Data-driven decision making (DDDM) is becoming the new method of choice with the proliferation of big data. Along with the new ease of access tools that makes this once specialised nature of business intelligence and data mining available to all business executives, no matter their technological knowledge, all businesses need to employ a DDDM strategy.
A study from the MIT Centre for Digital Business found that organisations driven most by data-based decision making had 4% higher productivity rates and 6% higher profits.
Utilising DDDM through big data analytics can lead to a competitive cost structure which will save your business serious amounts of money in the long run, but bad implementation of and especially interpretation of, the newly acquired data can lead to more harm than good.
It would be dangerous to assume applying data-driven decision making to your business is easier said than done. According to the Data Warehousing Institute, data quality problems cost businesses in the United States over $600 billion a year.
There can be confounding factors and flawed mathematical methods that can create inaccurate information; correlation can be erroneously considered to suggest causation; statistical significance may be mistakenly attributed when the data doesn’t support it; even if the data and analytic processes are valid, data may be deliberately presented in a misleading manner to support an agenda.
All of these problems arise when insufficient resources are applied to data processes and too much confidence placed in their validity. To prevent such issues it is crucial to place your big data analytics in the hands of people who aren’t attached to a particular agenda and know how to handle the tools that they are using. It’s crucial to continually examine data quality and analytic processes employed by the individuals who oversee the operation. Big data is infinitely useful but paying attention to common sense and even intuition is also vital.
Being a data-driven company has never been more important as data and the ability to understand it becomes a difference-maker. In a survey reported last year by The Economist, 59% of respondents who described their organization as “data-driven” said their company is more profitable and employs more cost discipline than competitors, compared to 40% who said they do not work in a data-driven environment.
Therefore the best option of any corporation looking to expand into big-data analytics – or expand upon their already in place processes – would be to employ the right people to take control of the situation whilst also keeping your head straight and employing human intuition when necessary. DDDM can lead to vital cost optimisation in an ever more volatile global business environment, it would be folly to ignore the new tools available to organisations when controlling costs and investing in new ventures.