How to Build a Data-Driven Culture in Your Organization
Whether you’re an international business or a local nonprofit, all organizations must take calculated risks to maximize their impact and achieve their goals. When it comes to the hard work you’ve put in to build your organization, would you simply roll the dice? Or would you make informed, strategic decisions?
Enter the data-driven culture. Data is the lifeblood of modern organizations. Access to qualitative and quantitative data enables you to identify new opportunities, serve your target demographic, and improve your operations. Yet, in the commercial world, only 63% of CEOs believed their organizations are data-driven.
Businesses and nonprofits alike face the same universal challenge: leveraging data to achieve short-term and long-term goals. In this guide, you’ll learn why the data-driven business model is a roadmap to success and how to take the first steps to becoming a data-driven business.
What is a Data-Driven Culture?
Is your organization driven by data? To answer this question, we must first define what a data-driven decision is. Decisions made based on data require empirical evidence to enable leaders to act.
A data-first mindset is simple: actions are only taken if they’re backed up by the numbers.
According to the McKinsey Global Institute, data-driven companies are 23 times more likely to attract new customers. However, not all data is good data. Poor or inaccurate interpretations of data can negatively impact the direction an organization decides to move in.
Learning to uncover valuable data and interpreting it correctly is just as important as deciding to follow the numbers in the first place.
Benefits of Data-Driven Decision Making
The data-driven business model comes with tangible benefits to help you do what you do best to an even higher standard. However, transitioning to a data-driven culture is a major change for any organization. At this point, you may be asking yourself: is it worth it?
Here are the top four benefits of data-driven cultures for organizations in any industry.
1. Serve Your Target Audience
No matter how many reviews you have online or how many surveys you send out, customers won’t always tell you what they want. And if you fail to meet their expectations, your customers will move to one of your competitors. Data answers the big questions about how your target audience feels about what you have to offer.
For example, use-based data informs how often someone uses a product, service, or facility. This can tell you which products or services to focus your efforts on, and which ones are falling flat. Regular usage can tell you they find that part of your business valuable, so directing more resources into developing, revamping, and marketing is an example of an intelligent data-driven decision.
2. Uncover New Opportunities
Finding additional revenue streams and moving into other niches is tough. These decisions often require investments into market research, funding and more. Many leaders see this as a necessary evil — after all, failed diversification can destroy otherwise thriving organizations.
However, organizations can use the data they already have to uncover promising opportunities and forecast the likelihood of success. Listening to the data and developing an expansion plan can help them get in on the latest trends before their competitors.
For example, a global clothing business might choose to use data to identify trends within the fashion world. During their analysis, they discovered an opening within the Asia-Pacific market for faux leather products that no one else was meeting, which enabled them to design, test, and release their exclusive products before the trend went international — beating their competitors to the punch.
When used correctly, data makes you a faster organization and more effective at fulfilling customer wants and needs.
3. Predict and Prepare for Challenges
Whether you’re a nonprofit searching for more funding or a small business looking to maximize your revenue, data is crucial for uncovering challenges ahead. Data can tell you where the money is coming in and where it’s not. For example, take a look at your sales numbers. While it could be a result of poor performance, slow sales growth for the year could indicate an early warning sign that your whole industry is about to enter a down period. Have your fundraising efforts been falling flat? It may be a sign that it’s time to shift your efforts away from personal donations and more towards corporate or government grants.
Digging into the data uncovers challenges for the future, allowing you to take the necessary steps to prepare. You can cut costs in other areas to make up for a decrease in revenue during a down period, take steps to recession-proof your organization, or use the data to find additional ways your nonprofit can help others during economic downswings.
4. Pivot to the Market Faster
Accurate data analysis, simply put, makes you a more agile organization. And with the world moving faster than ever, agility and adaptability is crucial. Harnessing the power of data helps you remain flexible in order to accommodate sudden changes in the market or get through rough down periods.
All of the benefits we’ve listed above come together to allow you to pivot to the market faster by knowing what your clients want, identifying opportunities for growth, predicting trends and having the data to create an informed strategy. When you have the data, you have a plan.
How to Develop a Data-Driven Culture
Transforming your culture from top to bottom needs buy-in from everyone involved, as well as a clearly-defined idea of what you want your data-driven company to look like. Every data-driven organization will have a different journey. You might be starting from square one, or you could be halfway there already.
Wherever you are in the process, here are the steps to develop a strong data-driven culture.
