Are you a business owner or perhaps someone who works in the corporate world? Whatever the case, it pays to stay abreast of business processes and methods, such as data-driven decision-making. Data-driven decision-making is the process of collecting data based on your company’s key performance indicators (KPIs) and transforming that data into actionable insights – this process is an important part of modern business strategy. In this article, we’ll cover what data-driven decision-making is and why it is important, so continue reading to learn more.
What is Data-Driven Decision-Making?
Data-driven decision-making (or DDDM for short) is the process of using various datasets to make informed and verified decisions to drive sustainable business growth. By using the right KPIs and tools, companies can overcome human biases and make the best managerial rulings that are aligned with their strategies and provide favourable outcomes.
At a fundamental level, using data for decision-making means aiming toward key business goals by leveraging verified, analysed information rather than relying on guesswork or shooting from the hip.
Two types of data apply across research and commerce. Qualitative analysis is a focus on data that is not defined by numbers or metrics, such as customer videos, interviews, and anecdotal data. It is based on observation rather than measurement. Most market research is qualitative data gathering. When analysing qualitative data, it’s crucial to code this data to ensure that things are grouped methodically and intelligently.
Quantitative analysis instead focuses solely on numbers and statistics. The various descriptive stats, such as median, mean, and standard deviation, are pivotal when it comes to quantitative data. This type of analysis is measured rather than observed. Both qualitative and quantitative data should be analysed to help you achieve smarter business decisions.
Why is it Important?
Using data to assist decision-making, from data gathered with market and customer research, is crucial to the growth of a business. Would you rather rely on guesswork or work towards business outcomes by leveraging analysed data? Which one sounds like the more savvy approach to you? As you can probably imagine, making key business decisions with no real foundation grounded in real facts can cause incredible harm to your public-facing and internal strategies.
For example, data-driven decision-making is vital to any data-driven marketing strategy. Customer insights can be leveraged to inform ad design, marketing messaging, omnichannel marketing, and more.
Furthermore, data-driven decision-making is crucial to continuous organisational growth and continuous improvement initiatives. Data-driven decision-making empowers corporations to focus on key insights based on their many operations, functions, and different departmental activities. The chain loop of consecutive decisions driven by data will empower your company to set actionable, achievable benchmarks that drive continual growth and progress, which is the key to longer-term success in a fickle market.
How to Make Data-Driven Decisions?
It is vitally important to have a competent, experienced team of data analysts with the requisite data analytics master’s degree who can find data sources, organise it, analyse it, and draw conclusions. The insights that these roles can provide are vital to your company’s success, as is investment in data analysis, market research, and data science.
Data-driven decision-making can be key to combating unconscious bias, the term given to the unconscious mental processes that underly the majority of human decision-making. Running decisions by a competent team of analysts who don’t share your biases is an invaluable step in data-driven decision-making.
Working closely with a team of analysts who know the data you are working with and that is relevant to your company opens the door to their helpful and insightful feedback.
Another key aspect to success from data-driven decision-making is enabling data literacy across your company. You’ll want to ensure that you perform a complete assessment of the levels of data literacy amongst decision-makers in your organisation. You’ll want to identify those who are comfortable using data to inform their decision and encourage them to motivate and encourage others to learn how to achieve this.
Finally, data-driven decision-making is an excellent way to save money and see a great return on investment (ROI). This is because your key business decisions are informed by real data that can be interpreted by your analysts, who can advise on the best decisions to make based on the available data.
Make Data-Driven Decision-Making a Priority
This informative article has covered all about data-driven decision-making. You’ve learned what this is and why your business needs it to achieve success and growth in a crowded and cutthroat market.
