We live in a data-driven world. In fact, we are at times overwhelmed by data. Every single action taken by an individual on a device is being tracked, traced, recorded, and the resultant data is being stored, processed, transformed, analyzed, and visualized.
But not all organizations today are able to harness this data into actionable insights or use it to drive decisions for business impact.
The role of the CEO
The role of the CEO is crucial when it comes to inculcating a data-driven culture in the organization. Certainly, as leaders, they need to lead by example. A CEO’s own usage of data for decisions versus going by gut-feel would impact how the internal teams also view data for decision-making.
However, this does not mean the CEOs who are not currently relying heavily on data analytics to aid their decision-making processes cannot be urged to take data more seriously. In fact, data scientists, senior data analysts, CTOs or CIOs may well be influencers and change agents who can coax and convince CEOs to take concrete steps to start utilizing business data and analytics to strategically drive business growth.
Change, uncertainty…and data
Businesses today are seeing uncertainties like never before. Agile reactions and quick decisions are needed. Making the right decision at the right time has become critical to business success. As these decisions may be needed on a day-to-day basis, there isn’t necessarily a large amount of time for learning and adapting.
Traditional ways of dealing with performance data and decision-making are failing in these highly dynamic scenarios. What is needed, then, is access to tools and technologies that can provide real-time, hard, reliable data and a level of automation to rapidly process the data and reveal insights that can be used to make impactful changes that drive growth. In other words, data that gives CEOs positive control over business performance is the data that matters!
Data is thus becoming a key asset in an organization – and the ability to utilize this data is becoming a key capability that every organization now needs to develop. Ultimately, automated systems that can help to make data-driven decisions have become the need of the hour.
Mandating a data-driven culture
The CEO’s job is obviously not easy in this situation. A culture of making data-driven decisions needs to permeate to every level in the organization. But how can CEOs create an environment to encourage the use of data for making decisions at every level in the organization? Clearly, technology has to play a big part in this picture. While we are not yet at a technological point where automated systems could take on the majority of decisions, we will likely reach that point in the near future. We are not far from a time when systems will automatically make decisions that are situationally appropriate, customer-oriented, as well as optimal for the business goals of the organization.
For the moment, however, CEOs need to focus on both the right technology and the right talent that can harness the available technology to produce business impact. The vision to use data for decisions must come largely from the top, along with a mandate that processes be put into place to ensure that this happens at an operational level.
Put the right technology in the hands of the right people
Putting in a team that champions the cause of data is often a good idea. Such a team ideally needs to be diverse and cover various departments, comprising not just technology product experts and data analysts, but also commercial heads and sales managers, for it to be successful. The mandate must also authorize the right person in each department to review the data available and approve an optimal decision that will create an impact for that department. Systematic governance as an enterprise-wide policy will help inculcate a data culture throughout the organization.
Creating a strategy to combine the power of data with the right talent across the organization can bring significant change in the way the business operations adopt data-driven decisions. Tools, training, and leading by example will certainly put CEOs in the driver’s seat in this race.
Focusing on the right metrics and KPIs
In order to use business analytics to drive decision-making, CEOs must first learn to focus on the right metrics and thoughtfully identify the KPIs that their internal teams must monitor to achieve their respective business objectives. The simple logic is that if you’re putting irrelevant metrics on a dashboard, you will have irrelevant results coming out of your decisions and activities.
CEOs need to carefully consider and debate with each department head what metrics are to be published on business analytics dashboards, in relation to a specifically articulated strategy about how these metrics are expected to affect growth. Most importantly, CEOs need to ensure that these dashboards are not clouded by unnecessary data or data that is not oriented towards business growth. This will ensure that operational decisions focus on the most important metrics and reduce or eliminate the allocation of resources towards activities that are not contributing to growth.
Examples of metrics that may make it to a dashboard may be which marketing activities have led to successful sales or progress of project schedules to meet hard deadlines related to revenue recognition.
Bringing together business data from various sources
One of the prerequisites of using data for decision-making is that all relevant business data must be available on a single platform, in a standardized format that allows data processing, analysis, and visual dashboarding.
Organizations today use dozens of different IT applications, enterprise systems, and niche applications for departments like finance and marketing. Each of these generates a large amount of business data that may hold key insights that can be harnessed for data-driven decisions. A holistic view of this rich organizational business data needs to be made available in a central repository or platform.
Key steps towards making data-driven decisions
Let’s summarize a few pointers that could be on the data-savvy CEO’s checklist:
Use data to drive decisions – but a gut feel hypothesis is workable
In the absence of clear hard data or instead of waiting for data, CEOs should go with a gut-feel hypothesis first and then look for performance data analysis to prove or disprove your hypothesis. This helps avoid the infamous analysis-paralysis situation, where valuable time is lost in waiting for analytical data to make a decision. Quick decisions may sometimes be made on a gut-feel — and a leader’s gut-feel must be taken seriously as the experience and hands-on business acumen of a leader can never be under-estimated! The most important aspect here is that the gut-feel hypothesis must soon be corroborated by data or replaced by a secondary decision made by hard data.
Articulate a clear data strategy
How will your internal teams find relevant data that should be monitored as KPIs on BI dashboards? Which of the KPIs if improved will drive significant business growth? How will teams be given access to real-time business data that is relevant to their specific functions? It’s important for CEOs to formulate a strategy addressing all of these questions.
Data analysts and data scientists are key resources to help formulate these and advise the CEO to use the best-in-class business intelligence and AI-powered analytics tools to ensure that the data made available to all departments within the organizations is rich and reliable.
Draw insights from past data
Seeing data on a dashboard or as an attractive visualization is not the end of the story. CEOs need to pay a great amount of attention to who is drawing conclusions from past data. how it is being interpreted and if there is any validation needed for the interpretation. This is a critical step, as decisions are based largely on the interpretation of this data. As we have reiterated, the right talent plays an important role at this stage; CEOs must invest in building a data strategy team featuring talented and experienced data scientists.
Having said this, there are advanced tools available now that are powered by AI and that can reliably bring out insights from data in an automated manner. Using these tools and leveraging the automated insights revealed from the data in these tools can create significant business impact over time.
The important point to remember here is that such tools are based on machine learning – which means the more you use the system, the better it becomes! Give it time and the quality of insights it will yield will be richer and more effective.
CEOs certainly have a tough challenge when it comes to leveraging data for effective decision-making. Those who can strategize and use the right tools and technology to achieve this, will reap rich benefits and equip their organizations to deal with an increasingly unpredictable future.