When can a company define itself as data-driven? Will it suffice to collect and analyze massive amounts of data using technology tools like Big data, AI & Machine Learning to become data-driven! Now, here it gets tricky. There is this common understanding that more data the company has, more data-driven it is. Is this true?
No, this is a misconception. With the use of new technology tools, surely there is going to be an influx of new data in the system, but what companies are overlooking is the power of existing data. In many cases, companies are not caring for the enormous potential that already lies in their existing data. And they can capitalize on this data saving time as well as cost – becoming data-driven in the truest sense.
What does it mean to be data-driven?
For most of the companies, the logic of being data-driven is ‘the more data, the more data-driven.’ Let’s put that thought to the rest. Being data-driven is not about how much data you can avail.
Being data-driven is about being selective and focusing on making the relevant data available to the employees in such a way that every employee can interpret data and make fact-based decisions that is going to have a positive impact on the business.
A company is always “driven” by something, and there is no other way around. Thus, a company needs to have an ambition, and it knows which direction it is moving to achieve its goals. This is crucial because having that knowledge can only help you to determine the value of your data. Let’s take for instance, assessing whether the right KPIs for the employees have been set or not. KPIs govern employees’ decision-making and actions, clearly guiding the company’s next steps, helping it to move towards the right direction.
You can collect an infinite amount of data about everything. But, if you do not know exactly what data should be used and where, it will not help in setting the right direction for the company. Then this data just remains an impractical overload of information.
Data must be selected and used with care
If a company takes a look at its data, then there lies an immense potential to become data-driven and make connections and dependencies visible. Unfortunately, the company’s existing data is often untapped.
For the right and constructive use of data, it requires that data be compiled and presented in a way that makes sense in relation to the company’s overall goals. And this is also reflected in set KPIs that are relevant to each employee. And when you put them together with other sources comes the knowledge of business insight, ensuring sustainable growth.
The company gains value from being data-driven only if the data is used to create insight and learning. By selecting data carefully, decisions can lead to the conscious and controlled behavior of the decision-maker. To understand this point, take the example of employees who must be able to act based on data, information, and knowledge that is presented to them in their daily work. So, it is always upon humans to continue to make the right decisions.
Therefore, I always advise companies to take a solid start by understanding their existing data, such as ERP and other valuable sources. They are the backbone of information, and if used correctly, it is a goldmine of valuable and relevant knowledge, waiting to be turned into business value. New knowledge dawns when you look across from different sources. Indeed.