The Importance Of Data-Driven Decisions For Business Success

Running a business in this digital age requires a businessman to be quick-on-the-feet regarding various technology trends. One such buzzword is big data. Most businesses have gone digital and are generating several GBs of customer data. Now is the time to leverage this digital insight. By understanding how to analyze the data and measure data accuracy, well-informed business decisions can be made that will lead to commercial growth and drive the business forward.

Companies that have fallen behind on this have noticed their data-driven competitors get success and make their stand in the industry by keeping the customer experience at the forefront. Big tech companies like Amazon, Facebook, and Google have aced and other Fortune 1000 companies are also heavily investing in data and AI initiatives.

Backing Business Decisions With Metrics

During the fourth industrial revolution, decisions made by a business must be backed up by facts and figures that will meet your business goals. Data-driven decision-making refers to collected data based on goals, analyzing patterns from the insight, and using them to come up with strategies. In short, the process goes as follows – collecting, extracting, formatting, and analyzing insights. This is the essence of data science.

Professors Andrew McAfee and Erik Brynjolfsson at MIT Sloan School Of Management wrote in a Wall Street Journal article about a study they conducted with the MIT Center for Digital Business. The study concluded that the companies that were data-driven benefited from 4% higher productivity and reported 6% higher profits. Such companies treat data as an asset.

A Guide To Become A Data-Driven Business

• Work With The Right Team: Working with a team that understands the data you are working with will leverage your business and make getting useful insights easy. Make everyone in your business aware of the basics of the data you are receiving. When more people understand, you will have an increased opportunity to receive credible information.

• Define Objectives: You have your team in place, but what are they working toward? Set definitive business goals before beginning data analysis. If there is a unified objective, all the collective efforts can be driven towards it.

• Gather Correct Data: There are tons of data at your disposal, but not all of it will benefit your business. For companies who are now going to start analyzing data, data collection should be the number one priority. According to the co-creator and founder of Twitter Jack Dorsey, "for the first two years of Twitter's life, we were flying blind. We're basing everything on intuition instead of having a good balance between intuition and data. So the first thing I wrote for Square is an admin dashboard. We have a strong discipline to log everything and measure everything."

• Ask The Right Questions: Gather your team and ask the right analytical questions to steer the focus towards the right type of data. This way you can stress on the data that you really need and filter the rest.

• Analyze To Understand: After answering all the questions to collect the right data, obviously, analyze it to extract meaningful insights and get analytics reports that will lead to data-driven business decisions.

Data-driven business transformation is a long-term process that requires all the above-mentioned steps. Organizations must invest to build these resources to drive the business in the right direction.