The phrase "this decision is not hampered by any form of knowledge" is often used to describe a poor decision. Poor decisions can be very dangerous to an organisation, particularly if they are a common occurrence. The idea behind data-driven organisations is that they are less likely to make these types of uninformed decisions, as they rely on data and evidence to inform their decision-making processes.
Many organisations claim to be data-driven, but what it actually means and what the implications are can be less clear. Being data-driven means that organisations use both internal and external data to analyse correlations and connections in order to make better and faster decisions. This can include using data to inform business strategy, identify trends, optimise operations, and improve products or services.
Data-driven organisations also tend to have a culture of experimentation and continuous improvement, where data is used to test hypotheses and make data-informed adjustments.
Data-driven and data-informed
A truly data-driven organisation enables professionals within the organisation to perform their own analyses, without the intervention of IT, on a platform they understand and trust. This allows the organisation to make decisions more frequently and quickly, based on the right information.
I want to clarify that being data-driven does not mean making decisions based solely on quantitative data. I wrote before about the concept of data-informed, where intuition, experience, qualitative outcomes and individual judgement also play a role in decision making.
Make better decisions than the HiPPO, ZEbRA, and WoLF
Data-driven decision-making should put an end to relying on intuition and the dynamics where the person who speaks the loudest is considered right. It also prevents endless discussions and constantly playing catch-up with the facts.
Recognisable ? Then you probably also know one or more animal species that frequent organizations. The bossy and also quite dangerous HiPPO (Highest Paid Person's Opinion) and the always annoying ZEbRA (Zero Evidence, but Really Arrogant).
The enthusiastic RHiNO (Really High value New Opportunity). The poor stressed WoLF (Works on Latest Fire). And my favorite: the Seagull - comes in screaming, shits all over everything, and leaves a big mess behind.
With data as evidence in your hand, you can limit or even prevent the disruption caused by these "corporate animals". You can read more about these unfortunately not so rare corporate animal species in Dean Peters' Behold the Product Management Prioritisation Menagerie.
Data-driven decision making is a part of digital transformation
Being data-driven does not happen by itself, not even when you have the latest Business Intelligence (BI) tools in place. It is a long journey, and you must have a clear understanding of where you want to go, where you currently stand, and what steps the organisation needs to take in order to truly be data-driven.
To determine where you stand in terms of data maturity, the TIMAF digital maturity model can help. The data-driven dimension in the maturity model refers to the extent to which the organisation uses data to inform decision making.
At the lowest Unmanaged level of digital maturity, there is no data available to make informed decisions. At the Beginning level, there are some reports here and there, but tactical or strategic decisions are not being made based on them.
At the Learning level, there are already some initial initiatives for data-informed decision making. The organisation is beginning to recognize the importance of data and clear reporting.
At the Responsive level, all decisions are (partially) based on data. No decisions are made without data. At the highest Predictive level of digital maturity, data plays an essential role in predicting trends. The organisation continuously adapts based on this data.
How data-driven are you?
Data-driven is an important dimension in the TIMAF digital maturity model. Take the digital maturity self-test and you will quickly get an idea of the first things you need to tackle.