The world of business is a very fast paced one, thus you will need to constantly keep making strategic decisions that will ensure the success of your business. As a master of his craft with three-decade long experience in private equity, real estate investing and management, Grant Kelley outlines the importance of data-driven decision making in corporate strategy. Stay glued to the end of this article to understand all about this important metric.
Why is data-driven decision making Important?
Data-driven decision making involves the use of data to inform and guide the decision-making processes of your business. This is as opposed to the traditional method of relying on mere feelings or intuition. Feelings and intuitions have proven to be insufficient in guiding the decision-making processes primarily because they lack the facts and market information that is needed to influence decisions. This is but one of the reasons why data-driven decision making is important, here are a few others;
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Helps to Identify Trends and Patterns
While it is possible to predict the movement of the market based on certain conditions, nothing beats studying the actual data. This data helps you to identify patterns that might not be easily deduced by intuition. With this pattern, companies can key into opportunities as they pop up, and as well make changes in their strategy when needed.
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Reduces Risk
Think about it, would you rather assume what a person likes, or would you walk up to them and enquire? Of course, the latter will be more effective. This is exactly how it is with data; it eliminates the uncertainties that comes with intuition, thereby reducing the risks of poor decision making for your business.
How companies can use data to drive strategic decisions
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Define the Problem
In order to begin collecting data of any form, you must first define your problem. This gives you a laser focus in the field.
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Collect and Analyze Data
Next step is to collect and analyze data that are peculiar to your problem. This includes, internal data such as feedback from customers, and external data such as market trend and demand curve.
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Interpret the Data
In order to utilize the data gotten, interpreting and likening it to your problem is very important. Interpreting the data involves identifying patterns, and trends, then drawing insights from them.
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Make Decisions
Based on the insights gotten from the data, you can now make decisions that will benefit the business in the long run.
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Keep a close watch on the results
Because the market is fast paced and dynamic, it is thus imperative to keep a close watch on the results of decisions. This will help you identify if there is still need for further improvements.
Examples of Data-Driven Decision Making in Corporate Strategy
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Netflix
By analyzing your data, Netflix deduces shows and movies that are popular in a particular region, and uses this information to influence its content acquisition.
Conclusion
Data driven decision making is an important aspect of corporate strategy. Grant Kelley has in this article shown that by using data to guide decisions, companies can have an edge in the competitive market, reduce risks and increase profitability. It is one thing to know about the benefits of a data-driven decision making strategy, and it is another thing to actually have the means to get this data. It is thus important for companies to have a data strategy in place, one that simplifies the processes of collecting, analyzing and interpreting data. This way they can stay ahead in a dynamic market.
