An introduction to using the data you have to improve decision making
A strong data strategy can help businesses stay one step ahead of competitors, helping tap into niche markets and predict trends.
An estimated 57 per cent of organisations within the tech sector use data to make better decisions about strategies. It’s also used to drive cost efficiencies (60 per cent) and monitor and analyse how products and services are used (51 per cent).
Data can play an important role in financial decision making too, enabling leaders to build more accurate forecasts based on real-time information.
As Harvard Business Review points out, the availability of data means that leaders are no longer left to rely on instinct or past behaviour to make decisions. However, learning to factor data into decisions can take time and leaders may need to make a conscious effort to develop an analytical mindset.
This guide will outline some of the ways you can use data to improve decision making and common pitfalls to avoid.
What factors should you consider when using data to inform decision making?
How relevant it is to objectives
Data collection gives you access to pools of information that can be segmented in myriad ways. It allows marketing teams to personalise comms to incredibly specific segments or get into the weeds about customer buying patterns.
That being said, a key consideration needs to be what the point of that is – and what return you’ll get on it. Make sure you’re clear about what you want to achieve when using data and it’s not being shoehorned in for the sake of it.
Who will be using the data
Making data-led decisions doesn’t happen overnight. Who do you want to be using data and what kind of decisions will it inform?
Consider whether you will use data to inform top-level strategy decisions or whether you want your employees to use data on a regular basis. If you’re involving employees, you’ll need to examine how to make data accessible and arrange training for tools like Google Analytics.
The extent you use data
Data is a great way to improve decision making, but it shouldn’t be the be-all and end-all. Leaders often fall into the trap of relying too heavily on data until it becomes difficult to make decisions without it.
Use data as a factor in your decisions but avoid making it your singular influence. Research, colleague advice and even gut feel are still crucial factors.
How successful decisions are
While data gives you a more robust understanding of a certain area, it isn’t a guarantee of success. It’s still important to reflect on whether decisions you’ve made are the right ones. If you’re using data as part of a campaign, do your usual due diligence and monitor how well it went.
“We have some incredible data and knowledge of what people want. I’m a massive IT nerd. Through technology, we’ve been able to gain a really deep understanding of what people like and don’t like, but I’m still learning every day. To really understand what people want, you need to keep probing away.”
Larkin Cen, director of WokyKo
The cold hard facts
Microsoft famously used internal data to cut down on hours wasted in meetings. The team had hypothesized that moving the workforce from five buildings to four would cut down on time spent in meetings. Looking at metadata attached to employee calendars revealed the move resulted in a combined 100 hours saved per week.
Common mistakes with using data in decision making
Confirmation bias is the tendency to look for and interpret information in a way that confirms your own beliefs.
Everyone is susceptible to confirmation bias, so it’s important to be cognizant of it when you’re using data to make decisions. Make sure you aren’t actively seeking out data that backs up the path you want to take and ignoring the data that contradicts it.
Neglecting necessary adjustments
One of the most common mistakes with using data to inform decisions is throwing money into things that seem like they should work – without checking that they actually do.
If you’re running a campaign that data predicts should be successful, you need to bear in mind that it may still need some changes along the way.
Just as data informed your initial decisions, data should be helping you adapt and adjust as things unfold. Test different platforms and methods, monitor results and update your approach based on real-time feedback on your own findings.
Creating bottlenecks with data analysis
If only one person in your workforce can access and analyse data, it’s likely to create bottlenecks that will slow down decision making. Businesses can be left in a difficult position if that person decides to leave, too.
To drive data-led decision making across your organisation, make sure everyone has access to it and understands how to read data, use it and keep it safe.
“The issue is often in finding an effective way to use the data in order to grow your business. One way of doing this is by using application programming interfaces (APIs) that will automatically gather the data you need from a source that you’ve chosen. This not only automates the data-collection process, but you can also tell the API to export the data it has gathered to another piece of software or document.”
Richard Strachan, MD at 3 SIDED CUBE
The cold hard facts
Quick wins for using data to make decisions
Check your tools use accessible language
Review the tools you have that output data and check they use simple, accessible language that your employees can understand.
If you want your employees to start using data on a daily basis, you need to make sure they aren’t stumped the second they try to access it.
There are a huge number of tools on the market, so don’t feel like you have to stay tied to legacy systems that aren’t accessible. Analytics tools are only valuable if they can be interpreted and used in a meaningful way, so it’s better to invest in something new than stick with something that’s overly complex.
Establish processes early on
A quick win when it comes to creating data-driven strategies is to establish practices early on.
Set the standard and expectation of how this data will shape your decision making by hosting a meeting that informs all relevant staff of the processes you’re putting in place. Decide how you will use data to make decisions and how you’ll be monitoring the success of your efforts.
It always helps to lead by example when you’re introducing a new process, so give examples of how you’ve used data to inform your own decisions. What data did you use and what was the impact?
Set aside a training budget
It doesn’t matter how much you talk about data – if your staff aren’t comfortable using it themselves, it won’t become part of their routines.
Ask managers to find out how staff feel about using data in one-to-one meetings. It’s not always easy for employees to voice how they really feel – particularly if everyone else in the team is skilled in a certain area – so give them a confidential outlet to express any concerns.
Use this feedback to arrange training sessions in the business, whether it’s an online course on Google Analytics or an expert-led training event. Check in with employees while processes are still bedding in and arrange further training or mentoring if there are still barriers to use.
“With digital tools, you can keep things running smoothly, save on costs and make the business more agile – something that’s crucial to staying competitive.”
Lukasz Czech, head of operations at First Mile