DATA-DRIVEN TOP MANAGEMENT

Data-driven systems are crucial for businesses today. However, transforming the analysis and decision-making processes of management into a data-driven approach carries a significant risk of failure. This is primarily due to two reasons: first, business owners or senior managers often struggle to abandon harmful decision-making habits; second, the focus on investment tends to shift to acquiring the latest technologies rather than achieving meaningful outcomes.

Despite the risks associated with data-driven digital transformation projects, success is achievable with proper process management. Therefore, businesses must understand the benefits of implementing a data-driven system and recognize its necessity.

To start, we should clarify what Data-Driven Systems are. A Data-Driven System is a collection of analytical systems that stores data from various business processes and converts it into meaningful information needed for decision-making (often using third-party data sources).

As illustrated in its definition, a Data-Driven System encompasses one or multiple systems. These systems do not make decisions for users; instead, they provide the tools necessary to compare and analyze different scenarios during the decision-making process.

Data-driven systems can be seamlessly integrated into all business processes and serve as a foundation for effective Company Management. To adopt this system, a business must be prepared and willing to make decisions based on thorough analysis, and it should have a strong understanding of its broader "environment."

Before the Industrial Revolution, a business owner only needed to comprehend the needs of their immediate surroundings, which typically covered a radius of a few hundred kilometers. For example, if there was a demand for shoes in that region and the manufacturer could produce them, success was within reach, without the pressures of new models or pricing strategies.

However, post-industrial revolution, the concept of "environment" expanded significantly, extending from a few hundred kilometers to several thousand kilometers due to advancements in transportation. It became essential to understand the demands not just of your town, but also of neighboring areas, recognizing the risk of competitors in those regions producing more innovative, better, or cheaper shoes.

Over time, this environment expanded from town to city, from city to country, and now encompasses the entire globe. While a shoe manufacturer might have produced just one model before the Industrial Revolution, contemporary manufacturers need to design various shoe models for different seasons, conduct extensive research, source materials for production, and potentially create new markets to stay competitive.

In the past, a shoe manufacturer was expected to possess comprehensive knowledge of their trade and manage it with a ledger. Today, however, change occurs rapidly, and businesses must be globally aware and agile in response to market fluctuations.

In the Internet age, businesses occasionally have more information about their operations than the leading companies in their sectors. Thanks to social media and news outlets, they can quickly learn about market activities, mergers, new product launches, and investments by major industry players.

By integrating this extensive network of data with their own, businesses can enhance their analytical processes and decision-making capabilities.

To survive in the rapidly evolving global landscape, relying solely on internal data is insufficient for long-term success. Companies must compare their data to that of close competitors and the wider industry, simulate different scenarios, and retain the results of decisions made through these analyses in their corporate memory.

Data-driven systems will equip businesses with these opportunities. If you have yet to begin this transformation, now is the time to initiate a data-driven change process in your organization to thrive in a world where the ability to convert data into actionable information is a significant advantage.