Building a Data driven Company
“In God we Trust, all others bring data” — Edwards Deming
A significant number of businesses have very little idea on how their business is performing, talk less of identifying ways to improve it. Making data-driven decisions is one sure way to optimize the outcome of your business and transform your idea/startup into a successful business.
Data-driven decision making is far superior to other forms of making a decision. However, when founders discuss building a company, they tend to talk more about gut feeling, intuition and creativity. These all have their place in the company building process, however, the downside is, it leads founders to believe they can intuitively solve any problem they have or their gut feeling is always right.
In reality building, a company is a balance between gut feeling/creativity/intuition and the scientific method; Hypothesize — A/B test — analyze — optimize — conclude- repeat. The data-driven process will guide you towards the best solution to your customers’ pain. Data should act as the foundation for your decision-making process, not as a substitute for your own judgement.
“What you don’t track you cannot measure”.
Running a data-driven method requires having a tracking and measurement tool in place, an analytic tool that measures every single activity users are doing on a daily basis. There is a host of them out there Google Analytics, Mixpanel, Optimizely and more. You should be running experiments and gathering data on every user activity, for example, what buttons are users clicking on? what messaging converts (Always A/B test this)? How long are users engaging with each feature on the product?
For instance, if you are trying to measure a customer’s desire or willingness to pay for a new product or feature. You can simply implement an experiment with a fake button, testing customer’s behavior. Your approach should never be, this is obvious why should we measure this. Employees should also be granted access to this analytic tool so they are also able to monitor user behavior and glean useful insights. You should quickly and effectively turn the data you collect into action.
The best companies (and employees) are obsessed with using data to back up decision making and improving the value of their products. They do not believe only founders know the solutions to their problems, they are maniacally focused on building user-centric products and they believe their users can help them understand what to build if they implement analytics, listen, observe and experiment.
Agree or disagree? Send your comments here.
Inside VP
Last month, over the course of one week, the Digital Explorers program organized a hands-on training and a Hackathon to select the final participants in the first cohort of the Digital Explorers program. Watch the video here.
Portfolio Chatter
What are we reading?
The Prosperity Paradox by Clayton M. Christensen, Efosa Ojomo and Karen Dillon. See here.
See you next month,
V.
