Data has become a hot-button topic in our technology-driven world. Every website we visit collects information about us. Google knows what sites we visit and adapts to show us ads based on our browsing history. Retail websites track our purchases and our viewing preferences. Even brick-and-mortar stores track our purchasing habits through customer loyalty and rewards programs. The amount of data collected on consumers is growing year after year, making the gathering and analyzing of big data a growing sector of the economy.
With the ability to collect so much data through transactions and technology, how well do we really understand and utilize the information that we have? Surveys of CEOs and business owners unanimously support the belief that data will drive the economy in the future. Data-driven decision-making has the power to change the customer experience and how businesses operate. Yet, the same executives who believe that data is the future of business often report that their organization does not use data effectively to direct projects.
Barriers to Data Adoption
For decades business leaders have run their corporations on human decision-making. Based on limited customer feedback, sales statistics, and their own business experience, they made decisions about advertising and what products to promote. Changing gears to adopt data-driven decision-making can feel uncomfortable, especially when the data seems to point in a different direction from what your intuition may be telling you.
1. Responsibility – As the head of an organization, CEOs are responsible to the board, employees, and other shareholders for the decisions they make. This fact does not change regardless of the motivation behind the decision. Whether based on experience, data analytics, or advice from the board, the result is the same. CEOs may be reluctant to trust a data scientist or an artificial intelligence program making recommendations based on preprogrammed algorithms.
2. Data Gathering – Customer data, sales data, and product performance information may all come from different sources in different formats. The wealth of material can be overwhelming to sort, and data sets may be incompatible with one another. To properly use the available information, corporations must sort through and identify the relevant from the irrelevant and control for quality. A shortage of in-house skilled data analysts has led many companies to seek out executive recruiters to hire roles such as a CDO or Chief Data Officer to advise top-level executives.
3. Data Deception – Statistics can be misleading if read in the wrong context. Number experts can often craft the numbers to support the position they are selling. In the case of executives, they may misread the data and see what they want to see. Cherry-picking the data can lead to false interpretations and disastrous business decisions. If data is to be used to inform decisions at the executive level, you need a data-savvy executive leading the charge.
One of the most substantial barriers to a data-driven business is creating a company culture where executives, managers, and employees value data in the decision-making process. Establishing this culture must begin at the top with executives. They lead by example as they analyze and inquire about the data before making decisions for the company. CEOs experienced in and comfortable with using data analytics to make business decisions bring unique benefits to corporations.
1. The Right Data –When businesses track a mountain of data, progress in one area can easily distract attention from failure in another. Data-savvy executives understand which KPIs relate directly to the goal they are trying to achieve. They track metrics that are a measure of the business problem they are trying to solve. Understanding the importance of identifying the relevant metric to track in each department and each hurdle the corporation faces is the first step towards leveraging the available data. The second step is making the information readily available to those who need it. Real-time access is ideal but may be a difficult challenge to overcome.
2. Data-Driven Decisions – Artificial intelligence and machine learning cannot replicate nor replace human decision-making. Consulting with other executives and data experts and weighing all of the information available before making a fully informed decision is wise. Data-driven decisions are not based purely on numbers but on careful consideration of opinions supported by impartial data.
The fast pace of business often does not allow executives to wait for strategists to crunch the numbers and gather data on the problem. They must make decisions by relying on existing information. Such decisions may depend on gut feelings and problem-solving skills. However, executives should seek data to back up their choices and the implications of those decisions verified. The data will support or undermine the decision, and a course correction can be made if necessary.
3. Lifelong Learners – Because the numbers on the page and the lines on a graph only tell part of the story, it is up to executive leaders to fill in the blanks with their experience. The decisions they make based on available data will inform them about the metrics they are using. Were they interpreted correctly? Did their reaction to the data lead them closer to success? There is no substitute for experience in making data-driven decisions. Data-proficient executives can lead the charge to use data at all levels of the business to support decision-making and inform business practices.
Executives with experience in data are few and far between. Yet, it is a skill every business owner knows will be necessary to their future in this technology-driven economy. If you are looking to expand the data proficiency of your executive leadership, consider partnering with an executive search agency. They can assist you in finding a qualified candidate to bring data to the forefront of the decision-making process in your c-suite.