Image by Etahos, via Creative Commons.

If you’re trying to be “data driven,” you’re doing it wrong

There was a quaint moment around 1999 when “e” was tacked on to a number of things, signaling they were now available “electronically.” Which is to say, online.

There were e-tickets, e-textbooks and of course e-mail. E-commerce was born. Businesses — e-tailers — offered e-sales. And oh, heading into the holiday season that year, how progressive a person felt, ticking through her shopping list from her desk chair.

If the business world initially imagined that e-commerce entailed adding a shopping cart button to a web site, we soon came to understand that it meant engaging a new world with a new mindset.

Years later, when online made the shift from desktop to mobile, an entirely new mindset was required again. The companies that won were those that didn’t shrink the desktop experience, but treated mobile as a new reality with new terms.

A new world, with a new mindset.

Now, the data rushing into organizations requires yet another such shift. While a small percentage of companies understand this, too many are still thinking of data driven in terms of software add-ons (much like that old shopping cart icon).

Being “data driven” doesn’t refer to technology but rather the practice of operating more intelligently, thanks to insights that data make possible.

The Oakland Athletics’ Billy Beane didn’t think: How can I create a data-driven baseball team? He thought: How can I make the most of my limited resources? Then he used data to answer that question.

Amazon didn’t decide to be a data-driven bookseller; it decided to understand customers better than any other retailer.

Being “data driven” doesn’t refer to technology but rather the practice of operating more intelligently, thanks to insights that data make possible.

“Data-drivenness is about building tools, abilities and, most crucially, a culture that acts on data,” Carl Anderson explains in “Creating a Data-Driven Organization.”

While some companies think generating reports or consulting dashboards makes them data driven, Anderson explains, those activities are typically backward looking, while analyses that consider who, what, when, why and where are looking forward.

Such analyses need to exist in an environment where they’re taken seriously and consistently acted on, Anderson continued. “If they’re unread, ignored and the boss is going to do whatever he or she wants to do, regardless of what the data says, then they are ineffectual.”

Firm in the memory is Karl Rove, feeling gut-certain of a Mitt Romney victory, arguing with the Fox News data analysts on live television, as they called the 2012 election for Obama.

And then there was Charles Barkley, driving a news cycle last February by trading barbs with Houston Rockets General Manager Daryl Morey. Or, “one of those idiots who believes in analytics,” as Barkley put it during a CBS Sports broadcast.

“You know I’ve always believed analytics was crap, and you know I’ve never mentioned the Rockets as a legitimate contender because they’re not,” Barkley ranted. “Everybody pays attention to stats. They just changed the name to analytics so they can charge you more.”

Some companies think generating reports or consulting dashboards makes them data driven, but those activities are typically backward looking; analyses that consider who, what, when, why and where are looking forward.

Barkley is, by numerous accounts, a ravenous student of the game, always watching, always analyzing and certainly capable of identifying details that are lost to the average viewer. He has what some would call a golden gut for the game; which, if analytical algorithms are successful, is a commodity. To Anderson’s point, analytics isn’t a successful strategy in itself, but requires a culture, and leaders, that can act on it.

And ultimately, the Rockets did make it to the Western Conference Finals, but they lost to the Warriors, who beat the Cleveland Cavaliers to win the NBA Finals.

Barkley’s objection to analytics may be tangled in the idea that they’re a repackaging of statistics, when in fact, statistics are raw data, while analytics are the conversion of raw data into intelligence.

It was analytics, not statistics, that determined the direct correlation between 3-pointers and a team’s success. The shot was introduced to professional basketball in 1967, as a way to wow fans and fill more seats, and since then has been dismissed by many as a gimmick, a playground shot or a risky last resort at the buzzer.

Analytics isn’t a successful strategy in itself, but requires a culture, and leaders, that can act on it.

Still, intelligent coaching has come to accept the motto: “Live by the 3 or die.”

“We all know if you don’t shoot the 3, you’re probably not going to win,” San Antonio Spurs Coach Gregg Popovich told ESPN in December. His Spurs won the 2014 NBA Finals, while setting a record for 3-point shots.

“Everybody in the league shoots the 3-point shot well and knows the importance,” Popovich added. “I still hate it.”

During the 2015 season, the last five remaining teams also happened to be the five teams that sank the most 3-pointers: the Rockets, the Warriors, the Clippers, the Cavaliers and the Hawks (the team the Cavaliers beat to go on to play the Warriors).

In business, the validity of analytics is likewise no longer up for debate. There’s no option to not pursue an analytics-proven tactic because you personally don’t like it, or to be a boss who does “whatever he or she wants to do,” as Anderson wrote. To be data-driven is to have a company culture that’s in constant pursuit of excellence and success, in ways that are based on leadership’s ability to translate analytical intelligence into strategy.

Consider that in 2009, Google took a new approach to Human Resources, a department historically slim on data, by creating a People Analytics team and a dedicated study to definitively determine whether managers are necessary. The team not only answered the question — indeed, managers are necessary, and the greater the manager, the greater his or her value to the organization — but then went on to definitively determine exactly what makes a manager “great.”

To be data-driven is to have a company culture that’s in constant pursuit of excellence and success, in ways that are based on leadership’s ability to translate analytical intelligence into strategy.

When in 2013 Google’s stock price broke $800, making it the third-most-valuable company in the world, Silicon Valley thought leader John Sullivan attributed Google’s success to “extraordinary people management practices that result from its use of ‘people analytics.’”

Being data driven is a mindset that’s no more optional than engaging customers online and on their devices. The way analytics inherently changed baseball (and then basketball and soccer), and the Bloomberg Terminal became the new core of the financial industry, data that’s mined for intelligence and made readily accessible to business professionals will transform processes and the fundamental ways that people work. Once the shift occurs, there’s no alternative.

When Los Angeles Lakers Coach Byron Scott faced a bench of injured shooters in 2014, he famously designed a strategy that didn’t rely on 3-point shooting, while acknowledging that a lot of teams put a premium on the shot. “I don’t believe it wins championships,” Scott said.

That season, the Lakers finished last in their division, setting a record for a franchise-worst performance.

When human-driven decisions compete against data-derived intelligence, it’s just no contest. •

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