INTRODUCTION
“What is the first step in creating a data-driven organisation?” Many leaders ask. But let’s go back to the more fundamental question of why we want to make decisions with data in the first place. One of the reason is humans are not perfectly rational beings, which is perfectly OK. When we make decisions based on judgement and intuition, we introduce heuristics and biases into the process. This is clear to anyone who has read the book Thinking, Fast and Slow by renowned behavioural economist Daniel Kahneman. #humblebrag I recommend that you read the book but bear in mind that it is 499 pages long and pretty confusing.
While we may never get to make perfect decisions with every available data point, we can reduce the margins for error by focusing more on numbers. Rich numbers help unveil insights, stories, angles, and correlations that we may have missed. This is important because we want to reduce the effort of making a sound decision. Consequently, this means that we can make decisions faster and reduce the risk of coming to an erroneous conclusion. Additionally, it means that we can then experiment faster and fail faster for us to pivot our strategies. In return we get the chance to move on to the next iteration or idea that we may have. However, this is only possible if the organisation is ready to have a culture that accepts mistakes and uses them to learn rather than punish.
First Steps
So going back to the question about how we get started in creating a data-driven organisation. As with everything, it flows down from the top. The C-Suite needs to be committed to making decisions based on data. They need to be willing to challenge people’s assumptions and have the proper understanding that even data may have its inaccuracies; this is known as statistical confidence. If we have an insufficient sample size or poor data in the first place, the insights we extract may not be accurate. This is known as Garbage In Garbage Out or GIGO, but that is a whole topic for another day. Leaders still need to use their experience and their intuition to make common-sense tests of the data. This form of validation and critical examination of the data is essential to good decision-making.
So, in practicality, how do we get this process started? Well, it all begins by asking the question, “where is the data to back this up?” when team members present a problem or solution. If leaders are committed to this change, this question must be asked consistently whenever a team member offers a possible solution. This habit needs to be ingrained until team members automatically present data to support their findings. They will also become more confident in their data. To deploy long-lasting culture change, consistency is the key; it may be painful at first but will prove fruitful in the long run. Much like other long-term goals in life like health and wealth, there must be sacrifices in the short run for future gain. When leaders start doing this, every layer of the organisation becomes more data-driven because they know what is expected of them.
Leading from the Middle
What happens if you are not at the top of the organisation but in a middleman position? Well, what you can do is start to present all your solutions backed up with data. This does not mean that you offer tables and tables of numbers and percentages in a spreadsheet but rather in simple, easy-to-understand visualisations. Make use of how you collected, cleaned and analysed the data to lend credibility to your findings; this is what accurate data analysts do and a skill any leader can deploy. Again, this is another topic for another day.
Why visualisations? Humans are visual beings, and we respond better to pattern recognition in shapes and colours rather than numbers. The human eye has been evolutionarily evolved to do so. We should not fight against this Basic Instinct. But presenting data this way goes beyond the standard pie charts and graphs we are used to seeing. Instead, create dashboards that can present data in ways with which it can be interacted with and drilled down for further insights.
START TODAY
When you start presenting these dashboards and data stories with your findings, your leadership team will get used to this style of information, and they will start asking the question, “where is the data to back your plan up?”. Then you are on your way to creating a Data-Driven Organisation.
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