How to become a data-driven person in 6 steps
Using data to inform your decision making process has been proven to yield more effective results.
Why is it important to be data driven?
In today’s world, data is king. There is so much out there that it far exceeds man’s capacity for manual analysis — in some cases it has even breached the capacity of traditional databases. All this information has presented opportunities for companies to leverage this knowledge for a competitive advantage.
This shift in the landscape has brought into focus the risks associated with decisions made based on intuition or gut instincts — especially in high stakes environments. The facility to quantify results helps you to be more certain which decisions were right or wrong, and can help inform your hypotheses.
Indeed, in pursuit of decision confidence, companies from all industries have begun adjusting their workflow, and some have begun considering 3 new pillars of working, data proficiency, analytics agility and community. The understanding of data has been outlined as having particular importance in the E-commerce sector, where understanding their audience solely through digital interaction is the gateway to a superior customer experience and allows business executives to make more tactically astute decisions.
The importance of using data to reinforce your decision making cannot be undersold, as it helps confirm or challenge otherwise unchallenged beliefs. The success of data validation has been seen to improve the ease of reaching appropriate conclusions, and hence better decisions. Furthermore, decision making efficiency is also improved when using data as the backbone.
A data driven approach has facilitated;
- Knowledge generation
- Discovery of business opportunities
- Identification of pain points
- Future trend prediction
- Resource optimisation
- Creation of new business strategies
- Revenue generation
6 things you can do to be data-driven
With the development of digitalisation and big data, businesses have access to a wide range of information at their fingertips, anywhere, any time with any device. Thus, it is now possible to make informed decisions based on data to support the growth of your company.
Developing data literacy skills is essential if you want to be able to make smart, data-driven decisions. Here are six actionable tips you can implement now that can help you make data-driven decisions.
- Know the difference between intuition and data-driven decisions
It’s easier to make intuitive, emotion based decisions compared to informed decisions. We’re used to relying on our instincts to make decisions in our everyday life. Those decisions are quicker but are not based on logical reasoning and create situations defined by prejudice.
Integrating data in your decision making process eliminates risks of prejudice, individual instinct and impulsive behaviour that can do more harm than good. Making decisions backed by data is safer, more efficient and leads to better results. As we saw earlier, companies that use data in their decision making process are more productive and get better results.
Data visualisation helps people kick off their data literacy journey faster since anyone — expert or not — can analyse and process the information given by a graph. Having each team member across departments able to interpret data, and reach conclusions based on their insights, can help your business become more data driven.
2. Define your SMART Goals
“Data-driven decision-making (DDDM) is defined as using facts, metrics, and data to guide strategic business decisions that align with your goals, objectives, and initiatives.” — Tableau
Since your data-driven decisions are based on your business goals, the latter needs to be clear and straight to the point. To work with data, it is required to precisely know what goals you want to achieve, what business strategies are supported by the data available, and how to prioritise your business needs to better satisfy them. Your SMART goals need to be supported by relevant KPIs. For each decision, think about which KPI will be impacted to achieve your goal.
3. Optimisation of Data Collection
To make the right decision, collecting suitable data is an essential step. Making sure that the data collected respects quality standards and is secured in the cloud are good practices.
For a better optimisation of data collection, it is recommended to use appropriate and integrated tools such as ETLs (extract-transform-load tools). To help you analyse and manage relevant data, consider using clean and organised dashboards that allow you to monitor and track relevant KPIs and make faster decisions.
4. Data prioritisation and questioning
With your clear SMART goals set up, you should reflect on the problem by asking the right questions.
What do you want to achieve? What data should you focus on to get that information? What insight is given by these data ? What KPI will be impacted? What is the most impactful solution?
This will make it easier to focus on the right set of data which will increase the speed of the data analysis and the decision making processes. It will help you save time and money. In fact, if the analysis is based on questions that need to be solved, finding the appropriate solution and analysing specific data will be easier and less time consuming compared a broad approach trying to extract information from less relevant data.
To avoid information overload — which leads to confusion and increase risk, you should prioritise data and focus on what has the most impact and thus can help you to reach your goal faster.
5. Data Analysis process
To better analyse data, you need to set up your dashboards and use a data analysis program such as excel or Power Bi. Consider analysing internal as well as external data to build a relevant situational analysis — frameworks such as a SWOT or a PESTEL can be helpful for this.
Data analysis tools will allow you to transform information into an insight which you can use to support your decisions.
6. Check up and continuous improvement
Inspecting and adjusting the analysis, reports and results of your actions is essential. The market condition is unpredictable and can change frequently as seen with COVID-19 or the impact of the ongoing war on inflation. Inspect all the steps of your decision making process and your action plan every week or month— depending on your business to evaluate what works and what should be improved. With this test and learn approach, you can spot mistakes in your analysis approach, and reduce risks of failure.
- Define the DOs and DON’Ts
- Check the evolution of the data
- Confirm or change the metrics you have selected
- Repeat and adapt tactics that best perform
Don’t forget, it is normal to change or adapt your strategy based on the results you are getting. The aim is to achieve your business goal by making data-driven decisions within the given timeline.
Impact on your job
The implementation of these 6 points can help clear a path for you to become truly data-literate and make decisions that are not based on some gut instinct, but backed up by real data. This reliance on real world data will help you provide solutions for what customers really want, rather than speculating, and allow you to foresee that a change in strategy may be required to stay competitive. You might even spot a gap in the market where you get an edge on your competitor.
Bringing these actions into your every-day approach can thus help your career as you climb the corporate ladder — demonstrating you can pick the important information from the not-important, and make impactful change because of it.
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About this article
This article has been written by a student on the Grenoble Ecole de Management’s Advanced Masters in Digital Strategy Management. As part of a content creation assignment, students are given the task of writing articles based on their digital interests and disseminate the articles online. Articles are marked but we make minimal changes to the content. Thanks for reading! James Barisic, Programme Director, MS DSM.
