We are hearing more and more talk about data. We constantly hear about the need for companies to rely on data and its growing importance. But what does it actually mean to be a data-driven company?
In simple terms, being data driven means relying on data and smart analytics to make important business decisions. So, your next question might be what kind of data are we talking about? Who gets to use the data and make decisions? Which decisions are made with data?
Let us use this opportunity to help clear some things up and highlight the top three reasons why your company should be data driven:
1. Helps you stay aware of what works and what doesn’t work.
In a data-driven company, business leaders are consistently informed. They know if their customers are satisfied with the product or not and if the sales are going up or dwindling down. In other words, important stakeholders of a company are informed of the feasibility of the product they are building and the services they are offering. Knowing the feasibility of a product or service helps a company strategize its way to success by tracking what works and doesn’t work.
In a data-driven culture, everyone in the company is empowered to innovate and work on new ideas, especially when working on the product or service. Based on data results, they can either build a new product or modify existing products and services to effectively cater to their target audience. In the long run, using data helps companies ideate and launch a product/service that works.
2. Helps you track and improve your team’s performance.
One of the most significant merits of being a data-driven company is using proven metrics. It helps you implement efficient management practices as it enables you to accurately track the performance of each employee.
Extracting insights from performance data also has far-reaching advantages. When tracking this data over time, a company can successfully pinpoint if an employee is working to his or her full potential or not.
Company assets like fleets of cars, trucks and material handling equipment are also good examples of what can be tracked to determine how many assets are needed, how they are performing and how long before they need to be replaced or retired.
All of this this newly discovered data helps a company in formulating workable policies that could be implemented at an organizational level and at a case-by-case level, which enhances the scope for improvement.
It has been well documented is that, when people reach optimal levels of their productivity, they unanimously help an overall profitable business model. Therefore, the power of data is a force that cannot be undermined. Its consequences are far reaching, and its use has endless advantages for any company. This is why successful companies are shifting their approach to facts and figures that are backed by data.
3. Helps increase profitability.
By leveraging industry insights and collating market research, data helps you pinpoint what makes your competitors profitable.
Knowing what makes your company profitable in turn helps you identify the gaps in your business model, which helps you work towards improving it. Without knowing the flaws in your business approach, you can never come to a point where you can fix it. And without fixing the shortcomings in your business approach, such as not fulfilling the needs of your customer, you may find it difficult to maximize your profits.
Making your company data-driven accomplishes the following: 1. helps you stay aware of what works and what doesn’t work; 2. helps you track and improve your team’s performance; and 3. helps increase profitability. This shift does not happen overnight. Building a data culture is a process. However, as these efforts unfold over time, the investment far outweighs doing nothing and watching your competition succeed.
Paul Bredemeier is vice president of consulting services at Trabon Solutions. Paul’s experience as a successful business executive and leader of transforming companies provides a unique perspective to how he helps companies grow and create competitive advantages by leveraging technology solutions to solve complex problems.