If you are a business owner, you will be making decisions all the time using a process, although you may not be conscious of it. Including data into those decisions does not completely disrupt that flow, but it gives you an advantage. If used well, data is an objective outsider that weighs in not with opinions or motivations, but evidence.
For the most part, using it well just means being thorough and consistent. Being mindful not to just run with the first finding, nor only selecting information that supports what you already think or are going to do anyway regardless. It need not be complicated either, to begin with, nor ever. You can gradually work it into all your business processes.
Think of the data-driven part as a circular pathway. When you get back to the start you have new information that will allow you to:
It is a circle, so where do you begin?
Starting with a question is best because it keeps everyone who is feeding into the answer, including data, heading the same way. There will be different perspectives, see below for viewpoints on the question, “Should I run a promotion at Christmas?”
PURCHASING: is there a suitable product ready to promote?
FINANCE: what are the expected margins and how are they divided?
MARKETING: did the Christmas promotion work last year?
There will be information available for every perspective.
Businesses sit on masses of data, a lot of which never sees the light of day because it tends to be held in digitally or filed neatly away. Simply having information at your fingertips does not equate to data-driven. Data needs to be actively worked with before it drives strategy, but it can be overwhelming because there is so much. Starting with a question lightens the load.
Here is a marketing perspective on the data to collect to understand, ‘did the Christmas promotion work last year?’
Notice how the data suggested is broader than just looking at business performance during the promotion. This example highlights some general principles that are worth bearing in mind when thinking about the data to gather to address a question:
There may be some work to do before you have data that is ready for analysis. There are people who love this stuff and make light work of it, even if it is not your cup of tea. Data alone has no intrinsic value. It needs working with to unlock value.
Analysis is just a structured & systematic look at some data. It may be as straightforward as producing and interpreting a table of information, or as complicated as running and translating a statistical analysis into plain findings. Just producing a table is not analysis. It is just the data laid out in a particular way. But it is a useful step because patterns sometimes jump out more in a table. Noticing a pattern and jotting some ideas about what that may mean, is analysis.
Then there is statistical analysis. Data is manipulated in particular ways. To show up relationships that are not visible by looking. These are skills that you can teach yourself, but it may be wiser to bring in a pro.
Here is one simple way forward with the promotion data suggested:
If anyone is interested in what that may look like, I plan to show some different types of data analysis in future blogs. Just writing it out highlights that data analysis is not a mysterious new world. Just a logical sift through evidence, guided by a question.
Watch out for analysis that is…
Analysis is an activity that uncovers insights hidden in data. Insights do not come from nowhere. Sometimes several pieces of analysis are combined to produce insight. Think of these as pieces of a jigsaw, only by looking at several do you see something new:
Watch out for insight that is…
Making recommendations is the goal of data-driven approaches, but they are often missing. This may signal that the analysis has not gone deep enough, but it may also be because whoever has done it does not understand the business context enough. Catch-22. You may not have the time, inclination, or expertise to do data or analysis work, so you hire somebody. It is unlikely that they know your business exactly so what you end up with is not useful. Pick independent but collaborative partners.
Data-driven recommendations come from your extra team member, the objective outsider who weighs in with evidence. You will not in practice only heed that one voice, for more on why read this. To decide whether to run a promotion at Christmas you would compare the recommendations that come from looking at the same question from different perspectives e.g. purchasing, finance, marketing. If they conflict you would still have a basis for a discussion where you could assess how robust and firm each recommendation was. Based on what your overall business priorities are, make a choice with a broad understanding of upside and risk.
Whatever your decision ends up as, best practice is to gather the relevant data, do some more analysis and evaluate whether you made the right choice. Closing the loop and re-evaluating past decisions keeps businesses moving forwards. Want more ideas about how to get started, or a chat about how to approach a business question that you have in this way? Give me a call or drop me a line.
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© Jo Gordon Consulting Ltd 2020