What actually makes a company 'data-driven'?

Traits of a data-driven company

It has been indicated that adopting a data-driven culture relies heavily more on a cultural shift than it is technical. The change in mindset is the first step, which should be coupled by supporting infrastructure.

• Starts from the top. Top managers should set an expectation and normalize that decisions must be anchored in data. This practice will contaminate others in the company, as employees who want to be taken seriously have to communicate with senior leaders on their terms and in their language.
• Choose metrics with care. Leaders can exert a powerful effect on behavior by artfully choosing what to measure and what metrics they expect employees to use and track.
• Quantifies uncertainty. Requiring teams to be explicit and quantitative about their levels of uncertainty has 3 effects:Forces decision makers to grapple directly with potential sources of uncertainty.Analysts gain a deeper understanding of their models when they have to rigorously evaluate uncertainty.An emphasis on understanding uncertainty pushes organizations to run experiments.
• Adopts the habit of explaining analytical choices. It’s a good idea to ask teams how they approached a problem, what alternatives they considered, what they understood the tradeoffs to be, and why they chose one approach over another.
• Fixes basic data-access issues quickly. Instead of grand-but-slow programs to reorganize all their data, top firms use grant universal access to just a few key measures at a time.

Learn more about the 10 traits of a data-driven company in the full HBR article here.

Uncovering the silos

As there is a plethora of benefits of being data-driven—like improved agility, cost savings, and even more engaged employees, there are also obstacles that a company might face in their journey of becoming mostly or fully data-driven.

1. Low-Quality DataAccording to Gartner, poor data quality costs firms on average $15 million a year. Lack of regular and ongoing data collection causes insights based on defective, partial, or erroneous data to be flawed.
2. Lack of System IntegrationSometimes, the main issue is the enormous volume of unstructured data stored on several different platforms. Standardized data gathering procedures should be put in place to maximize data value and provide a comprehensive picture.
3. Insufficient Data InterpretationFinding pertinent data points could be challenging to aid in decision-making, since traditional systems are unable to proactively analyze real-time data to get insights into business operations.
4. Cultural DynamicsIt may be fairly intimidating for unprepared companies to convert to being data-driven without the proper datasets, analytics tools, and data professionals to help your organization.

Find more common challenges a company might face when going data-driven here.

Data vs instinct

The ideal way of making strategic decisions is to combine evidence with expertise. With intuition which comes from experience, you could even make data-driven decisions way more quickly.

The main issue comes when the intuition does not match with the provided data. That could be a few cases of this dilemma that a decision-maker might face:

• “The data looks good, but I’m feeling anxious and fearful. Could my gut be sensing a potential risk that the numbers aren’t showing?”
• “The data is telling me something I didn’t think it would, and I’m feeling frustrated. Might I be resistant to let go of my original hypothesis?”
• “Now that the data is in, I’m feeling a sense of discomfort. Could there be a reason to distrust the data? Or could I be realizing that this decision is rooted in a bigger issue than I first thought?”

To make a both informed and empathetic decision, take time to analyze both the data and your own intuition. It would be beneficial also to brainstorm with other experts.

Having all the data should not make you a know-it-all, but rather encourage your curiosity further to initiate discussions and arrive at a clearer understanding.

Read more about the Data vs Intuition debate in the full piece here.

From all the characteristics above, do you feel that your company is leaning more towards data-driven, or non data-driven?

Though each industry and company has their own best practices to implement, incorporating data-driven traits will help boost productivity in ways more than one.

Be sure to let your Data-minded friends know of this week’s Monday Mavens edition, and we’ll see you again next week!