Good business decisions don’t just happen. No one wakes up one day with the foresight and the knowledge of a business genius. Most of the time, a good “business sense” is developed after years of experience, hard work and a few failed strategies (Steve Jobs is the perfect example of this).
However, in today’s data-driven world, where we can measure the exposure and the effect of every occurrence in the industry, every new trend, product and service emerging on the market, we have the possibility to use that in our advantage. That process is called data-driven decision making, and it’s becoming a “must-have” tool for individuals in the decision making role.
The working premises of data-driven decisions are simple. You gather relevant and quality data, which is afterwards verified and analysed by specific software. The report of the analysis shows emerging patterns, which can help you make the best company decision regarding the subject.
Data science itself was introduced by Peter Naur in 1960 and has developed as an interdisciplinary field since then, which combines logical methods, procedures, algorithms and structures to extract knowledge and insights from data as formulas or reports. Processing information in a report form enables executives and managers to comprehend the data, even if they are laymen when it comes to technical analysis.
A lot has changed since the 1960’s because what was once a lengthy, manual and meticulous process, today is a business analytics software, which produces better and faster results. At Minerra, we work with high-quality software business tools like Yellowfin (business intelligence and analytics platform) and Ajilius (data warehouse automation platform), in combination with our business intelligence experts, which will deliver tailor-made reports and indicators for your company.
Making the right business decisions by using reports that compile large amounts of raw data can be extremely beneficial. Interpretation of data is the key factor in many cases where you need to make a quick assessment, and you’re not positive about the outcome.
The perfect example of ignoring data analysis and the consequences of that is IBM’s partial sale of its ROLM division to Siemens. The team did an internal review, assessing the aftermath of the sale, and it concluded that it would be a “catastrophe” if the deal went through. As we know, it did, and it cost IBM over one billion dollars.
Why you should be using data to make decisions
Using data to make decisions is becoming a blueprint for a safe business strategy. In a study done by MIT Sloan School of Management, it was shown that businesses that make data-driven decisions in the governance of their companies tend to have 4% higher productivity and 6% higher profits than the average. The statistics of the study prove that data-driven decision making helps your business grow, plus it’s result oriented, providing you with the possibility to be more competitive in the market.
The most basic example to understand the logic behind the process is the business practice of the Bank of America. They use a business analytics software to check cash-back offers to credit and debit cards to determine which customers should get credit, based upon analyses of their prior purchases. It’s simple and clean decision making, with little-to-no room for error.
Another great example is the Norfolk Southern, a train company that managed to save over $200 million by making trains run one mph faster, and they accomplished this by using customised software to monitor rail traffic. That is data-driven decision making in its best light, especially if your goal is to save money and enhance productivity at the same time.
Using a business analytics software to determine future trends is also a prudent technique, because if you can anticipate the needs and wishes of your clients and the behaviour of the market, you can improve your turnover. Analyzing data is the safest way to do just that.
This is what companies like Netflix are doing. In the case of Netflix, it includes analysing the data gathered from people’s viewing habits, after which they create and buy programming that will appeal to broad audiences. They attract customers by predicting their viewing needs.
You can see the benefits from an analytics platform and determining future occurrences with data analysis in the case of Google collaborating with the U.S. Centers for Disease Control. Google tracks when users are inputting search terms related to flu topics, and it helps the U.S. Centers for Disease Control to predict which regions may experience an epidemic.
The benefits of data-based decision making
In the previous section, we presented you with case studies that show how much you can accomplish with a data-based decision making approach. However, you need to pay attention to misleading statistics and the quality of the raw data you’re running through the business intelligence software.
Good data should pass the requirements set within the qualitative and quantitative variables that are matching the goals set by your company. Data management is a serious matter, and the information is only beneficial to you if the data is suitable and appropriately processed.
Another important step towards reaching your goals and making the smart decision when it comes to data-driven reports is tracking the right metrics and taking the opinions of your coworkers into consideration. When we present you with the report, you can analyse the key findings and insights, and sharing it with your team is the most prudent way to come to a Grade A conclusion.
Additionally, one more tip for data-driven decisions is to let the numbers speak for themselves. Managers tend to have biases from previous experiences, which are not always applicable to the current problem or situation they are facing.
In conclusion, data-driven decision making can be beneficial to the growth and expansion of your business. You can predict trends, save money and evaluate a situation or a problem better if you have a sufficient amount of information. Implementing the right tools can make or break a company, and you should take advantage of data and apply it in your decision-making strategy.
Contact us for more information regarding the data-driven decision making process!