Jim Barksdale, former CEO of Netscape once joked, “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.”
Let us be clear. All businesses, the successful ones anyway, rely heavily on the technologies and human perception to collect, disseminate, and act on insights. Therefore, it’s only natural that technologies delivering faster, cheaper, more accurate information create opportunities for strategic planning. Of what do we speak, you may ask. whatis.com defines Data-driven decision management (DDDM) as an approach to business governance that values decisions that can be backed up with verifiable data. The success of the data-driven approach is reliant upon the quality of the data gathered and the effectiveness of its analysis and interpretation.
According to Forbes contributor, Jon Bruner, there are five key steps for making data-driven decisions. These are:
- Understand what the real business question is. Ask the stakeholder what she really wants to know. “Why is this person asking this question? What’s the context, what are the impacted segments?”
- Create an analysis plan with hypotheses. “What are your fundamental beliefs about this problem? Let’s do a guided exploration. This is where you decide what methodology you’re going to use–am I going to use correlation analysis, is this a profiling problem, am I going to go into predictive analysis?”
- Collect data. Based on step 2, you’ll know what sort of data you need to collect.
- Gather insights. “Now that you’ve collected data, you’ve ordered it, validated it, triangulated it, then you get into the analysis part based on the technique you’ve chosen.”
- Make recommendations. “It’s not only the technical aspects that are important, but also the soft aspects: what are you doing with your stakeholders? You are an analyst. What are you doing with the folks on the other side? How are you building alignment so that when you say ‘here are my insights, ta-dah!’ somebody is going to be able to work along with you. If you’ve not brought your stakeholders along, then they won’t necessarily take your recommendations.”
A fundamental problem observed in many firms in Jamaica, and this is generally unique to small businesses, there is very little or no accessible data available locally to assist owners in making better business decisions, and for those who do make the effort to do primary research, find it expensive.