Gone are the days when company executives would base their decisions on intuition or refer to past decisions to make sound decisions. Objective decision making in a company depends on using credible sources of information. Data is crucial in making strategic decisions and should be every organization’s goal. Biased decision making can be costly, misleading, and can prevent growth.
Sources of Data
What exactly is data? Data can be defined as a collection of raw facts. Every company has sources of data that they rely on to make day to day decisions. This could be:
- Customer engagement on social media
- Sales and Purchase Records
- Profit and Loss Statements
But there is more to data. Big Data and analytic tools. Big Data is large complex volumes of data that are characteristic of day to day businesses but are usually underutilized. For instance, a company can obtain market data to supplement its data on sales and marketing to obtain necessary insights. This would involve the use of sophisticated data analysis tools that can identify patterns and gather the information that would be useful in making an organization’s strategic decisions. Social media platforms have analysis tools, and there are various Big Data tools in the market. By investing in real-time Big Data analysis, companies can obtain much-needed information.
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What is Data-Driven Decision Making?
Data-driven decision making involves collecting data, analyzing it, and using that information to make every day to day decisions. Data analytics involves identification of the right tools, expertise, and knowledge to analyze the data. Data analytics involves:
Data Collection – It is a systematic process of obtaining information on various variables using quantitative and qualitative methods to evaluate outcomes.
Analysis –This involves the use of various tools to interpret the data collected, identify patterns, and convert it into meaningful information.
Statistical Inferences –This involves the use of analyzed data to make generalized conclusions about a population or subject.
How To Be Data-Driven
Any company be it a startup, large or medium enterprise can be data-driven. For a company to be data-driven, it means it wants a more realistic approach to decision making. It also means it can adopt a rigorous and systematic approach to the collection and analysis of data such that data will take a significant role in decision making. There are various ways in which a company can be data-driven:
1. Investing in data analysis tools and expertise.
2. Encouraging data collection in various departments.
3. Making data readily available and encouraging data-driven ideas from various organization levels.
The Benefits of Data
The following are various ways data can be beneficial to companies:
- By using accurate data, risk is minimized, which can lead to more profits due to cost savings.
- Regular data analysis can help a company identify new business opportunities in the market.
- It means more accountability in the organization. This means more transparency as data is continuously collected.
- Management can have better control of their departments as they have to make clear goals and results must be measured.
- Since the company is more alert on market changes, this would mean better customer satisfaction.
- Helps in decision making that can facilitate business growth as it can help a company adapt quickly to market changes
Data helps companies to make informed decisions. It doesn’t mean that a business manager can do away with the “gut feeling” during decision making; it means that data will show what is working. Developing a data-driven culture can give an organization a competitive edge over their competitors. This can also help in innovation. Companies need to invest in technology models that can synthesize Big Data to gain the information necessary for strategic management decision making.