Are You Creating a Data-Driven Organization?
Data-driven decisions and a data-driven mindset are admirable qualities in an individual and advantageous qualities in an organization. I’ve encountered many organizations that think they’re data-driven. Unfortunately, many are deluding themselves and failing to make the critical investments necessary to become truly data-driven. Time for a gut check (pun intended). Do you work in a data-driven company? Here’s a quick set of statements to guide you to your answer.
How strongly do these statements resonate?
- We don’t have anyone with “analyst” in their title, job description or as part of their informal responsibilities.
- Decisions are heavily driven by gut feel.
- My organization’s idea of a business case is to take a “swag” at the numbers.
- Data visualizations are left in their stock format – there’s no effort to clean them up for more meaningful insight generation.
- No one cites their sources – on internal or external reports or presentations.
- No one puts a chart, graph or even a table in their reports or presentations.
- People say “I think” or “I feel” about objective, verifiable facts.
- People outright reject the data, stating: “this isn’t how it really is…”
- You review data as a team and then it’s never referenced again.
- Data visualizations have no context – no benchmark, no goal line, no average line.
- Reporting primarily serves to justify someone’s existence instead of to generate insights for decisions.
- Reporting doesn’t happen at all or it’s incredibly ad hoc.
- Decisions are heavily driven by political power.
Take a minute and count the number of statements that describe your organization. If a lot of these statements feel familiar, I’ll state what you’ve already realized. You’re not part of a data-driven organization. Which is perfectly fine, if you want to create or work for the kind of organization that ignores the wealth of information and insights available today.
A model to move forward
Let’s say you’re not comfortable being part of a gut-driven decision-making organization and you’re ready to drive the change. Wouldn’t it be great if there was a straightforward process for making that happen? Perhaps one that walks you through a sequence of steps that catalyze and galvanize the transformation within your organization? I thought so too. Which is why, with my colleague Kevin Joyce, we created a process for turning into a data-driven decision-making organization, or 3D Organization. Kevin wrote about this recently, and I recommend checking out that post for a more in-depth review of this process. Here’s the summary version:
Underlying this process is a set of six critical questions that must be answered in order to effectively make data-driven decisions. We’ve tested this model extensively in the last two years and found these questions present in every organization that wants to make decisions based on data and insights. Failing to sufficiently answer any of these questions will surely yield incremental improvements at best, but will hinder any real, fundamental change. And attempting to rush to the end instead of following the sequence will have even worse results. If you’re going to transform your culture, a purposeful strategy aligned to the key drivers of your business is the surest route. That strategy originates with your KPI Roadmap, which answers the question “what should I measure?” within the 3D Organization framework. I unpack this foundational artifact in my post The Critical Importance of a KPI Roadmap. I highly recommend checking that out for more details on establishing a KPI strategy.
In defense of being data-driven
An argument I’ve heard levied against pursuing being more data-driven is that leaders have made – and will always have to make – decisions with imperfect information. While true, just because something can’t be perfect doesn’t mean it can’t be better. Manufacturers have pursued this noble effort forever – slowly trying to eliminate as much waste material as possible. And much like manufacturers, we need to start thinking about eliminating waste in our virtual, intellectual and opportunity resources. Every poor decision, ineffective decision-making process, failure to generate innovation or just plain missed opportunity reflects real costs – real waste – to our organizations and the communities we serve. In the knowledge economy, the key to effectiveness and efficiency isn’t through optimizing productive time. It’s about generating the best decisions.
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