3 Ways CEOs Can Use Business Data for Decisions Instead of Guesswork

Before the technology and data boom, many business decisions had to be made with limited information and insights available. CEOs and other executives drew upon their experience and intuition and rather proudly said that they had decided “by the seat of their pants” or gut feel.

As technologies and systems to collect and analyze data made inroads into the business environment, managers began to have far more information and insights when it came to making decisions. Today, we have moved from merely capturing the past, to understanding why things turned out the way they did, to predicting the future and finally, recommending the best course of action.

This does not mean that human experience, intelligence and wisdom are no longer needed.  Experienced managers are still very much needed to synthesize all human and machine learning, and make the final decision; but, business data can take the guesswork out of many critical business areas. 

This has powerful applications in all business functions, including sales, production, distribution, finance, and human resource management. In order to see gains in all these areas, it is critical for the CEO to have the vision to create a data-driven organization. 

Today, some organizations are achieving wonders, some are struggling with the basics, and some have invested in big data tools and technologies but admit that they have not succeeded in applying them effectively.

The challenge is in creating a data-driven culture, and the obstacles are always related to people and processes. The CEO must drive this change.

So, let’s look at what it will take for a CEO to foster a data culture that enables decisions to be based on business data and not guesswork.

1. Discuss with data

Across all levels of the organizational hierarchy,  businesses should encourage teams to bring data to all discussions, dive deeper into reports, seek insights, consider possible future scenarios, and make plans. Share insights from data in newsletters, Town Hall meetings, and reviews. Provide automated dashboards for managers in different functions and across as many levels as possible. Business leaders provide direction to interpreting data that helps others to follow; data tells a story, and leaders can share that story with all colleagues. 

Leaders inspire others with their actions. When senior managers are seen basing their decisions on data, their team members will see the value of this approach and adopt it, too. The CEO must be seen giving data-based insights precedence over anecdotes, gut feel, and seniority. 

This is also an important way to build trust in data. When a CEO is confident in the quality of business data, it becomes the single version of truth for the entire organization and others learn to trust it, too. Accordingly, insights from data are not limited to the boardroom or just a few roles, but can be shared across functions to make a real impact on the organizational performance.

The CEO is also the person ultimately responsible for ensuring that all employees use business data in a responsible manner. This may require policies to be drafted and training to be imparted.

2. Break down data silos 

When functional teams manage data using different systems, silos are created that prevent collaboration and agile decision making. Unfortunately, sometimes the data from different departments can tell conflicting stories.

For instance, apackaged consumer goods major found that the data available with the product teams about quantities supplied to different retailers was not matching with the sales figures reported in the accounting system. Such a mismatch creates a mistrust of data and no one knows which version can be a reliable basis for planning.

Breaking down these silos requires steps to ensure that systems exchange data correctly and there is transparency between the functions. The answer may not be to acquire even more technologies, but to find ways to remove bottlenecks and ensure the reliability of data.

The CEO can direct the IT team to build better integration among the systems used across the organization, allowing aggregation and, more importantly, sharing of insights. Some organizations are now ready for systems that will share business data and insights with external stakeholders, such as investors, partners, and vendors as well. This breaks up data silos even more effectively and fosters more effective communication and collaboration across the extended enterprise.  

Once data becomes part of the organizational DNA, people have a shared purpose, which is to work better with the help of data. They then take more initiative to break down silos.

A technology platform that allows business users to explore data based on their specific requirements — and not be dependent on data engineers — can play a huge role in helping different functions to start working with common data.

3. Help team members to learn

Every CEO is aware that some team members are simply scared of dealing with data. Some have always relied on their judgment (or guesswork!) to decide on the next course of action. Making decisions based on business data might feel strange to them.

The CEO can help to overcome this mindset and change management issues by sponsoring programs designed to provide support in the form of training and processes.

Too often training is limited to learning about the technology platforms and doesn’t help managers to understand how these really help solve their specific work-related challenges. The problem is compounded by the volume, variety and velocity of data that can simply overwhelm new users. Senior management can help by showing which parts of the data their teams need to focus on and which data points are most relevant. 

Organizations with failed big data initiatives usually have huge masses of data residing in data lakes with no clear idea of how these are to be applied in business. This is the result of an approach that focuses on gathering more and more data, with the hope that some dramatic insights will simply reveal themselves.

The approach of a CEO who has successfully embraced data-making decisions is very different. It starts with the outcome, then looks at what decisions need to be made to produce those outcomes, then focuses on what data landscape should look like in order to help make those decisions. Now, the entire data machinery is oriented towards business outcomes.

It’s not enough to simply acquire the most cutting-edge analytics tools;  what’s important is to apply them in the business and at scale. Top management plays the role of defining the business problems that data should solve so that the technology and systems can build the right solutions. 

It’s important that people don’t feel burdened by or forced into using data. This is where organizational leadership plays a key role. By demonstrating that business data is actually helping each person to achieve his or her targets, a CEO can create a data-driven organization with far less internal resistance.

Some CEOs have found that the secret is to start with small steps. A daily dashboard that everyone can discuss in the morning for just 5 minutes can help bring all colleagues onto the same page, as well as overcome apprehensions.

Managers who have gotten used to traditional data systems, such as reporting and visualizations, have to learn the power of advanced analytics — i.e. automated insights, predictive capabilities and more. This learning requirement often starts right from the CEO and includes every manager.  For the organization, it’s critical to provide this learning in order to ensure that the full capabilities of advanced analytics and machine learning are leveraged. A series of knowledge sessions or workshops are often needed in order to institutionalize this awareness.

In conclusion:

Organizations where decisions are made based on data and not on guesswork benefit from better predictability of results and achievement of  KPIs, which ultimately means better bottom lines. Making this happen is not a matter of acquiring technology alone. The CEO must actively drive all employees to embrace a data-driven culture so that decisions are based on business data and not guesswork.

Today’s data analytics technologies, which incorporate machine learning and artificial intelligence, are capable of creating magic. Imagine the impact when the CEO’s vision and organizational culture keep in step. 

Over time, analyzing business data will become a habit and team members will start associating data with performance and optimization. The CEO will have successfully created a true data-driven culture when team members find their own innovative solutions based on business data. Data will have become embedded into core business processes, delivering a variety of powerful results. 

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