BY EXECUTIVE BUSINESS COACH, THOMAS ODHIAMBO

Most new years begin with goals and resolutions that eventually fall by the wayside. How should businesses then go about making the right decisions regarding their goals? How can they ensure actions and outcomes are deliberate?

Enter data driven decision making:

Data-driven decision-making (DDDM) is the art of using facts, metrics, and data to guide strategic business decisions that align with business goals, objectives, and initiatives. 

In order for any decisions to be sustainable there must be a wealth of information backing them. Organisations should make it a norm to collect, on a consistent basis, data they can use to make plans for their future. At times this information exists, it simply needs to be analysed. In such circumstances, it is incumbent upon the business leadership to constantly reach back into the data jar to draw from its insights when making decisions. 

Daniel Khaneman captures the concept of data driven decision making in his book ‘Thinking Fast and Slow’.The book’s main thesis is that of a dichotomy between two modes of thought: “System 1” is fast, instinctive and emotional; “System 2” is slower, more deliberative, and more logical. The book delineates rational and non-rational motivations or triggers associated with each type of thinking process, and how they complement each other, from framing choices to people’s tendency to replace a difficult question with one which is easy to answer.

It is this tendency that makes it more likely that business leaders will default to system 1 which is fast, emotional and instinctive decision making. While this is useful especially in situations where a quick and decisive action is required, it cannot work alone for all business processes, especially long term ones. Long term plans require a more deliberative and logical approach which is driven by data.

Here are steps that can be followed to transition a business into the realm of data driven decision making.

1.                  Identify SMART business goals

 Setting SMART (specific, measurable, attainable, realistic and time bound) goals enables an entrepreneur to look critically at each aspect of the goal logically. It also helps them identify data points they should consider. Take for example an event planning business seeking to set up 24 corporate events in a year. While this goal is specific, measurable and time bound, the organisation would need to check in their records what amount of time it has typically taken them to plan similar events in the past. This would help them know if based on their current resources the goal is realistic for them. The organisation might go a step further, and look at their competition who has achieved more to confirm that the goal is attainable and what changes they would need to make to ensure success.  All this essentially means that businesses should track performance in every part of their business in order to establish the direction that will take them to their end goal.

2. Get input from your team

Data is available everywhere, from conversations among employees, to feedback from customers, activity logs, everyday expenses to annual company reports & accounts. It is imperative for organisations to create a culture that encourages critical thinking and curiosity around such data. 

This is important particularly during the planning, execution and evaluation stages of business operations. When you involve your team it speeds up the process of discovery. Organisations with the right mix of skills and levels of expertise can especially benefit from such a process. A bank may receive recurrent complaints from their customers through its tellers about the inconvenience caused by system downtime. The account closures department might also report a certain percentage increase in account closures. The combination of this feedback might reveal a loss of business as a result of system downtime. Whereas management may have decided to keep the old system because of the high cost of upgrading, the feedback from other employees may help them see and measure the long term cost of not making changes. This cost may outweigh the cost of upgrading and a decision might be made to make the investment. Encouraging team members to share their experiences and observations therefore enhances the quality of decisions made by surfacing blind spots and unearthing information that was previously not put into consideration. People  also develop their data skills through practice and application.

3. Research Industry trends

With the rampant use of technology, business markets and landscapes are rapidly changing. This means that strategies used in the past should be reassessed consistently. Market research offers suggestions of great trend analysis. It is essential for organisations to conduct thorough market research in order to know what works and what does not.

An office manager may look at a sample of 25 newly set up offices and what designs are in. Is it open plan? Do managers value their privacy? Is there a correlation between productivity and open spaces? They may also go further and speak to different teams working in the different office designs and establish pros and cons of various options. Armed with data (percentages and trends) and the internal needs of their team, such a manager is well placed to make the best decision with the highest return on investment.  

4.Act on the Data

Once you have established your goals, had data input from the team and the industry in which you operate, you will now need to create an action plan to put your decision into action. This stage is key because you make clearly defined plans on what needs to be done, by whom and what outcome is to be expected. 

The action plan just like the research must be filled with data points for evaluation as the process of using data for decisions is a continuous one. Implementation must have milestones and outcomes that can be tracked.

5. Explore the outcomes, what is the new data saying?

Supposing as a result of your initial research you had embarked on a digital marketing strategy. Based on your observations, which is the most successful action? Are you achieving the specific outcomes you had set out? If you had noticed and hopped onto a social media trend such as instagram reels, has it generated the intended result? Does it suit your consumers and is it therefore generating sales? 

Technology is a major tool in organisations with a data-driven culture. Detailed data analytics is used to process information. One can know exactly how many people consumed their digital marketing content by checking the reach. One can count how many new people they have gained in their community and who has engaged with them.  

By continuously trying to decipher what the data is saying, organisations are able to draw their conclusions and tweak their action plans as they go. Any business that builds a data-driven decision making culture is undeniably competitive because it always makes the best  decisions given any situation. Such a business measures risks and rewards accurately. When organisations realise the full value of their data, they are empowered to make better decisions every day.

LEARN. GROW. CHANGE

MAKE THE DECISIONS THAT MATTER THIS YEAR.

If you enjoyed the above insights from our previous workshop, join us for our next next one on 9th March 2022 with Virtual Assistant, Elma Ooro. Find the details below.