Becoming Data Driven

“Data driven” is one of those descriptors you see all businesses frequently using. It’s being used to the extent that the term has lost some of its real meaning. We shouldn’t let the current state of the term’s usage detract from just how powerful a transformation becoming data driven can actually be. It’s not as simple as adding a phrase to your brand. To be data driven has real meaning and requires a real investment of time, capital, and labor. Thankfully, the benefits can be just as powerful.

In this article, we’ll give you an overview of what becoming data driven means. We’ll start off by examining the benefits of data driven decisions, then talk about the costs and challenges of transforming your organization. Let’s jump right in.

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What Does it Mean to Be a Data Driven Organization?

In an era of “big data,” it’s important to simplify the discussion of being data driven. Being data driven does not imply a wholesale embrace of expensive software and AI-enabled machine learning. Becoming data driven means ensuring every decision made has a solid underpinning in data. Let’s use an example.

Imagine a company is considering launching a new product. On some level, almost any company is going to use some data in making the decision. But a company that is not data driven will likely focus 75% to 85% of the discussion around the decision focused on the product’s quality and why customers will buy it. The team will use high level cost estimates to produce and suggest a price range. Then, they’ll talk about a range of sales volumes that the product development team believes is possible. They may then talk about the overall market size for similar products, but are likely to use a broad definition of the market. The VP or CEO won’t sign off on the project because of the data, but based on past experience and intuition. In that sense, even though the company used some data in the decision, it is still not a data driven organization.

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Contrast that with a company that requires all new potential product launches to:

  • Use market research to talk about the specific customer needs the product will meet
  • Define the market for the product narrowly and show a range in market size
  • Discuss competitive products, price points, and product comparisons that are quantitative (X% of people we survey preferred, or the product allows you to do this Y% faster)
  • Show a range of cost estimates that include data on previous product launches (top down) and show the details of where the costs come from (bottom up)
  • Build a financial forecast for the product launch that incorporates all of the above, includes a summary of key metrics like implied market share, and shows a downside, expected, and upside case

In the above discussion, the former company is not data driven, while the latter company is. When we talk about being a data driven organization (or data driven storytelling or building a data driven culture), all we are talking about is companies that are a bit more like the latter company than the former.

What’s the Benefit of Data Driven Decisions?

Any business owner worth her salt knows that the costs and benefits have to add up at the end of the day. Knowing that investments are required in order to become more data driven, we have to ask: what’s the benefit of data driven decisions?

Whether we like it or not, we are living and operating in the age of Big Data. Explosive quantities of data are being produced at a constant rate, and you can be sure that your competition wants to leverage this. A data driven approach is appropriate for many companies across virtually every industry and sector. But being data driven is more complicated than it might seem. Below are several benefits of being data driven:

Data can help you make better decisions.

It might seem like a truism to say that one of the benefits of being data driven is making better decisions. But the fact of the matter is, management consultants are forever running into business executives who claim to be data driven, while making decisions based primarily on intuition or past experiences. The best decisions are driven by a combination of data, intuition, and past experience, with the foundation of the decision being data.

Data can help you make faster decisions.

If you already have experience running a business, you know that so often, situations demand (and outcomes depend upon) making the right decision at the right time. Of course, a businessperson doesn’t have the scientist’s nor the artist’s luxuries of time and experimentation. Research shows that, even if some of your decisions are wrong, making more decisions that are sometimes wrong can lead to better outcomes than making fewer decisions that are more often right. Data driven decisions can be made quickly if you stick to the facts.

Data driven decisions keep you grounded in reality.

Without incorporating data in your analyses of situations and projections for the future, you’re not only limiting your decision-making arsenal to gut instinct, but you’re also subjecting yourself to the subconscious influence of emotions. This is not to say that emotion and passion have no place in running a business. However, when making important decisions, the wisest approach involves consciously incorporating both qualitative and quantitative factors.

Data driven decisions can unearth expected insights.

More managers and economists are recognizing that a data driven approach can support more boldness and innovation, rather than less. Data driven decisions enable managers to pursue innovation more wisely, thereby empowering progress. Investments in data analysis software or data analysts to sift through information can lead to deep insights. You may find that, although you only offer product X in 5% of your stores, customers who have purchased product Y will buy product X when it is offered to them 90% of the time. Or, you may find that customer A, who is one of the most profitable customers you have when measured by gross profit dollars, actually seems to call your customer service line 3X as much as any other customer. This creates many hidden costs for your company. This type of insight just simply isn’t available to the organization that is not data driven.

Making the Leap to Becoming a Data Driven Organization

What does it take to become a data driven organization? Is it as simple as deciding that you want to be that? Or is it a matter of hiring a few more accountants, maybe a data scientist or two? Obviously, it’s not that simple. But part of the trick is indeed as simple as making using data in all key decisions a priority. You can set up templates to be used in all key meetings that require the collection and interpretation of data. You can hire people who know how to identify the key sources of data that every organization has access to, beyond basic financial data. Before you decide, you can require that some market research and data driven testing occurs.

Challenges of Creating a Data Driven Organization

There are many challenges to creating a data driven organization – but almost all these challenges relate to changing the culture of an organization. To really transform your organization, you need to create a data driven culture. Changing a culture is no easy task, and won’t happen overnight. Let’s explore some of those challenges.

Challenges of Creating a Data Driven Culture

Changing a culture supports a broader system in which a data driven approach informs decisions at every appropriate level of operation. Consider every stage of your overall business operations and imagine what it would mean to incorporate a more data driven approach. Not only the benefits, but the costs. What additional resources would it demand, for instance, to achieve more data driven design, informed by data driven testing? Can you provide these resources within your organization, or would it be more efficient to outsource that work to a trusted data driven entity?

One difficult and costly element of scaling a business is moving toward data driven marketing. Search engines and other platforms provide some tools for incorporating data in your marketing decisions. Many third-party companies specialize in helping other organizations with data driven marketing.


Becoming a data driven organization is in an odd sense both easier and more difficult than you might imagine. You can start becoming a data driven organization and building a data driven culture with some simple steps. But becoming a truly data driven entity that relies on and truly leverages the power of data will take time. Learning to take on a more data driven approach – as part of a conscious symphony of different perspectives – can empower leaders to make better decisions. Becoming data driven can help companies mitigate weaknesses, increase strength, and stay relevant in a competitive business landscape. If your organization or team needs help becoming more data-driven, we have custom training offerings devoted to exactly that. Reach out today.

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Filed Under: business consulting, Corporate Training, Leadership & Management, management consulting