The digital age has brought an ever-increasing amount of data to businesses, making data analytics a critical part of business decision-making.

It is in this context that the data-driven approach has stood out, with companies seeking to base their decisions on insights extracted from data. In fact, according to an Accenture study, data-driven companies can achieve up to 30% annual growth with the approach alone.

Therefore, directly impacting business results, in addition to other items that we will cover in this article, are some of the benefits of being data-driven that cannot be ignored by high-performing managers.

Do you want to know what data-driven is and what is its importance in making business decisions, as well as some tips to better develop it on a daily basis? Then just continue reading the article we have prepared on the topic, just below!

What is data-driven?

Data-driven means that decisions are based on data, rather than subjective opinions or guesswork. This type of behavior is increasingly important these days, where the amount of information generated is immense.

Unlike the traditional approach, where decisions are based on personal opinions, assumptions, or subjective judgments, the data-driven approach is based on facts and evidence.

Of course, experience still counts for a lot in decision making. In this sense, it is important to use it, together with the available data, in order to raise the quality of the choices made and, consequently, the quality of the results obtained as well.

What is the importance of data-driven culture in decision making?

The importance of data-driven culture in decision-making is undeniable. With the increasing amount of data available, companies need a solid and reliable approach to turning general data into valuable information, and then using it to improve their business.

Now that you know what data-driven is, here are some reasons why this culture is important for decision making in companies:

• Improves decision accuracy: By basing decisions on data and analysis, companies can minimize subjective bias and make more accurate and informed decisions. In addition, data can be used to identify patterns and trends, which can help predict the future and make more strategic decisions.

• Increases efficiency: Data-driven culture allows companies to identify and resolve problems faster, which increases overall efficiency. In addition, data-driven process automation and analytics can reduce the time and complexity of manual tasks, which also increases business efficiency as a result.
• Fosters innovation: Data-driven thinking enables companies to explore new opportunities and paths forward, based on data and analytics. This helps to identify trends and patterns, which can inspire new products, services, and solutions.
• Increases transparency: By basing decisions on data and analysis, it is easier to explain decisions to stakeholders, as well as convince them and get them to understand . This increases transparency and trust in decision-making processes.
• Improves organizational culture: By valuing the importance of data and the data-driven approach, companies can foster an organizational culture centered on the pursuit of insights and knowledge. This encourages the team to work together to solve problems and make data-driven decisions, which can increase collaboration, innovation, and overall company success.

In addition to the above, decision-making through a data-driven approach reduces the chance of failure by not betting on the “inspiration” of the person responsible for the decision.

In order to prove this point, we propose a quick mental exercise: try to make difficult decisions at the end of the day, after you have slept poorly, woken up early and worked all day on strenuous tasks. Possibly, if you are trying to decide something without any kind of support, your ability to make a good decision will likely be compromised.

Whether the above scenario can be aggravated by a sick child or by household chores that need to get done and taken care of; in this case, the outcome of your decision might be a total disaster.

Read also: Ideal Competency Mapping: What it is, Goals and 5 Steps to follow

How to develop a data-driven culture?

Just knowing what data-driven is, unfortunately, is not enough. Therefore, we have brought to you 8 steps to develop a data-driven culture, always bearing in mind that this has got to mean a solid change in behavior in the day to day of your organization:

1. Invest in technology: Technology is critical to collecting, storing, and analyzing data efficiently. Ensure to choose the right tools to meet your company’s needs and invest in training so everyone knows how to use them correctly.
2. Value data: Make sure that everyone in the company understands the importance of data and that it is seen as a valuable resource for decision making.
3. Empower staff: Provide training so that staff have the skills they need to work with data and analytics. Also, encourage the team to develop their skills in data analysis;
4. Set clear objectives: Setting clear and measurable objectives is important to ensure that data analysis is aligned with the company’s objectives.
5. Encourage collaboration: Create a culture of collaboration where teams can share data and insights to make more informed decisions.
6. Integrate data: Integrate data from different sources to get a more complete and accurate view of the situation;
7. Adopt a testing mindset: Encourage the team to try new solutions and learn from the results to continually improve.
8. Committed leadership: Leadership teams should be role models for the data-driven culture, and thoroughly support and encourage the team to adopt this approach.

Data-driven as a management tool

Of course, the application of data-driven approaches is not a silver bullet. In this sense, it is important to understand that it is a useful tool for the day to day of managers, but it will hardly prevent, by any means and once and for all, bad decisions from being made.

As previously mentioned, by basing decisions on data and analytics, companies can make accurate judgments, increase efficiency, foster innovation, expand transparency, and improve overall organizational culture.

However, the human factor is still important in this equation, as well as the experience in the area and all the baggage and experience developed. In fact, understanding the numbers is an essential part of the process, but the creativity and intelligence in its application is what makes all the difference.

Did you like getting to know what being data-driven is? So, also take the opportunity to read: Open and closed innovation: concept, differences and benefits of each model