Not too long ago, only the financial world relied on data. Now, whether we like it or not, data is important in every business, and it promises to become only more relevant in the future. Consequently, business leaders need to learn how to harness data's value while still trusting intuition. Sometimes the feelings and instinct that you have long relied on when making important decisions are right; other times it would be better to have data to back them up.
And metrics are at your fingertips: Your website, social media and customer contacts all
generate usable data. Sometimes the
biggest problem is that with so much data, it is hard to know where to start. A recent report found that 2.5 quintillion bytes — that’s a "1" followed by 18 zeros! — of data are created every
day.
In other words, it is impossible to follow all the data we have. Company leaders need to recognize this and home in on the data that will help their businesses grow. Good data can be helpful for:
- Finding inefficiencies such as bottlenecks and duplications so that you can make improvements to processes
- Identifying productive employees
- Noticing changes in historical trends that may indicate potential new challenges
- Tracking customer characteristics and behavior through demographics, purchase preferences, pain points and the like
- Conducting market research by finding new competitors and competitor pricing (for example)
- Mitigating risk by assessing internal controls, cybersecurity and similar
Even this narrowed list leaves you with a lot to consider. Depending on your bandwidth, it may not be possible to monitor all your data in a meaningful way. That is why you need a plan that targets the data that is most important to your business.
Be SMART
A good way to accomplish this targeted data use is through goals that are specific, measurable, achievable, relevant and time bound. Using SMART goals provides a workable framework that includes a beginning and an end. Without the framework, it is easy to slip into never-ending cycle of looking at data but not using it to improve your business.
Once the data is gathered from your available sources, it needs to be analyzed for patterns, trends, opportunities and challenges. After it is analyzed, you have to plan how it will be used. This is where gut feeling can meet data. If the data says that shiny red puffer coats will sell but shiny blue fabric is available at a great price in large quantities, which should win, data (make red coats) or gut feeling (buy the less expensive fabric)? If the gut wins, the manufacturer risks sales. If data wins, the manufacturer must spend a lot more money on materials.
Most business owners have found themselves facing not-easy choices. In general, data gives you backup for your actions, but your instincts come from experience. In a best case scenario, the answer may be to use both.