The term “data driven” is penetrating the lexicon ever more deeply these days. Data Driven was the title of my latest book, and recent academic work shows that companies that regard themselves as “data driven,” are measurably more profitable than those that aren’t. So becoming data-driven is clearly a worthwhile endeavor. Yet for all the attention, I’ve yet to see any clear criteria by which leaders can benchmark themselves and their organizations to figure out what they need to do better.
In my view, the essence of “data-driven” is making better decisions up and down the organization chart. Over the years I’ve had the good fortune to work with plenty of individual decision-makers and groups, some terrific and some simply awful. From that work, I’ve distilled twelve “traits of the data-driven.” (It bears mention that the data-driven also avoid some self-destructive traits)
Traits of the Data-Driven
- Make decisions at the lowest possible level
- Bring as much diverse data to any situation as they possibly can
- Use data to develop a deeper understanding of their worlds
- Develop an appreciation for variation
- Deal reasonably well with uncertainty
- Integrate their ability to understand data and its implications and their intuitions
- Recognize the importance of high-quality data and invest to improve
- Are good experimenters and researchers
- Recognize that decision criteria can vary with circumstances
- Recognize that making a decision is only step one
- Work hard to learn new skills and bring new data and new data technologies (big data, predictive analytics, metadata management, etc) into their organizations.
- Learn from their mistakes
All of these traits are important. And most are self-evident. Only a few require further explanation. First, data-driven companies work to drive decision-making to the lowest possible level. One executive I spoke to described how he thought about it this way:
Pushing decision-making down frees up senior time for the most important decisions. And, just as importantly, lower-level people spend more time and take greater care when a decision falls to them. It builds the right kinds of organizational capability and, quite frankly, appears to create a work environment that is more fun.
Second, the data-driven have an innate sense that variation dominates. Even the simplest process, human response, or most-controlled situation varies. While they may not use control charts, they know that they have to understand that variation if they are going to understand what is going on. One middle manager expressed it to me this way, “When I took my first management job, I agonized over results every week. Some weeks we were up slightly, others down. I tried to take credit for small upturns and agonized over downturns. My boss kept telling me to stop — I was almost certainly making matters worse. It took a long time for me to learn that things bounce around. But finally I did.”
Third, the data-driven place high demands on their data and data sources. They know that their decisions are no better than the data on which they are based, so they invest in quality data and cultivate data sources they can trust. As a result, when a time-sensitive issue comes up they are prepared. High-quality data makes it easier to understand variation and reduces uncertainty. Success is measured in execution, and high-quality data makes it easier for others to follow the decision-makers logic and align to the decision.
Further, as one executes, one acquires more data. So the data-driven are constantly re-evaluating, refining their decisions along the way. They are quicker than others to pull to plug as when the evidence suggests that a decision is wrong. To be clear, it doesn’t appear that the data-driven “turn on a dime”; they know that is not sustainable. Rather, they learn as they go.
Now take that hard look in the mirror. Look at the list above and give yourself a point for every trait you follow regularly and half a point for those you follow most — but not all — of the time. Be hard on yourself. If you can only cite an instance or two, don’t give yourself any credit.
Unless you’re one of the rare few that truly score seven or more, you need to improve. While each person and organization is different, I’d first recommend starting by pushing decision-making down the organization. I’ve already noted the benefits. It may be tough and counterintuitive, especially for managers that want to feel in control, but it’s worth the effort.
Second, invest in quality data. Frankly, you simply cannot be data-driven (or do anything consistently well for that matter) without high-level of trust in your data and data sources. You’re reduced to your intuition alone, the antithesis of the goal here. Quality data is a necessity.
Now, take one more step. You’ve taken a hard look at yourself. Engage your management team in doing exactly the same thing for your organization.
The Data Doc adds
I want to thank Reltio for putting this blog front and center again. When I first wrote Data Driven, I had no idea how popular the phrase would become. By the time this post appeared, about eighteen months ago now, the phrase was gaining popularity. I hope the hype has peaked. For with hype, important concepts can be watered down. While I don’t wish to call anyone out, I see data-driven this, that, and the other all over, as if attaching the label would make it so.
So let me amplify: At its heart, “becoming data-driven” is a strategy for distinguishing one’s company from the competition. It means everyone, individually and in groups, strives to bring more data to the table and so make better decisions. Data-driven is a journey, not a destination. The aim is not to be perfect—just a bit better today than yesterday. And a bit better tomorrow and the day after tomorrow. Forever. The data-driven recognize that all important decisions are made in the face of uncertainty and so aim to combine their intuitions with the data in powerful ways. Finally, the data-driven learn, from both their good decisions and bad.
For almost all, becoming data-driven represents a deep cultural change. I suspect it will be the most difficult data strategy to implement and I further suspect that it will be the most powerful. It goes without saying that the data-driven benefit from solid “infrastructures,” such that they can find the data they need, trust that it is correct, understand what it means, and combine data from disparate sources together. There is much hard work to do. And great opportunity. Just think how great your company would be if today it lived up to a fraction of that contemplated above!
Dr. Thomas C. Redman, “the Data Doc,” is President of Navesink Consulting Group. He helps leaders craft programs to get in front on data quality, learn to compete with data, and build the organizational capabilities to do so. His most recent article, “Data’s Credibility Problem,” appeared in the December 2013 issue of Harvard Business Review and his fourth book, Data Driven: Profiting from Your Most Important Business Asset, Harvard Business Press was a Library Journal Best Business Book of 2008. Prior to forming Navesink, in 1996, Tom started and led the Data Quality Lab at Bell Labs. He holds two patents.
*Are You Data Driven was originally published at HBR.org