How to Become a Data-Driven Business
More and more businesses are realising the need to be data-driven. The way that customers shop has changed, employees look for different values and cultures, and more than ever, businesses need to be prepared for a constantly changing environment and unexpected challenges.
But becoming data-driven is not an overnight job. It requires management to take a different approach to how they’re making decisions and to roll out this altered mindset across their entire business, undoing potentially years of ingrained processes. It’s not simply a case of collecting data and storing it somewhere for safekeeping.
In this article, we’ll explore:
What it means to be data-driven
3 reasons to become a data-driven organisation in 2022
Step-by-step to becoming a data-driven business
The importance of financial management data
Netflix has been a data-driven organisation since its inception.
What does it mean to be data-driven?
Data is a gold mine – and an invaluable resource that can change the way your business operates and take your business a step forward. Data has the power to change processes, become more efficient, save resources, and grow your business, all whilst keeping your customers and employees even happier.
Becoming data-driven means learning to leverage and utilise data across multiple areas in your business. It means collating data across all areas of the business – from customer insights to employee feedback to financial information – and using it as the foundation of all your decisions about your next steps.
3 reasons to become a data-driven organisation in 2022
1. Data helps you to set relevant and realistic business objectives
When a business is in its growth stage, the excitement of the potential future can be overwhelming. Setting business objectives can be daunting, particularly as you don’t want to fall short, but then setting the bar too low can also be anti-climatic if business booms as you’d like.
Being data-driven means removing any confusion and hesitation and making decisions that are suitable for your current business performance. The only way to do this is to have clear visibility of performance through collating the right data.
2. Make better decisions for the future of your business – while improving employee relationships
According to PWC’s Global Data and Analytics Survey, Global, “Big Decisions™,” organisations that are data-driven are 3X more likely to note significant improvement in decision-making.
No longer the case where management teams have to argue endlessly and those with the loudest voice come out on top, management teams instead can utilise data to ensure decisions are unbiased and represent the needs of the business only. Removing the subjectivity and focusing entirely on analytics can help improve communications, decision-making and employee culture.
3. Help you track and improve performance amongst employees and with your customers
McKinsey note that data-driven companies are 23x more likely to outperform their competitors. Leveraging customer analytics and employee insights means that your customers and employees are heard, and a business you are not stabbing in the dark about what your customers want. Happy customers + happy employees = business growth.
Steps to becoming more data-driven
Becoming data-driven, as previously stated, is not an overnight job. It requires a complete overhaul of the process and a change in mindset amongst management and employees. Here are 5 steps to help you become more data-driven:
Decide on one core business objectives – what do you want your business to accomplish first?
Identify what data will help you achieve this business objective and which teams/employees this data is relevant to
Collate the data through your teams (this may take weeks, months or even a year to collate the substantial data required).
Analyse the data and explore findings, coming to aligned decisions based on the sourced data
Create a strategy for implementing these decisions
Financial MI for Small Businesses
As a CEO, MD, or small business owner, trying to collect and leverage this data by yourself or with a small team is going to be a challenge. To make things easier, we’ve put together a list of recommended financial management information to focus on, and a plan for how to use it to kick-start business growth. Check out our full guide below.
Alternatively, by outsourcing your financial management information to a fractional CFO or other financial experts at The Finance People, you can guarantee a panoramic view of your business’s financial activities.
At The Finance People UK, our experts have years of financial management information under their belts. We have found that small and medium-sized businesses often do not have the in-house capability to leverage financial MI to its greatest potential. That’s where we can help. We’ll help you to collect, analyse and evaluate key financial management information to drive your business forward.
At The Finance People, we align businesses with a part-time FD to suit their needs. Get in touch today to get started.