digital Business conducted a research and found that data-driven establishments are making 4% higher productivity rates and 6% higher profits.
Fred Shilmover, founder and CEO of InsightSquared stated in his interview with the INC, “As sales moves from field sales to inside sales, and as a lot of deals that historically may have taken six to 12 months to complete are now taking 30 to 60 days to complete, there’s just a lot more transaction volume”. He also added “You can either take advantage of that data to make better decisions or you can ignore it and get left behind”, thus signifying the importance of business intelligence in shaping up the sales pipeline.
Characteristics of a data driven company
The best performing companies are trying to maximize the use of big data and analytics and trying to be able to distinguish themselves in the market with their ability to use the appropriate data at the appropriate moment to produce what should be an appropriate business decision. Data can also provide these enterprises with a set standard for the employees to link their activities to business outcomes and the effect they directly have on the entire business. This will disclose their strengths and opportunities. Performance evaluations and appraisals can then be linked and evaluated based on assessable accomplishments. All the employees would be able to see the graph of the growth and profitability of the whole organization and access where the organization’s strengths and weaknesses are.
Another reason that a data-driven company fares better than its peers is the fact that with the determination and usage of appropriate data they get to plunge deeper and recognize the root causes behind definite business situations like the variations in customer preferences, competitive intelligence, market trends etc. It certainly helps the company to maintain the quality of decision, mitigate risks, and understand the market in the best possible way. This is why the wide approach to data and analysis are becoming more and more important and useful to all companies.
How to become a data driven company?
Most specialists say that the path to becoming a data-driven enterprise is neither easy nor glamorous. There are several steps are required for a company to strategize and become a data-driven organization. Chris Jennings, the vice president of technology services at Collaborative Consulting spoke about the complicated nature of strategizing your business to become data-driven. He says “To become a data-driven company, the belief in the importance of the integrity and quality of information needs to permeate the culture of the company at all levels. It is not enough to start a formal data governance program, becoming data-driven requires a disciplined shift in the mindset of all employees towards maintaining the integrity and quality of their data.”
Everybody in your enterprise needs to embrace the data-driven approach. The finest way to transform to a data-driven company is to ensure that it is an absolute priority, always. There are four important steps to incorporate the data-driven strategy to your business.
Create a data warehouse.
The first step to ensure your business is a data-driven company is to ensure that you have adequate data. It is absolutely important to collect as much meaningful data as possible, before embracing the strategy. Now that the cloud platforms are readily available and have become inexpensive, collecting data through data mining and web crawling for big data analysis is not a huge task. In fact experts say that to strategize your business to become data-driven, collect as much data as you can.
All the data may not be of use. Some will be useful and some might not, however the usage can be determined only after it has been analyzed, which is only possible when the data has been collected in a data warehouse and is available. Data should be collected both internally and externally. Data generated internally are data generated from Google Analytics, Site conversions, Salesforce, stored customer data, business intelligence etc. and the external sources are social media, market data, competitor intelligence, etc. Thus collecting as much data as possible is the key.
Set assessable goals.
Setting measurable goals are important in this strategy. It will allow you to assess the performance of your data analysis versus the goals set. With data availability, you will be able to find out what went right or what went wrong. This analysis of data would help you to understand what factors affect which part of your business. It will help you to understand and probably strategize better considering each detail.
Every action taken would have an assessable outcome. These goals can also be used for individual and personal projects. This will also help the employees to understand their impact to the business and also evaluate their own performance. The key is to be able to predict and decide on your moves which help you to protect your ideas.
Availability and transparency of data.
Fred Shilmover said “Not everyone is comfortable with giving everyone a login and having everyone see what the sales numbers and performance metrics really are, but in my view this is actually the beginning of creating accountability.”
In a data-driven company, the transparency and availability of data is the most important key. In order to embrace a data-driven culture, each employee and each department need to take ownership of the data they are going to use and understand them to incorporate them in their business decision.
Employ data experts.
Having an extensive data warehouse is important; however working with it might be a little tricky sometimes. Thus it is important to hire data experts and incorporate technology which helps to ease the process. It would also help the environment at your company to adapt to the data-driven culture in a smooth way.
Stay tuned for the first part of our blog series on How big data will revolutionise the business scene in the near future.
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