Our company is data-driven. How many times have you heard (or used) this expression? It has become almost a cliché in recent years.
Unfortunately, this is one of the many expressions that we have abused so much over the years to empty it of all meaning, as often happens with other words that are born with the best intentions.
At a time in history when we are surrounded by an unprecedented amount of data, no one wants to feel inferior to others, and so we use the label data-driven left and right, without worrying much about what it really means.
The truth is that being data-driven is by no means simple, but you can consider at least three steps when it comes to a truly data-driven approach:
- Know what data to read and collect
- Being able to interpret data
- Make decisions based on data
Let's start with a thorny issue: not all data is useful. Or at any rate, not all data is useful at all times.
The first step is to identify what data we need based on the moment we are living in, the goal we have set, the problem we are facing, and so on.
Figuring out which data to read is a complex task in itself, but defining this "filter" is vital for the next two steps.
Sometimes you have little data at your disposal and you need to start establishing an information culture that cares about generating and collecting even so much data that comes through your daily processes, but is usually overlooked. Other times you risk having the opposite problem: data paralysis, which is when we have a lot of data at our disposal. Too much.
At that point, paradoxically, we are no longer able to make decisions because we don't know which data to read, which to trust and we want more and more to make sure we make the right decision. Unfortunately, however, the right decision does not exist, ever.
It's critical to be able to adapt and choose the right metrics for each precise moment.
Start focusing your data collection now. Schedule a free initial consultation.
There's nothing worse for an entrepreneur than bending data to your will
It happens often to see entrepreneurs and professionals who actually use data, but simply use it to confirm their ideas.
This mechanism is the now famous confirmation bias, one of the most well-known and widespread cognitive biases. What does it consist of?
It is a mental process according to which once we are convinced of an idea we go in search of information that confirms our conviction. This creates a vicious circle that is self-perpetuating and reinforces the belief that we are right.
The data itself is neutral, never encapsulating a prepackaged thought, so the interpretation applied by the data reader is crucial. That's why this second step is probably the most difficult.
How do you overcome it? Obviously there is no magic formula, but there may be some tips based on our experience:
- Evaluates each piece of data in its context
- Don't rely only on quantitative data, but always flank it with qualitative data
- Involve multiple people in the data analysis process, preferably different people
- Compare any data with your track record, i.e., history
- Use industry reports and benchmarks to better read some of the data
Are you just using the data to confirm what you already know? Look for another point of view.
After understanding what data to look at and how to interpret it, you need to do the most important thing of all: make decisions. This may seem trivial, but it is not.
The whole question revolves around this last point and how much our business decisions are actually based on the data we have available.
It's not enough to just open Google Analytics or take a look at dashboards once a week to call yourself truly data-driven. Data needs to be part of your business processes and everyday life.
The difference between those who fill their mouths with a fashionable expression and those who have fully understood its importance is all here: take action.
Going back to the introduction of this post, there is no such thing as the right decision. Let's get rid of this obsession with wanting to be perfect, procrastinating endlessly, and being right at all costs.
A data-driven approach is about making a major mindset shift and moving from wanting to know the best alternative to wanting to have as many alternatives as possible on your plate, so you can continue to test and adjust decisions as you go. If you want to adopt the famous data-driven approach, Digitalics may be the right partner to start this transformation journey.
Extract all the value contained in your data mine. Learn how to make data-driven decisions. We are available with a free, no obligation initial consultation.