A data-driven business analyses and interprets data when making strategic decisions. It’s the opposite of following your gut.
However, you could ask — why be data-driven if your gut instinct is pretty good? Many prominent business figures have publicly stated they made millions by following their “spider senses”. And, while this may be true, we’d argue that behind every gut player, there is a data-driven person or team course-correcting everything that instinct gets wrong.
Our data-driven world
Let’s start by discussing data, and the critical role it plays in business operations; it’s the foundation of every organisation, empowering data-driven decisions and providing justification for those decisions. Additionally, data helps organisations to establish benchmarks that can be universally agreed upon and measured against.
The amount of data globally is growing. By 2025, global creation will grow to more than 180 zettabytes, and individual companies are also seeing data volumes increase by 63% per month.
So, if data is suitable for decision-making, and there’s more of it, then we should all be great at business, right?
Unfortunately this isn’t always the case. Despite having plenty of data, many businesses aren’t doing as well as expected at leveraging that data to drive commercial insights. In fact, the average company analyses just 37-40% of its data and hence a tonne of information that could support decision-making processes is slipping under the radar. It is therefore crucial for businesses to enhance their utilisation of data by fostering a data-centric culture, where data and analytics are central to the organisation, and employees are empowered to effectively leverage data to enhance business outcomes.
How do you build a data-driven culture?
Becoming data-driven isn’t like flicking a switch. It takes more than simply purchasing new technologies or setting up a business intelligence dashboard. The truth is that becoming data-driven relies as much on cultural change as any single piece of technology.
For businesses to be data-centric, they need employee buy-in, and data needs to be embedded in all parts of the organisation. It requires investment in tools, technology and training, with clearly defined processes and governance. Ultimately, it requires a data literate workforce, where employees from across the organisation are empowered to utilise data and truly understand the value of data.
As we tell all our clients, a data-driven culture starts at the top—in the boardroom. The senior team needs to start using data in its decision-making process, becoming a role model for the rest of the company. In due course, senior managers and employees will catch on and realise they have to back up ideas with data in order to have serious conversations.
The change process won’t happen overnight, but it will happen if the C-suite is engaged.
What a data-driven culture looks like
So, you want to become a data-driven company. What should you be aiming for? To give you an idea, we’ll highlight some gold-standard data-driven companies.
Amazon
The first – and this won’t come as a great surprise – is Amazon.
Amazon has become data-driven by democratising data across the business to support better decisions faster. In a letter to shareholders, company founder Jeff Bezos laid it out thus:
“The senior team at Amazon is determined to keep our decision-making velocity high. Speed matters in business – plus a high-velocity decision-making environment is more fun, too. Most decisions should probably be made with around 70% of the information you wish you had. If you wait for 90%, you’re probably being slow in most cases.”
This summarises how it’s ok if you don’t have access to all data. You just need to ensure you’re best leveraging the data you do have access to, and be willing to course correct as more data comes in.
Data drives Amazon from beginning to end. It optimises supply chain and inventory management, pricing strategies, marketing, and advertising. The company uses it for continuous improvement, analysing customer feedback, reviews, and browsing behaviour.
Nike
Another couple of great data-driven companies are Nike.
Nike has long used analytics to understand customers and drive decisions in digital marketing. Product recommendations are the result of data on user activity, and product design strategies are based on data around user behaviours and preferences; leading to product development that will meet audience expectations.
Coca-Cola
Coca-Cola intentionally focuses on strategic, data-driven experimentation and agility. If it didn’t, how would it have the boldness to launch some of its products—which, let’s face it, are quite a departure from Coca-Cola Classic? Here, we’re thinking about Flashlyte, an advanced hydration drink for the Mexico market, and Smartwater Alkaline for North America.
When you look at the diversity of Coca-Cola beverages nowadays and how well the company is doing, it’s clear that it is analysing a lot of data.
The benefits of adopting a data-driven culture
Thus far, we’ve delved in to what it really means to be a data-driven culture, some gold-standard industry examples, and why data is such an important asset to businesses.
Let’s now explore some of they key benefits of adopting a data-driven culture:
- Make better-informed decisions – Being data-driven ensures decisions are based on facts rather than assumptions, eliminating human biases.
- Improve productivity – Data-driven companies give employees across the organisation quick access to accurate data to formulate strategies quickly.
- Optimise campaign performance – Having the ability to analyse data on customer behaviour and preferences helps companies improve the impact of campaigns.
- Drive internal efficiencies – Obtaining objective proof of where a problem lies can often be a battle. Data makes that more accessible, and data-driven companies can quickly identify their operational inefficiencies to act.
- Enhance internal accountability – With data-driven decision-making, companies can track how decisions are made. This improves transparency and accountability, leading to fewer internal conflicts and greater trust.
- Strive for consistency – Humans find it hard to achieve consistency because we’re only human on good and bad days. Data can provide the consistency, accuracy and objectivity we often need.
10 steps to building a data-driven culture
So here are our 10 steps to creating a data-driven culture to ensure your business is one of the winners.
1. Investment
Deploy the infrastructure to gather and process data from across the business. Implement the systems to analyse the data and provide tailored insights to different teams across the organisation.
2. Buy in from the top
Ensure the leadership team makes decisions based on data, setting expectations across the company that facts back choices and can be explained later on by looking at the figures.
3. Start from the hiring process
Develop a team of data experts, including data analysts and, depending on the amount of data you have, data scientists. Data scientists can build and deploy data models while analysts maintain your data infrastructure and provide data reports to the company.
4. Integrate data across departments
Make sure data isn’t stuck inside specific departments, creating siloes. If data is integrated, a business can have a more comprehensive, holistic and data-driven view of operations for making better decisions.
5. Aim for consistency
Select canonical metrics and programming languages to ensure consistency, particularly as a data-driven culture evolves. Without these benchmarks, much time can be wasted debating over different versions of a metric.
6. Data governance
Developing policies that determine how data is gathered, stored, processed, and disposed of is critical. These policies will also control access to what kinds of data and by whom. This will ensure better quality outcomes and regulatory compliance.
7. Encourage experimentation
By allowing personnel to fail when experimenting with data, companies often reveal hidden insights that unlock greater value from their operations.
8. Don’t isolate data teams
Data-driven cultures thrive when data scientists and analysts are embedded in a business’s operations. The better the data folks know what’s going on across a company, the more likely they’ll start delivering insights that have a real impact.
9. Explain choices
Set expectations around transparency and accountability so that personnel know they may need to validate their decision-making process. This allows for feedback that, in turn, will support continuous improvement.
10. AI integration
Even in the early stages of developing a data-driven culture, it’s useful to consider how artificial intelligence (AI) can take your decision-making to a new level. AI is becoming a critical enabler for companies, supporting more informed decisions, predictive analytics, the automation of routine tasks, and much more.
Each step in developing a data-driven culture is important. They can’t be rushed or skipped. At the start of a company’s data journey, the process of becoming data-driven can seem daunting. We’ve seen instances where, due to a lack of experience, time-to-value has taken much longer than originally expected.
Helping reduce time-to-value
It’s important to remember that a strong data-driven culture is proactive, not reactive, and it doesn’t happen overnight. At Ipsos Jarmany, we can guide your data investment and support you with becoming data-driven faster, so you can achieve time-to-value sooner than expected. Our teams of consultants, which have extensive experience building data-driven cultures, are working closely with customers, helping them navigate towards data-driven decision-making and enabling them to gain a competitive advantage, innovate faster and boost productivity.
Start a conversation on becoming data-driven today by contacting us.
