“Data-driven strategy” is certainly a buzzword in business today, but like many hot-button phrases, its meaning has been watered down with use. Being “data-driven,” like being “aligned” or “disruptive,” feels important but abstract — what does it actually mean, how is it achieved, and what do the results look like?
That said, data-driven strategies have proven to yield real results. Companies that have successfully adopted data-driven strategies are 5% more productive and 6% more profitable than their competitors. What’s more, companies that base marketing and sales decisions in data enjoy 15 to 20% higher ROI than those that do not.
Grounding decisions in data — rather than reactionary instinct or anecdotal evidence — pays dividends, and companies are increasingly capitalizing on this insight. Still, a minority of companies are actually satisfied with their efforts to become data-driven. If your company falls in the majority that aren’t, here’s why you should turn your attention to becoming data-driven in 2020.
What does it really mean to be data-driven?
At its most basic level, “data-driven” implies basing strategic decisions in data analysis and interpretation. More practically, companies with successful data-driven strategies have a culture that encourages — and even expects — data to inform assertions, decisions, and predictions.
However, plenty of companies that claim to be data-driven are, in fact, falling into a few common traps. For example, many organizations mistakenly believe that data-centered tools and teams equates to a data-driven strategy. While a data lake and a business intelligence team are vital components of a data-driven organization, they are far from comprehensive measures.
The problem is a common one. According to one report, while 81% of organizations believe data should be at the heart of everything they do, a vast majority still keep data in silos. If an organization’s decision-making process does not begin and end with data, or if only certain teams are using data to measure progress and drive results, the organization cannot be deemed truly data-driven.
How can you become data-driven?
Before a company can become genuinely data-driven, it is tasked with setting clear requirements, which necessitates a comprehensive assessment of how data will fit into and improve the organization’s existing processes and company culture. Consider the role data will play in the decision making process, how technology will fit into the equation, how reporting and communication within and between departments will need to change. The answers to these questions and any others that arise will form the basis of the organization’s data-driven strategy.
With a strategy sketched out, it’s time to turn to the data. Most organizations do not suffer from a lack of data. In fact, many organizations fall victim to the misconception that amassing as much data as possible will fortify their business. However, the result is often a system of disorganized, poorly managed data — and a slew of compliance landmines. An initial data audit and clean-up will position the organization up for continued success down the line.
With the groundwork established, organizations are faced with arguably the most difficult component of building a data-driven strategy: encouraging organization-wide buy-in. Sustainable investment in new initiatives starts from the top: when the C-suite sets the tone by providing visibility into the ways in which they are abiding by new processes and leveraging new tools, the rest of the organization follows suit. Further, intentionally selecting technology that will support a data-driven culture, onboarding new talent in alignment with new processes and systems, and investing in robust training programs for current employees can set an organization up for success. However, decision-makers should remain flexible and respond to roadblocks as they appear.
Choosing a data analytics partner
Developing an effective data-driven strategy — and reaping the rewards — requires carefully incorporating best practices with the company’s existing needs, culture, capabilities, and objectives. Any organization seeking to not only remain financially viable in highly disrupted markets, but to gain a sustainable competitive advantage would do well to consider partnering with a team that can deftly navigate critical factors.
Locally-based SEI consultants embed themselves in the unique culture and processes of every client, getting to know the business intimately. By doing so, we are able to architect custom-build data analytics solutions that are designed to propel clients’ unique business objectives — and deploy them via proven agile frameworks that synchronize with existing infrastructures.
