How much information is required to make a data-informed decision?
There are a multitude of decision-making techniques and processes available to you if you look for them. If you need guidance to establish an action plan searching Google will yield many and varied results. Other than ‘going by your gut’ the majority of us seek information to inform our decision making. This is known as data-driven decision making.
“Data-driven decision management (DDDM) is an approach to business governance that values decisions that can be backed up with verifiable data.”
The success of the data-driven approach relies on the quality of the data gathered and the effectiveness of its analysis and interpretation. The key components that stand out within the definition are decision effectiveness and verification of the data sources that underpin the decision. Here is a list of 10 simple steps, according to forbes.com, that can be taken to verify a data flow process;
- Start with Strategy
Having a strategy helps you ignore hype and get to what your business is hoping to achieve.
- Focus on the business area
Identify which business areas are imperative to achieving your goals.
- Identify unanswered business questions
what questions need to be answered in order to achieve your goals
- Find the required data
Identify the data needed to answer these questions.
- Find out what data you already have
You may already have some or all of this data. If you don’t have it, where can you get it from?
- Determine if the cost is warranted
Once you know what you need, you can determine the benefits outweigh the cost.
- Collect your data
Combine your existing and new data.
- Analyse your data
You need to understand the insights within your data by analysing it.
- Collate and share your newly found insights
By presenting and sharing insights with the right people, you can enable DDDM, ultimately improving performance.
- Incorporate your learning into the business
Apply the insights from your data to your decision making and then act on those decisions. Turn data into action.
This process is as important as the data itself. By following these 10 steps – and not skipping ahead – you can better answer business-critical questions.
However, there is still the conundrum of how much data you need, and I would suggest you follow Powell’s Rule. You should have no less than 40% and no more than 70% of the data needed to make your decision. Less than 40% and you are likely to make an incorrect decision and more than 70% and your decision may come too late.
A 30% data gap can be bridged with industry knowledge, experience and gut feel. By following this approach, you can make more effective decisions, regardless of the size of your organisation. Unleash the potential in your business data.
Feel free to reach out and speak about any ideas raised in this article.
Reference article: forbes.com