Data is everywhere. Big data, small data, external data, observational data, experimental data...the different types of data we’re exposed to in business is growing at an unprecedented rate.
The ideas behind big data and data-driven decision making aren’t new. They have been around for some time now. What’s becoming more commonplace is how businesses are using this data.
Companies are using data to make better decisions. Whether it’s product and feature development, marketing, advertising or hiring – being lead by data is helping companies become more profitable and productive. In fact, according to research carried out in the Harvard Business Review, companies who have embraced data-driven decision making are, on average, 5% more productive and 6% more profitable than their competitors.
When it comes to decision making the most important thing we need to learn is the simplest; no matter who we are or what we do, we’re all going to make a bad decision. And the first thing we need to do to make better decisions is accept the fact we’re going to make bad ones.
Don’t be stifled by the fear of making a bad decision, as Theodore Roosevelt said making the wrong decision is better than making no decision at all. Accept it happens, learn from it, then move on because if life can guarantee anything it’s that there’ll soon be another choice to make.
However, when we use data and evidence to make decisions, we’re greatly reducing the risk of making a poor decision, providing we’re using the right data.
Optimising your business
Take a retail store as an example. Each store knows when their busiest times of year are and when then will see more customers coming through their doors. Because this information is based on historical data, they’re going to have more staff working and they are going to make more sales.
Where stores can take this to the next level is by using technology and software to collect real-time, relevant data. If the store is using integrated software solutions they will know how many staff they have on the shop floor at any given point, how many customers are in the store and how many sales they are making.
They can then identify trends of when their optimal selling times are. They can also identify what the optimal ratio is between staff and customers. In essence, they can optimise their store so it hits peak performance. So by measuring, analysing and then implementing, businesses can optimise their performance.
Knowing what data to use
Not all data is equal. While data can help us make better decisions it’s important to find the right data to base the decisions on.
Many businesses fall into the trap of using vanity metrics, such as social media likes or video views. If these numbers are going up then that’s great, but can they be used to prove a difference on the bottom-line? For the key decision makers, the secret is to always have the organisation’s main objective first and foremost in their minds when making a decision.
Furthermore, it’s important for leaders and managers to understand that many types of decisions, particularly those where there is little data available, still need to be made be drawing on knowledge, experience and instinct.
Data-driven decision making comes down to the most effective analysis of information presented to us and then choosing how we act on that information. We can use data to be more informed, we can then analyse that data to make the decisions we know are going to deliver the maximum benefits to our business.
This is what systems like workforce management software do. They process large amounts of data to enable business leaders and managers to make better decisions – whether that’s in terms of scheduling, budgeting or forecasting. It helps significantly reduce the margin for error meaning informed decisions can be made quickly, effectively and efficiently.