What’s The Value Of Becoming A Data-Driven Business?

Vice President at Datagration overseeing the company’s business development and client solutions across North America.

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There’s a lot of talk these days about data-driven businesses. What does that mean, and why is it so important? Simply put, a data-driven business uses data to make decisions. That might sound obvious, but it’s a radical change from the way most businesses have operated.

Traditionally, business decisions are made as a gut-level reaction to what’s going on. It’s hard to blame managers for this approach — if businesses have not been using data to drive their decision-making, they likely never had enough of it to do so. That is changing fast with the rise of data science and its resulting mountain of information about customers.

A data-driven business might not be a perfect fit for every occasion, but it is much better suited to the modern business world than a business that doesn’t use data at all. It’s also a practice that can be adopted incrementally as more and more data becomes available over time. 

As a leader of a company that offers data integration and modeling solutions, I’ve seen firsthand how data helps drive better business decisions. Business isn’t about luck; it’s about making smart bets. Smart bets can be made on a hunch, of course, but data-driven businesses make the most informed guesses possible before putting their money where their mouth is. There are two primary benefits to this approach:

• It helps you outperform your competition. While they may not advertise it, many companies operate by reacting to what their competitors do. This is a fast-moving target at best, and something that’s entirely avoidable if you become a data-driven business. A data-driven business predicts what will happen before it does and gets a head start on the competition. By understanding what customers want and need, a business can proactively provide it before anyone else even knows it exists.

• It improves customer retention. Happy customers are more likely to stick around, and data-driven businesses know how to make their customers happy. They do this by understanding what makes customers tick and using that information to give them what they want. Data also helps identify unhappy customers before they leave so that businesses can take steps to remedy the situation before it’s too late. Data-driven decisions are based on evidence, not guesswork, so businesses can be more confident in their choices. This leads to better products and services, which, in turn, attracts more customers.

It may seem like a daunting task for organizations to become more data-driven, but with proper focus, planning and leadership, things eventually fall into place. Specifically, business leaders interested in transitioning their organization into a data-driven business can begin by taking the following steps: 

Identify your business needs.

Clearly identify the business value in undertaking such an endeavor. For example, improving operational productivity via data standardization. There should be clarity on how this aligns with your organization’s broader outlook. In addition, there should be a good sense of the required, existing and missing data in order to achieve this.

Establish effective change management strategies.

Any organizational transformation requires change, and establishing a data-driven enterprise isn’t any different. Business leaders should keep this in mind and follow appropriate steps in sensitizing and aligning their respective organizations. This includes effective communication and engagement with all the various stakeholders in your organization and ensuring other leaders are adequately trained and informed on the broader objectives to facilitate buy-in from the rest of the organization.

Envision what success looks like. 

It is also helpful to have a clear picture of what success would look like. This helps inspire and align everyone within the organization. Furthermore, to achieve the type of success that truly becomes sustainable, it helps to start small, but think big. For example, you may choose to implement planned changes first within a particular group or unit, and subsequently leverage the lessons learned to scale up and across the entire enterprise.

Prioritize integration for data connectivity. 

For any business to truly achieve the benefits of being data-driven, it isn’t sufficient to just have data available. I find that one of the most common mistakes leaders make when transitioning to a data-driven organization centers around poor system integration. Data collected from their day-to-day operations tend to reside in various locations that are siloed from one another. This lack of interconnectivity between the various systems adds a layer of inefficiency to the organization and further limits the ability to successfully scale any initiative across the entire organization.

Business leaders must ensure that the various systems, repositories and databases that are housing their data are effectively connected for efficient consumption across the entire organization. If the data connectivity isn’t established, it could lead to a drop in the overall operational efficiency and resulting performance across the entire organization.  

It’s not easy for an organization to suddenly make a switch to become more data-driven, but the benefits are worthwhile. By understanding what data is available, integrating it across your organization and using it to make informed decisions, your business can thrive in the digital age.

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