The Data-Driven Approach to Improving Business Productivity

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    Whether you’re a budding startup, a solo entrepreneur, a creative agency, or a full-fledged enterprise, it’s no secret that leveraging data the right way can skyrocket your organization’s productivity.

    But how, exactly? In this article, let’s break down the what, why, and how of a data-driven approach to improving business productivity, starting with the fundamental question that is…

    What is Data-Driven Decision Making?

    Data-driven decision making, or DDDM, refers to the idea of relying solely on data to inform all business decisions, as opposed to using your gut feeling or intuition. DDDM is essentially the process of collecting valuable data, analyzing it, and using it to chart a course of action.

    That is, you consolidate historical information to figure out patterns and make future decisions based on what’s worked well in the past.

    Of course, the data-driven approach’s success depends on the quality of the data collected and the efficacy of its analysis and interpretation.

    But with the right data-driven culture incorporated in your company, it is a repeatable process that’s sure to boost your overall business productivity and bottom line.

    Importance of Data in Productivity

    While being data-driven in all your business decisions be it financial, marketing, lead generation, recruitment, or customer service, it’s wise to be aware of the operational side of business productivity.

    A study performed by MIT Sloan School of Management concluded that businesses engaged in data-driven decision-making observed a 6% boost in productivity and output.

    Although the study is nearly a decade old, it is a reliable testament to the power of being data-driven. In today’s super-competitive landscape, it holds truer than ever. Even a 5% increase in business productivity in most industries can be enough to gain a competitive advantage and stand out on top.

    As data collection, analytics, and interpretation processes continue to advance, the benefits of data-driven decision-making can be reaped by both small businesses with less than five employees to established giants across all industries.

    The smallest of small businesses generate data daily and can make data-driven business decisions based on that. For instance, data can be easily collected from your business website, social media channels, customer transactions, email interactions, and reviews.

    Businesses that make data-driven decisions by gathering and analyzing data from multiple sources not only witness an increase in productivity and operational efficiency but also improve their customer service, experience, loyalty, and word-of-mouth.

    However, often, driving an organizational level change and getting all executives on board with the data-driven decision-making approach can be tricky.

    58% of respondents to a BI survey said that their companies base at least half of their routine business decisions on gut feel or experience instead of using data and information.

    The survey also found that the “best-in-class” companies base their decisions more on data (60%). In comparison, laggard companies base around 70% of their decisions on instinct — illustrating a clear link between data-driven decision-making and having the edge over the competition.

    So why do less than 50% of companies agree that data is highly valuable for decision-making? For starters, being data-driven requires more money investment than basing decisions on gut or experience.

    Plus, people may have had unpleasant experiences with poor data analysis leading to bad decisions that were expected to be well-found. Or, they are not trusting in the data itself as they had experience with low data quality and are now cautious about the risks of insufficient quality data.

    And so, it is up to you, the manager, to convince executives and leadership to embrace the data-driven approach. This can be done by presenting data as a powerful tool, showing past examples of successful projects, and educating them about the power of data analytics.

    How to Create a Data-Driven Culture

    The amount, variety, and complexity of data being generated are all increasing. Data on its own does not automatically add business value, and so the ROI may not be clear — you need to tie data analysis with actionable insights, which can be challenging.

    Also, data may not be organized correctly in the right format or may not be centralized, which means it is inaccessible to employees who need it for decision-making. Security and compliance concerns (such as GDPR) related to collecting and protecting data also come into play.

    However, even with all these challenges, creating a data-driven culture should be a priority — a culture where all team members appreciate the significance of replacing intuition with data, removing biases, discovering patterns, and experimenting — in everything they do.

    A data-driven culture minimizes data silos, democratizes access to data, and consolidates it into a database so everyone can use it for better productivity and output. Creating such a cogent culture requires more than merely installing and using the right tools.

    Here is a four-step process to create a data-driven culture.

    1. Identify Your Data Sources

    There is no shortage of the types of data you can collect and analyze. You can start with simple data from internal sources, such as inventory, website traffic, sales records, orders processed, customer satisfaction scores, and so on.

    Identifying the right data sources depends on your goals. With a specific, measurable purpose in mind — to reduce operational costs, better manage your inventory, boost monthly recurring revenue (MRR), etc. You have a clear picture of the problem you’re going to solve using data that can determine and align relevant data sources.

    Furthermore, this is the time to garner the confidence and support of business executives, so everyone commits and agrees about being data-driven to achieve the desired goal.

    Based on your objective and key results (OKRs) — say it’s related to building a stronger online brand presence — your data sources can range from Google Analytics and social media monitoring tools to your detailed database and CRM.

    2. Organize the Data

    Organizing your data is essentially the process of removing inaccurate or useless data from the raw data to streamline your analysis and decision-making. This ensures that the data is of high quality and adequately structured, reducing the odds of making poor decisions due to defective data.

    For example, your website’s Google Analytics is packed with data but is all of it useful to improve your search engine optimization (SEO) efforts? No, and thus, you make reports that compile only useful information. An idea for a great visual way to do this is by leveraging infographics.

    This step is also about democratizing data, so employees across departments have easy access to the data they need, eliminating the need to wait for data scientists to generate reports.

    In other words, provide your teams with access to data and user-friendly business intelligence (BI) and analytics tools so everyone is capable of being data-driven. Talking about BI tools…

    3. Identify Your Optimum Processing Approach

    With so much data being generated in real-time and from multiple sources, it is easy to get overwhelmed when processing all the data at hand.

    This is where real-time dashboards and BI tools such as ClicData can help.

    With it, you can connect your data from over 250 sources into a data warehouse and create custom, beautiful, and interactive dashboards for smarter and quicker visualization while maintaining a single point of truth.


    Moreover, the BI platform allows you to filter data down to the key metrics, and an easy-to-read dashboard simplifies processing. You can automatically share daily or weekly reports, conduct trends analysis and facilitate data-driven collaboration within your team.

    In essence, by using a BI platform, you spend less time processing data and get more time to track efforts, wins, and opportunities for improvement. An interactive dashboard gives you a holistic view of your business, and with better data visualization, your decision-making process becomes super smooth.

    4. Integrate the Data Culture

    For your business to make the most of data, you must focus on cultivating a culture of experimentation. Just providing employees with BI tools isn’t enough; they should also be trained on how to use these tools and experiment with them.

    For instance, you can conduct training sessions to teach your social media marketing team on how to use past data to come up with future post ideas. It is an investment of time, but you empower them to become more data-driven in their work.

    You must also encourage experimentation; employees should play around with tools and use data to come up with more ingenious solutions. In the above example of social media marketing, the team can leverage content discovery tools to curate trending ideas for engaging content.

    Finally, to integrate an organizational-level change, hold people accountable for their decisions, and reward them for using data to make better decisions. This is a surefire way to build a data-driven culture in your business and improve everyone’s efficiency.

    Ready to boost your business productivity?

    Companies that rely entirely on data and facts rather than intuition to base their decisions are the ones that achieve higher levels of productivity and outperform their peers.

    Thus, it is essential for your business to lay the foundation for a data-driven approach while building an organizational culture that values information as an asset. This can be done with the four-step process outlined above.

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    About the author

    Mark Quadros is a SaaS content marketer that helps brands create and distribute rad content.  On a similar note, Mark loves content and contributes to several authoritative blogs like HubSpot, CoSchedule, Foundr, etc. Connect with him via LinkedIn or Twitter.