Becoming a Data-Driven Company

We’re no longer in a world where people wait for a quarterly report to come out and painstakingly go through it in a meeting. Now, data’s being used every day to stay informed and make decisions. If you work in an operations role, you’ve likely heard the term “data-driven” a million times. It’s become quite the buzzword! But being a data-driven company can be quite difficult and it can sometimes feel impossible without having an expensive suite of tools and a team of business analysts. This is especially exemplified in small businesses. For larger companies, you may already have an overwhelming number of tools that all capture data in separate systems. But you may not have a way to connect them together meaningfully to make informed business decisions. 

This article will share some practical tips for becoming data-driven without breaking the budget, with a focus on getting results now and setting up for scalability long term.

Choosing the Right Data

You likely have lots of different types of data you could be leveraging in your day-to-day operations, and even more data you wish you had. Here are my top two methods for choosing the right data.

Identify your Quick Wins 

The best way to get started is to pick a metric or series of data that is simple and comes from a single data source. This eliminates the need for integrations and managing relationships between data.

For example, this could be your revenue information, coming from a finance tool. Revenue data may not be the most valuable on its own, since it’s only one small representation of how the business is performing, but it is a quick win that can get you into the habit of leveraging data to answer some basic questions.

Identify your Most Valuable Metrics

Consider: If you could not speak to anyone in the company, what are the top 5 pieces of information you would want to see that will tell you about the health of the business. This may be related to the company’s finances, operations, sales, growth, talent, IT infrastructure, etc.

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Your top 5 metrics may include:

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Likely, your top 5 will only include one or two of the examples above. Use your business context to determine what’s truly the most valuable to you.

Is it Worth It?

When collecting and analyzing data, there are two things to evaluate to determine “is it worth it?”:

1. The value the data brings to the company
2. The effort to meaningfully represent the data to the company

Only you can decide if the data is valuable (see the section above). For effort, consider that it’s proportional to:

• The sources of data required to represent your metric
• The complexity of the relationships between your data sources
• The additional work required to transform the data to be useful

This can help you categorize each of your metrics into one of:

1. Low Effort - this data is simple to collect, simple to maintain, and doesn’t require connections or significant transformations. For example, capturing survey results in a single spreadsheet or using telemetry data captured by a single tool.
2. Simple Connections and Transformations - this data comes from multiple sources and may require simple connections and/or transformations. For example, consider you have two tools with project finances and project-specific information that both contain the project ID. A simple connection could be to export the data from both tools to a single spreadsheet and combine. A more complex connection could be to leverage the APIs from both tools to populate a single dashboard.
3. Complex Connections and Transformations - this is data that comes from multiple sources and requires significant effort to form connections and properly transform the data. You could have data that is messy and difficult to connect. Or, you could have data that requires significant transformation to be usable. For example, to determine profit margins, your company may use several tools to keep track of your various revenue streams and expenses, the data may be incomplete or inaccurate, etc. This will take significant effort before you’re at a state where the data can be meaningfully used.

Once you’ve identified the effort required to track your most valuable metrics (or the quick wins!), you can prioritize them accordingly. Then, as you build out the capability to report on them, you will need to balance between short-term (ie. getting something available now) with long-term (ie. building for sustainability). This will become clear as you start to think about how to take your data and become data-driven.

Going from Data to Data-Driven

There are three parts to becoming data-driven:

1. Review - the method to interact with the data and make decisions
2. Report - the medium to interpret the data
3. Process - the workflow and system to collect the data

Review

The idea of “Review” starts with a way to incorporate data into your everyday operations. This creates a repeatable and predictable time where data and decision-making collides. Think about who can benefit from this data and how the data should be presented to them. There are multiple ways to accomplish this, depending on how your organization works. The top four I’ve used:

• Broadcast - This could be as simple as an email up to a full-on presentation. This is best when you want to tell a story to the stakeholders with little effort on their part.
• Engagement - This could be a recurring meeting where you review the data, determine insights, and/or make decisions. This is best when you need multiple stakeholders involved and discussion or input is needed.
• Self-Serve - This could be a report or a dashboard made available to your stakeholders. This is best when your stakeholders own and drive the story, have the business context to interpret the data, and make appropriate decisions.
• Automated - This could be an alert that is sent out if certain conditions are met. This is best when you or your stakeholders only need to know the information when a specific event occurs.

Report

A “Report” is simply the medium to present the data to your stakeholders. By introducing a consistent report, your stakeholders will progressively get better at being data-driven. The report can be anything. When deciding on a report, think about which review option you previously chose. This will help determine the most effective medium. A few examples:

• Verbally sharing the data in a meeting
• Dashboard with the ability to filter and slice data
• Simple spreadsheet with summarized data
• Presentation with key pieces of data, charts, and insights

Tip! There are tons of tools out there to help you generate different types of reports. Be careful not to overcomplicate your report with many of the fancy visuals available in these tools. Focus on keeping your report as simple and clear as possible so the data is easy to interpret.

Process

A “Process” is the business steps required to generate data. For example, if your company performs time tracking, you’ll need a process for your employees to input the proper data so you can capture their time, activity, rate, etc. as needed for your report. Here, you’ll learn about the capabilities of your tools, the limitations of your current process, and you may discover you aren’t tracking one or more critical piece(s) of data. Think about your current process and determine if it needs to change, by asking yourself:

1. Is the current process being followed? Are employees actually doing it?
2. What data do you need to track? In what format?
3. Does the current process allow you to consistently get this data?

If your process isn’t already ideal (they never are!), think of what your ideal process would truly be. Then, determine how you can make iterative progress to get there.

Tip! Think of progress over perfection when changing a process. There is some data that will require 100% accuracy and others where “close enough” is acceptable. It doesn’t have to be perfect for it to be useful.

Document Everything, Even if You Don’t Want To

As you embark on this journey, document your process, your key decisions, and the calculations behind your metrics. I promise you’ll regret it if you don’t! As your company grows, your processes change, and your data becomes more complex, you’ll forget the intricacies of the past. Consider capturing:

• Data Source - Where it’s stored, its format, and its dependencies
• Connections and Transformations - How the data goes from data source to report
• Report Calculations - How you calculate specific metrics

Having a way to refer back will also make it easier to include more people into your data operations as you and the company scale to become more data-driven.

Conclusion

Having data is one thing. Being data-driven is another. It’s just choosing the right data to track, evaluating the business value v. effort, then exploring the review, report, and process to incorporate it into your business. 

You aren’t going to get it perfect. The data will be wrong, the process will break down, you may encounter more pushback than you think (people think they love data until that data is telling them something they don’t want to hear!). You will face all sorts of challenges. But becoming data-driven is worth it.

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