Being data-driven is a process. Collecting and analysing data to identify and solve problems, one at a time.
Businesses have access to such high quantities of data, but is it the right data? Is it being used the right way? Will it drive growth?
How businesses use their data, determines their future. Businesses that are not using data to influence actions and make better decisions are headed towards a dead end in their journey of growth.
They base decisions on emotion rather than fact
They become irrelevant
They lose to the competition
Ray Dalio’s “Principles: Life and Work”. is an excellent interpretation of this journey. We’ve adjusted his process slightly so that you can apply it to driving growth for your business.
Step 1: Set Goals
Imagine you’re going on a road trip. You can’t go anywhere until you’ve chosen a destination. The same applies to your data-driven journey. You need to set goal(s). Be ambitious with them, otherwise, it’s like going on a road trip just to drive 3 miles. You’ll never achieve true growth if you don’t aim high enough.
Step 2: Document
On your road trip, you will more than likely reach a fork in the road - one leads to success, the other leads to failure. The problem is, you’ll only know which is which once you’ve chosen the direction.
The path isn’t actually the important thing, what is important is documenting the journey. What made you choose that direction? What happened on the path? Were there any challenges? How did you react to the challenges?
Step 3: Learn
You now have something super valuable. Data.
Take this data and apply it. Analyse it and most importantly learn from it. Identify where you went wrong on your road trip as well as ways to improve.
Step 4: Build a Framework
Use the lessons you’ve learned in step 3 to build a framework. This framework becomes the criteria that you can use to make better decisions in future situations.
Step 5: Improve
Now that you have your framework, put it into practice. Be agile enough to apply the criteria that you have set.
Step 6: Set More Goals
The more you improve, the more you grow. By reaching one goal, you can set bigger goals for your business going forward.
You’re on a road trip. Your goal is to get to Las Vegas in six hours. You get to a fork in the road. You take the road that has no lights. Without any data to help you decide, you make your choice based on your instinct. On the road, there’s are potholes which you can’t see because the road is poorly lit. As a result, you hit a pothole and puncture your tyre. Adding an extra 2 hours onto your journey.
By documenting your road trip, you have learned that driving along dark roads means you are likely to hit a pothole.
You are now able to use this data to set criteria and build your decision-making framework. In the future, you won’t take a road that doesn’t have good lighting.
Just by doing this process once, you have drastically reduced the chances of hitting a pothole in the future.
Ensuring you reach your goal successfully, and on time.
To become truly data-driven, your business will have to repeat these steps over and over again to achieve real, continued growth, so it’s worth your while to refine this process and carve out a route that works best for your business.
Data-driven businesses are capable of taking their failures, turning them into lessons and applying the learning to improve their systems and decision-making processes. They reduce their chances of becoming irrelevant and are in a better position than their competitors to drive growth.
Being data-driven is a journey.