Start at the Very Top
Despite the overwhelming evidence showing the value of data, 62% of executives said they rely on a combination of gut feeling and soft factors. Without buy-in from the uppermost levels of an organization, it’s impossible to execute a data-driven strategy or develop the culture alongside it. Companies with strong data-oriented cultures should always have a top manager driving the culture.
Actions as simple as asking for the data when someone makes a suggestion or prioritizing the numbers when making a presentation help to set an example for everyone further down the pyramid.
Select the Right Metrics
When it comes to key metrics, less is more. Trying to track every little metric can quickly overwhelm employees who are less confident working with data (and even those who are). Leaders must select which metrics they’re going to track and prioritize. Keep the list relatively small and poignant.
Think about the data directly impacting the customer, such as the user experience, pricing, and customer support. Figure out which metrics are most important to your organization, then narrow them down from there.
Invest in Qualitative Data
Quantitative and qualitative data represent two sides of the same coin. They each work in tandem to provide meaning to your data. Most organizations work primarily with quantitative data. This data answers the usual questions of “How much?” and “How many?”
Qualitative data creates connections by answering the “How?” and “Why?” This type of data is about the relationships between different data pieces and your target audience. It helps you understand your customers' mindsets, so your organization can unlock new opportunities.
Avoid Creating Organizational Silos
A major part of building a data-driven culture is bringing data into all aspects of your organization. Isolating your data scientists or data-focused departments means your analytics aren’t fully involved with your organization, meaning your data can’t provide the value it should.
Some of the problems arising from these silos include:
- Lack of innovation
- Team misalignment
- Disenfranchisement between personnel
- Diminished collaboration
- Lack of communication
How do you stop this from happening? The overlap between core business activities and data experts is more significant than many leaders think. Bringing your data experts into the business, such as by allowing them to scale a proof of concept, keeps your organization thriving and in sync.
Want to really bring data into all aspects of your organization? Teaching your employees to become data literate in quantitative and qualitative areas ensures everyone is on the same page and feels included in the culture.
Fix Data Bottlenecks
Data security and privacy are essential for every organization to comply with national and international regulations. However, this shouldn’t create bottlenecks or delays within your organization.
If your team is struggling to access the data it needs to do its job, you’ve got a problem. Data democratization is essential within all organizations. Your analysts can’t perform to the best of their abilities when they have to fight to access the data they need.
Smart solutions, like granting universal access to critical metrics, can help your employees do their jobs without compromising security. For example, an online home loan lender might try to predict refinancing needs using a standard data layer for its marketing team. The primary data layer would include property information, loan terms, balances, and relevant customer information illustrating each customer's relationship with the lender.
Simple security innovations like data layers ensure every employee has access to vital information — without complicating the process or introducing security risk.
Encourage the Value of Uncertainty
Even the best data can’t accurately predict the future, meaning you’re always taking some form of risk. Getting comfortable with this fact is a crucial part of building a data-driven culture.
Questioning the reliability of data also reminds organizations to take a second look and confirm that the decision is sound and backed by the data. It also breeds a deeper understanding of the models used to make decisions, which encourages innovation within the firm. Acknowledging uncertainty opens the door to better decision-making.
Use Data to Help Your Employees
The value of data is nearly always framed with customers in mind. Discovering what customers want, learning their habits, and anticipating the trends within the industry are all vital functions of infusing data into your operations.
A hidden benefit to creating a data-driven culture is that it can help you make your employees happier. How? Data is a tool in the employee’s arsenal to help them achieve more success in their roles, communicate feedback, streamline their processes, and more.
By eliminating time-consuming and unnecessary actions in their day — no matter how small — can improve their experience and boost morale in the office. Don’t just become data-driven. Become employee driven.
Map Out the Analysis
Get into the habit of explaining why a choice has been made. Most obstacles that data can overcome have several possible solutions — there’s rarely a single approach. By including the rest of your organization in these decisions, you’ll boost morale and help them make similar decisions in the future.
Ask proposal makers how they approached the problem, which alternatives were considered, and what the tradeoffs were of the solution. Exploring these aspects as part of a data-driven company gives everyone a deeper understanding of why certain choices were made and how data can be further used in intelligent decision-making.
Harness the Power of Data with UpMetrics
Data has become the center of organizations in every industry. Whether you’re a corporation or nonprofit, don’t roll the dice — use data to make informed, strategic decisions.
At UpMetrics, we help you use data for the greater good. Our social impact measurement tool combines several quantitative and qualitative data collection and analysis methods. Our in-depth reporting and analytics provide valuable insights that help leaders make smart decisions and build strong, data-driven organizations.
To learn more about how data can transform your organization, contact UpMetrics today at firstname.lastname@example.org.