¿What does it mean to be a Data Driven company?
2023-02-25
Context
Many organizations think that, simply because they generate a lot of reports or have a lot of dashboards, they are data-driven. While those activities are part of what an organization does, they are usually backward looking. That is, they are often a statement of past or present events without much context, without a causal explanation of why something did or did not happen, and without recommendations on what to do next. In short, they state what happened but are not prescriptive. As such, they have limited upside.
On the other hand, prescriptive analytics, such as predictive models, involve answering questions related to what, who, when, where and why, making predictions, recommendations and telling a story around the findings. They are often a key factor in a data-driven organization. Those insights and recommendations, if acted upon, have great potential impact on the organization.
However, such insights require the right data to be collected, the data to be reliable, the analysis to be good, the insights to be considered in the decision and to drive concrete actions so that the potential can be realized. This process is known as the analytics value chain.
Analytics value chain
The data must generate reports, which should lead to deeper dives and analysis. Those analyses need to reach the decision maker who incorporates them into their decision making process. This step is key to being data-driven. An organization needs that data and analysis to drive a decision that changes strategy or tactics and ultimately impacts the organization in some way. Technology and training can do the first part: enabling analysts to perform analysis and write up their findings. However, it is the culture that establishes the mindset and process for taking note of those findings, relying on them and acting on them.
The challenge
In short, a data-driven organization will use data as critical evidence to help inform and influence strategy. There will be an evidence-based culture where data can be trusted and where the findings obtained will be contemplated when making decisions.
Therein lies the challenge. If your organization is making intuitive decisions, how do you make the case for more data-driven decision making? It's not easy or quick, so don't expect radical changes overnight, but everyone in an organization can contribute significantly to such an improvement.