Decision-making is an integral part of any business and can impact future success and profitability. However, many business owners may make important decisions based on “a feeling,” speculation, or past choices. In fact, according to a global survey, 58 percent of respondents said that their companies base at least half of their business decisions on gut feel.
Although intuition can be helpful, relying solely on it may lead to ill-informed choices that negatively impact a business. However, using data to influence decision making allows for smarter and evidence-based outcomes that can take your business to the next level.
Looking ahead to the future, data-driven decision making will be more important than ever as we’re flooded with more information and digital technologies evolve daily.
What Is Data-Driven Decision-Making?
Data-driven decision-making is the process of using actual data to make organizational decisions, validate a course of action, and work toward goals rather than relying on observation or guesswork. It prevents poor decision-making due to biases or false assumptions that can often cloud judgment.
This process involves using key performance indicators and measurable goals to make business decisions. The insights from these facts and patterns are analyzed to develop strategies and activities that are most beneficial for the organization. Additionally, data-driven decision-making allows us to conduct real-time analysis to make quicker decisions and pivot on a dime.
Real-World Examples of Data-Driven Decision-Making
Before the digital revolution, collecting and analyzing data insights was tedious and time-consuming, which often led to delays. Now, business intelligence software is available that makes decision-making faster and more convenient. Even users who do not have deep technical knowledge and expertise can use a program to extract insights from accurate, relevant, and valuable data quickly and effortlessly.
Data-driven decision-making can come in many forms. For example, your company can conduct surveys to know the products and services your target audience is interested in or launch a new product in a test market to get a glimpse of how it might perform. Here are some real-world examples of businesses using data to their advantage when making high-impact business decisions:
Future store locations at Starbucks
During the 2008 economic recession, hundreds of Starbucks branches were closed as the company – like many others – reacted to a multitude of financial troubles. As they recalibrated their approach, former CEO Howard Schultz promised that the company would identify future store locations with a more analytical approach. Starbucks had been known for its aggressive growth, but that strategy may not have been rooted in actual data. At present, the corporation works with a location analytics company to determine ideal store locations and see the likelihood of success for these areas using demographics and traffic patterns.
Leadership development at Google
Google prioritizes people analytics, which is an approach that aims to inform people of the organization’s practices, processes, and programs. Due to this, they launched Project Oxygen, a well-known people analytics initiative used to identify common behaviors of high-performing managers. It also developed training programs to improve employee’s core competencies. It collected data from more than 10,000 performance reviews and compared it with employee retention rates.
Why Is Data-Driven Decision-Making Important For My Business?
No matter the industry, your business has to be data-driven. Failing to do so and basing decisions on pure intuition can lead to challenges down the road. Through big data analytics, you have a higher chance of success and preparing your business for future growth by predicting future trends more accurately, optimizing operational efforts, and producing insights that can be acted upon in the best interests of your company. In other words, using data in decision-making will keep you heading in the right direction.
As digital technologies evolve seemingly every day, data-driven decisions will also keep changing. Serverless and no-ops cloud deployments will help businesses automate many processes, allowing owners to focus on running their business and making smarter decisions. As businesses require more real-time decision-making (as we’ve seen throughout the COVID-19 pandemic), streaming data will be critical to making real-time business decisions. With the continued ease of access to machine learning, data analysts will be able to quickly and cheaply roll out technology-driven initiatives that previously would have been costly and time-consuming. Additionally, as data-driven technology becomes more mainstream, lowering barriers to access and pricing, more businesses will be able to analyze and react in real-time.
Making business decisions should be taken seriously since it can mean the difference between failing to reach your business goals and making a mark in the industry. By incorporating data analytics into your business strategies, your business can continue to grow and thrive.
Transform the way you make business decisions with data analytics solutions. At Gemini, we’re redefining data analytics so you can go from data to insights to decisions faster. Contact us to learn more about how we can help your business.