What does it mean to have a data-driven mentality?

A follow-up call with a former client turned into an eye-opener. During the initial engagement, she ran a small service company that provided contracted helpline support. On the first call attempt, she asked for speed because the company jet was taxiing for takeoff. Quite a change.

Later that day in New York, that same client described the change. The question was simple: what happened? How did the business move so quickly? The answer: scorecards and dashboards built for the team kick-started a shift. They helped build a data-driven mentality.

Catchphrases aside, what does a data-driven mentality actually mean? In this case, the team used dashboards to cultivate a mindset across the company. That mindset was to continually use data to make fact-based business decisions. The goal was a stage where the use of data by executives and employees became a natural part of day-to-day activity. Expectations were clear: line-of-business and functional leaders in sales, marketing, finance, and operations should use relevant data assets to make sound decisions quickly, which in turn leads their organizations to business and operational success.

Are you and your company becoming data-driven? How do you know?

Here are a few telltale signs to know if you’re truly a data-driven business:

• It means being willing to complement human decision-making with data and analytics. Robots do not make strategic choices. Humans still make decisions, but as many books and studies have shown, humans are not always great at it. Bias and past experience can cloud judgement and lead to poor calls. Data can augment fallible human thinking. It also means running business experiments and tests. As powerful as Google is, the company does not sit on its laurels. To improve its products, webpages, and recommendations, the advertising giant constantly runs A/B tests.
• It means being willing to make large acquisitions largely for data. Case in point: Microsoft’s $26B acquisition of LinkedIn. Many analysts viewed Microsoft’s purchase largely as a data play. Microsoft now has even more data about people, interests, capabilities, and career paths. In every market, the company knows what jobs are open, what skills are available, and where the gaps are. With the addition of Lynda, there are courses to close those gaps. Data-driven mentality wins. It also means stitching together data from disparate sources. Ads seen in Gmail lining up with YouTube history is not an accident. That client linked learnings from the call centre to trouble tickets from the software vendor and Salesforce records to predict who would be having the same problem next, then called the customer before the event even occurred.
• It means analyzing new data sources even when the rewards are uncertain. One Operator analyzed which help pages callers viewed before phoning versus that Operator’s ability to deliver first-time call resolution (“F-1”). The finding: if users read specific web pages before they called, first-call resolution improved because the caller had a better understanding of the problem and what needed to be done. That insight informed better web page design, search, and an understanding of caller behaviours.
• It means moving beyond Microsoft Excel and using interactive data visualizations. Klipfolio Klips powered the client dashboards, making data available by default and in real time. The mindset shift was huge, along with thee ease of making visualizations.

It's also important to note that being a data-driven business does not entail:

• Only installing Hadoop or Spark in a test environment.
• Purchasing fancy business intelligence applications but not using them.
• Inserting the IT department into every reporting request.
• Merely hiring a Chief Data Officer (CDO) with no strategy in mind.

What’s the benefit?

As that client executive looked to make better use of data, the team was able to differentiate the organization in a competitive market by using the right data at the right time for conclusive decision-making. Data-driven companies show the determination to gather relevant data from all aspects of the business. This allows teams to dig deeper to understand the root causes behind business conditions, like solution opportunities or new offerings.

An enterprise-wide approach to data gathering and analysis, not just leadership or the IT team, is more valuable for the organization.

Data that’s only seen within a silo of a company:

• Undermines the quality of decisions across the company
• Increases risk
• Reduces the security of corporate data
• Reduces efficiency
• Drives IT costs up

So, how do you build a data-driven mentality?

First, define what your strategic objectives and priorities are. From there, decide which success metrics will be measured and mapped to your KPIs. While it may seem like a daunting initiative, many teams complete this work in a day or two. This is the first step in aligning tactical execution at the department level with corporate strategy and measuring performance against defined goals and objectives.

The next step is mindset and culture. The use of data in everyday activities must be embraced across the organization. Without top-down and bottom-up commitment, adoption and execution will stall. Internal champions, such as line-of-business leaders, can drive adoption by quantifying and then openly sharing the benefits they’re seeing.

Make it a standing agenda item in monthly all-hands meetings. The cross-functional spread of data-led best practices can become a healthy competition across teams. As data sources are shared, adoption spreads and collaboration between teams and departments improves. Executives, managers, and employees start thinking and acting differently, asking more probing questions about the business or operational challenges they’re trying to tackle. Employees begin figuring out how to answer these questions themselves rather than “just asking the boss.”

Research from Carnegie Mellon University and A.T. Kearney indicates that data-driven leaders are also more likely to run pilot programs. Pilot projects give users first-hand experience with reporting and dashboards, encouraging a sharing and data-centric mindset.

Evangelism

Perhaps the most important task is evangelizing the power of data to areas of the organization that may not understand its potential or may be resistant to change. Peer-to-peer conversations create a low-risk environment to understand the value data can bring, which helps build support for data initiatives.

In our client’s case, she saw the constituent groups to include:

• The C-suite. The executive team must be on board to cross-functionally share data, support projects, and help drive change through the company. An executive dashboard can facilitate this process by providing a centralized platform for data visualization and communication.
• Business leaders. They need to understand the corporate objectives and see the linkage to their own objectives. They may be sensitive to or feel threatened by organizational change.
• IT teams. They can be your biggest obstacle. They may feel they have the most to lose and nothing to gain. This varies depending on the organization.
• Users. These are your customers. They need to be on board with the benefits of data initiatives to ensure engagement and positive results.

And they all lived happily ever after!

What’s next? That company now makes decisions more accurately and faster than its competition. The next step is to become even more agile and gather more data, faster, across the entire organization

About Pm2

Brett is an Executive Partner at Pm2 (Performance Measurement & Management), an international consulting firm specializing in the development and implementation of strategic dashboards and scorecards. The frameworks they use include OKRs (Objective and Key Results), Balanced Scorecard, 4DX (Four Disciplines of Execution), Lean, Six Sigma, etc. Their work has been profiled in Harvard Business Review, Fortune, and Forbes magazines, as well as countless business books and periodicals. We are pleased to have this thought leader as an active contributor to our blog posts.