Why Is Everyone Talking About The Revolution of Data-Driven Management?
As companies struggle to cope with the rate and pace at which data is being produced – by 2020, 1.7 megabytesof data will be created every second, for every person on earth – data-driven management is becoming a hot topic. An approach to business governance that values decisions backed by verifiable data, the success of data-driven management is based entirely upon the quality of the data gathered and the effectiveness of its analysis and interpretation. From a business perspective, making decisions based on evidence is a clear win. Yet, many organizations find it difficult to adopt a data-driven culture. While there are many teams who are willing to embrace this transition, there are many others who undermine it. Irrespective of how it is perceived, data-driven management is all set to bring about a revolution, hands down.
So, what exactly is data-driven management? Why is it becoming popular? And how can businesses benefit from it? Let’s find out!
What is data-driven management?
In today’s highly competitive world, meeting customer needs to the T is a given. If you do not act fast, someone else will, and eat your share of the market. This will not only affect your sales, but can also make you irrelevant, and maybe even non-existent. 79% of enterprise executives believe that companies that do not embrace data mining techniques will lose their competitive position and could face extinction. If you want to understand customer needs, keep pace with the industry dynamics, evaluate how your competition is faring, know how a particular product will perform in the market or where to deploy resources, data-driven decision-making is extremely crucial. In simple words, data-driven management is the process of making business decisions that are backed by hard data, as opposed to intuition or observation. With business technology advancing exponentially, data-driven management is becoming a fundamental part of every industry.
Why is it becoming popular?
As the amount of data generated by enterprises reaches an all-time high – including data about employees, customers, finance, markets, trends, and more – businesses are finding it hard to analyze these huge data sets in order to drive effective decision-making. Although it was feasible to make decisions based on observation or guesswork when the data was limited, in today’s data-hungry world, decisions have to be made using a plethora of modern tools and technologies; tools that can unearth insight from data and present it in ways that back up decisions. That’s exactly why data-driven management is picking up steam.
As the demand for data-driven management increases, business across the world are embracing self-service data analytics tools – tools that do not require a skilled data scientist to crunch the numbers; tools that can be used by resources with no experience in data management or analysis and present their own decisions that is backed by the data in question. Such data analysis is enabling enterprises to monitor workflows, and performance like never before—and ushering in a new era of business operations that use data to train AI and machine learning models that will, in turn, transform the nature of work itself.
How can businesses benefit from it?
For enterprises looking to embrace the data-driven management revolution, the reasons are many: accelerated quality decision-making, reduced ambiguity, increased efficiency, and more. Let’s look at 3 top benefits of data-driven management:
- Better accountability: Organizations that use quantified metrics and analytical methods for driving key business decisions are more likely to be looked upon as more accountable. Data-driven management not just automates the herculean task of data analysis, but also helps enterprises make better, faster decisions. When decision-making is backed by data, even if the outcome turns out to be sub-optimal, organizations will be able to explain their actions in a logical and concise manner and have a better understanding of what/where/how they need to improve. The data-driven approach is just as beneficial for smaller organizations as it is for large ones, and enables employees and customers to have more trust in the organization that in turn improves loyalty and business output.
- Competitive advantage: Data-driven management is also a great way to gain a competitive advantage. Integrating massive amounts of information from different avenues of the business and assimilating it to derive actionable data in real-time can drive businesses to the pinnacle, and leave competition far behind. Data-driven decision-making models can evaluate competitive standing, highlight potential gaps in business operations, and provide direction to the steps that should be taken to stay on the edge. By having the right amount of information available at the point when a critical business decision has to be made, data-driven management provides enough time for the appropriate actions to be taken for the best business outcome.
- Efficient workforce management: Managing the highly capable, highly dispersed workforce is a mean feat for any organization. With no robust structure, consistency, or process around management, enterprises end up wasting a lot of time over spreadsheets, reports, and dashboards. Data-driven management lays down a robust foundation for day-to-day management of the large workforce – including specific actions employees take while executing workflows, time spent on activities, and actions that are most likely to lead to the best outcomes. With AI, BI, analytics, and machine learning tools, organizations can virtually track every activity, every interaction, and every decision made by employees and increase transparency. This can not only help motivate employees but also make sure their efforts drive the organization towards its goals.
Inculcate a data-driven culture
In contrast to the early days of IT, where it took a specialist with a strong background in databases, data warehouses and data management to mine data for information, today’s BI and analytical tools require very little, if any, support from the IT department. Business executives can leverage the sea of self-service, customizable tools to display the data they want to see and run custom reports on the fly. This ease of data mining and visualization allows business executives – with no technology backgrounds – to efficiently work with analytics tools and make evidence-based decisions, inculcating a data-driven culture across the enterprise.