Why you need a culture of data-driven decision making
Reading time: about 6 min
You make thousands of decisions every day, and it’s possible that most of those are performed automatically. In fact, if you were to analyze why you chose to wear a sweatshirt today instead of a turtleneck or eat a breakfast burrito over an onion bagel, the nuances of your decision making might surprise you.
Instead of relying on hard facts when making a choice, humans tend to go with their impulse. Facts typically come into play after gut instinct and only to rationalize the decision.
But the whims of human impulses can only go so far, and they’re not particularly useful when making strategic business decisions. In business, the smart thing is to turn the order of decision making on its head by examining data first and then making a choice. Even better: develop a culture of data-driven decision making that allows all team members access to the data they need when they need it.
What is data-driven decision making?
Data-driven decision making (or DDDM) is exactly what it sounds like: it’s using facts to make business choices that further the company’s goals and objectives. While it’s likely that there are people in your business who already use data to inform their decisions, that’s not enough. Your business should be fostering a culture of data-driven decision making that prioritizes facts over feelings (which isn’t to say that gut impulses aren’t important, they just shouldn’t be used in place of data).
Here are some examples of what data-driven decision making looks like in action:
- Your social media team analyzes reactions to posts and discovers that posting at noon garners a higher engagement rate than posting at other times of the day, so they begin scheduling social media posts at noon.
- Your UX team conducts A/B testing on your website. Based on the results, they decide to feature static images instead of hero videos.
- Your dev team analyzes page loading time and sees that your site is loading slowly and is causing a high bounce rate. They begin prioritizing site optimization to keep visitors from becoming frustrated as they browse your site.
A culture that prioritizes data-driven decision making allows for the free flow of information between departments. There are no silos of data, so your UX designers have access to development data, your managers can see website analytics, and your project leads can get information about cybersecurity performance, if they wish. The bottom line is that a culture of DDDM allows for everyone to have the information they need to make informed decisions.
7 benefits of data-driven decision making
Here are seven key benefits of creating a culture of data-driven decision making.
1. Decreases risk
Using data to inform decisions is the smartest approach to making choices that mitigate risks. For instance, if your UX team knows most of your customers access your website through a mobile device, they can prioritize UX design on your business’ mobile site. And if your marketing team looks at your customer data and learns most of them love murder mysteries and podcasts, they can buy ads on crime podcasts with a better return on investment.
2. Encourages critical thinking
It’s easy to fall into the trap of performing your job by rote. A culture of DDDM breaks up the monotony by encouraging team members to analyze data and challenge previously held assumptions. For instance, if engagement on a landing page plummets, your UX team and your product managers should consult data to analyze the problem, then begin forming hypotheses and testing to confirm or refute theories. This kind of critical thinking keeps the business competitive.
3. Counters bias
Say you work for a video game company that builds a successful roleplaying game. Before fostering a DDDM culture, it’s possible your artists worked under the assumption that most of the players were male, and that influenced many elements of the game. After analyzing the data, your artists learned their players are half male and half female, and that challenged their assumptions about what their audience would find most appealing. Data cuts through bias—whether unconscious or not—to help determine the best course of action for the business.
4. Saves time and money
Imagine how much time and gas you’d waste driving a car from Chicago to Los Angeles without consulting a map or a navigation system. The same theory applies to business decisions made without looking at data. If you, for instance, build a customer persona based on suppositions instead of actual customer data, that persona could influence thousands of poor decisions, resulting in products that don’t respond to customer needs and marketing that doesn’t target the right audience.
5. Drives accurate understanding of goals and outcomes
Looking at data helps determine where you currently stand so you can determine where you’d like to be. If you’re a project manager, you might be helping launch a new solution that the business would like to roll out by December. That might seem like an arbitrary goal, but when you learn that all the data says December is when businesses start looking to purchase their solutions for the next year, suddenly the deadline makes much more sense. Data is the empirical evidence that cuts through abstractions.
6. Gives an accurate gauge of market response
You’re partial to your solution, so it’s easy to feel like everyone in the world thinks as highly of it as you do. But it’s difficult to argue with data. Instead of interviewing one or two loyal customers who will tell you what you want to hear about how great your product is, an analytical look at the data will tell you how the market really feels. And that response—good or bad—is vital for determining the real success of your solution.
7. Provides a metric for success in your role
Data-driven decision making helps your business make decisions that align with business goals and objectives, but it also helps on an individual level. For instance, if you’re a content marketing manager, using Google rankings to measure the success of your content is one way of knowing your SEO strategy is paying off. That’s useful for determining where to tweak strategy, but it’s also useful for justifying your decisions to stakeholders. Let the data speak for you: it’s more than happy to help you get a raise.
A culture of data-driven decision making results in a more analytical team that feels confident in the decisions they make. Data can help drive innovation and also ensure your business develops strategies for gaining a larger percentage of the market. And as an added bonus, DDDM helps team members examine the decisions they make on an everyday basis, from determining the smartest and safest car to buy based on consumer testing to choosing the best real estate investment based on neighborhood comps and market analysis. A positive approach to analyzing data ultimately results in smarter decisions that mitigate risk and drive innovation.
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