Data: The hidden treasure inside your business
The best entrepreneurs rely on experience and instinct. First-hand understanding lets experts in their fields offer valuable strategies and ideas for business. However as markets, technologies and consumer preferences shift more quickly than ever, anecdotal experience is no longer sufficient. The timely analysis of data is vital for those looking to keep ahead.
Collecting and understanding relevant data can help mitigate biases in decision making — and more. From helping to manage supply chains and inventory, to offering product recommendations tailored to each customer, to evaluating employee performance, data-driven organizations take much of the guesswork out of business management.
Knowing vs learning
Data is best regarded as a core asset of modern businesses, rather than a by-product of the work they do. It’s how Facebook curates its newsfeed, and how Netflix and YouTube provide you with suggestions on what to watch next.
It’s also a big part of how advanced businesses now work behind the scenes. Productivity analysis, job applicant screening, work process optimization — these challenges are all made much easier with the benefit of programs designed to collect and evaluate key data points.
From there, predictive analytics can take data processing to the next level. By analyzing ongoing trends in demographics, in markets and in the economy as a whole, a properly calibrated computer program can filter out the signal from the noise and highlight promising new strategic directions for the company to pursue.
When reviewed with technical prowess and insight, data can reveal hidden business opportunities that might otherwise have been missed, such as Walmart’s realization that it should stock up on Strawberry Pop-Tarts each time a hurricane is on the way. Given these advantages, the absence of data analytics in management is akin to driving with blindfolds.
The main obstacles to becoming a data-driven organization are both technical and cultural. The technical challenges are straightforward: Aspiring data-driven organizations need to train personnel to operate the new system smoothly, hire employees with the right software skills, and ensure system upgrades to make the transformation possible.
On the cultural side, managers must be willing to learn from the data and adjust their conclusions accordingly, rather than being convinced that they already know everything in advance. Some managers may find that they are not comfortable letting an algorithm influence their decision-making. So data specialists need to help senior management take that journey — be it introducing pilot programs, analytics dashboards or other tactics to show results. Reinforcement of a team spirit can also lead to a healthier mindset toward data sharing across the organization.
The company’s workforce must also be brought onboard to understand and embrace the new, data-driven direction. Data about internal operations and business decisions can be collected, processed, made available within the company from top to bottom, which then can be used to guide future decisions through predictive analysis.
Setting the tone
Leadership needs to show the right direction for the business, and coordinate all efforts toward a new mode of operations. It also needs to re-orient the company’s culture around data-driven ideals, emphasizing a reliance on analytics to improve decision-making.
Of course, data alone cannot determine a plan for action. It is merely a tool to help a company get where it wants to go. Finding that larger goal will depend on the company’s identity, values, and internal talent.
The more an organization integrates data into its daily operations, the more progress it is likely to make toward those goals. On the other hand, if data is not collected and made internally accessible, people across the company will be seeing different things, and basing their decisions on hunches and instincts.
In a competitive business marketplace, such imprecision can be costly. A better alternative is to use the resources already available – the treasure trove of data from their own customers, employees, and suppliers – and let their lessons light the way forward.