Analytics, big data, small data, internal, external, business intelligence… There is data around us everywhere. This data is used by businesses to find answers to key questions such as “How to improve customer experience?; “How to use data to help your business grow faster?”. The insights provided by data can be converted it into decisions and actions that can create a significant impact, whether it’s multinationals or small enterprises.
This makes it clear that data is essential to remain competitive in today’s ever-evolving market. But, is having all the data enough? Businesses often believe they have a data-driven culture; thanks to the multiple dashboards or reports used throughout their organisation. However, it is not enough. Keep reading to understand what is data-driven decision making, its benefits and tips to create a data-driven culture.
What is data-driven decision making?
Data is not just about facts and figures. According to a source, Data Driven Decision Management (DDDM) is described as an approach to business governance that values decisions, which can be supported by data that is verifiable. The success of decisions depends on the data gathered and the way it is analysed and interpreted.
Why your business needs data-driven decision making?
Professors Andrew McAfee and Erik Brynjolfsson from the MIT Sloan School of Management surveyed a few companies with the MIT Centre for Digital Business. Based on the findings of the survey, they found that companies that were mostly data-driven had 4% higher productivity, and 6% higher profits.
This proves that making decisions for your business that are data-driven can either make or break your business. Companies that use this approach are more likely to treat the gathered data as a real asset. This helps them identify opportunities and future trends; which eventually proves to be useful for generating more revenue.
Top 5 Benefits of data-driven decision making
- Measure the rate of success of multi-channel marketing campaigns
- Integrate and create synergies across all the channels used by businesses
- Deliver effective solutions to customers on real-time and historical data
- Create a sustainable and competitive advantage in the market
- Become more agile and better to respond and innovate
These are a few points that explain the ‘what’ and ‘why’ of data-driven decisions. Continue reading to understand how to create an effective process for making data-driven decisions.
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Six Steps to data-driven decision making
To make sure you make the most of the available data, you should consider the steps given below:
1. Create a strategy
With such an enormous amount of data available, it can get confusing to narrow down the data that is important for your business. Hence, you should start making a strategy that can help you identify data that will make a difference. Before starting, make sure you understand what the ultimate goal of your business is.
2. Identify important business areas
There could be multiple areas of your business that you want to improve. But, which one of these are the important ones for you? You need to identify these areas to achieve your overall strategy.
3. Identify the issues you want to address
Now that you have identified the most important business areas, it is time to figure out which questions you need to answer to reach your ultimate goal. By understanding what you really want will help target data that you really require.
4. Target your data
To find answers to your questions, the next step is to identify what data you need. Remember, there is no such data that is more valuable than the other. You need to focus on what is ideal for your business.
5. Analyse and collect data
You are most likely to have the internal data that can help you in the data-driven decision-making process. But, is that all you need to accomplish your ultimate goal? If not, you need to identify different ways of collecting it.
6. Convert insights into actions
Once you have all the necessary data you require, the final step is to present it. This will help you determine how much value you can expect from it. Next, you need to apply these insights while making decisions and take a step closer to transform your business for the better.
Making data-driven decisions for your organisation won’t just happen overnight. Hence, you need to create and follow a proper framework so that everyone understands the value of data and how to use it optimally. For more such blogs, and updates, keep reading iTMunch.