Business Analytics: Becoming a Data-Driven Organization
Many companies say they want to be data-driven but don’t know where to start or don’t see it as a priority. Why does it matter to be data-driven? What does the buzzword “data-driven” actually mean in practice in a company?
To us, becoming data-driven simply means adding relevant available information to a decision.
If you’re expanding into a new market, data-driven might mean combining your existing organizational knowledge with information on market size, level of competition, fit with your target business, etc. to inform which market to enter or where to operate in that market.
If you’re making strategic decisions on the business’ operations, product, or customers, it means extracting insights and value from the data in your organization to support those decisions.
Becoming data-driven is an opportunity to insert a layer of analytics sophistication to important decisions in the business.
We support businesses that want to add data & analytics to their business and growth decisions. Below are a few tips we have for becoming more data-driven as an organization:
Start Simple & Targeted
Rome wasn’t built in a day and neither is a sophisticated analytics culture.
Start simple. Resist the temptation to immediately add analytics to everything in the business or implement the most advanced analytics in the market. It sounds good in theory but doesn’t work well in practice.
Find a specific, important-to-the-business question that you and your team are struggling with. Solving a high-value problem like this generates enthusiasm, shows the value of the work, and pushes the business forward.
A couple questions with high ambiguity, high value to the business, and high value of adding analytics that we see are:
Which geographic markets do we expand into next?
Should we take [action A] or [action B] for our business?
What can we learn from our current customers to support new customer acquisition?
Start with a real business question that matters to the business and can be solved in a reasonable amount of time.
Know What Data You Have
The first question we ask clients when discussing an analytics engagement is - Do we have the data to answer this question?
If the engagement revolves around the internal operations (revenue, customers, products, etc.), the business needs to have the data to answer the question.
If the engagement is looking at questions outside the company (market intelligence, industry trends, etc.) then we’ll ensure that we have that data available before moving forward.
Analytics only works with (good quality) data. Investing in the right technology and tools to have data available is a critical component of becoming data-driven.
Even if you don’t know what to do with it, or don’t plan to do anything with it in the short term, you will benefit from having the data.
Otherwise, you may have to wait months or years from the point you start collecting it to start generating value from the information.
Distinguish Between Interesting and Actionable
Good data analytics introduces as many questions as it answers. Learning something about the business leads to more questions. Seeing interactive data tools in action might lead you to want more.
Drowning you and your team in data or tools will make working with data more confusing than it is helpful.
Distill what you need to know down to the least number of metrics, KPIs, or other outputs that you can - especially at the beginning.
Take the time to figure out what drives success in your business - What are the 2-3 metrics that tell you if your business is doing well?
If working on a specific question about the business, how will knowing the answer change your behavior? What will you do different with the information?
If you can’t answer this, then the question you’re working on might fall into the category of interesting.
There is a place for interesting findings - they oftentimes spark new questions or identify areas for further research - but when starting the journey, ensure that each analysis ties back to a question and action.
Final Thoughts
Adding data and analytics to a business can be a cultural shift in how decisions are made. We prefer a “crawl-walk-run” approach. We start with a targeted high-impact business question, deliver results that move the business forward, and continue to expand the impact of analytics from that initial win.
Interested in making your business more data-driven? Have a question you and your team are trying to solve? Reach out to us through our website or by email at jordan@bean.consulting.