Why a data-driven culture drives smarter and faster decisions

Bilde av Terje Vatle
by Terje Vatle

05. Jan 2021, 5 minutes reading time

Why a data-driven culture drives smarter and faster decisions

The universe is not perfect, and neither will our data ever be. But the goal cannot be to make perfect decisions, but to make them slightly better – and slightly faster – than last time, and enable us to ask "why". Here is how a data-driven culture drives that progress.

The well-known adage that culture eats strategy for breakfast, might be more accurate than ever.

As described in our e-book, culture & competency is one of the fundamental pillars of a data-driven organization. Culture, the aggregate of attitudes and behaviors, is essentially the organization’s ability to put ideas – that is strategy – into action.

Consequently, as a necessary prerequisite for becoming data-driven, creating and fostering a data-driven culture is going to be paramount moving forward. Not only to thrive in the new digital economy, but to survive.

Open-mindedness opens doors
To see how a data-driven culture can lead to faster and smarter decisions directly, we need to look at some key characteristics of such a culture. In our experience, those who succeed have a willingness to learn, are resilient to changes and are open to suggestions that contradict their biases. That is, if you are going to use data, you have to accept that the data might lead you to conclusions you would not have arrived at yourself. More succinctly: You have to be open-minded.

Once challenging your beliefs is part of the cultural mindset, the organization will have a smoother transition from «faith-based» decision-making to actual hypothesis testing. We have also seen that internal discussions – from the board of the directors down to the production line – can be more quickly resolved when facts rather than assumptions are on the table.

Culture as source of agility
Becoming more fact-based throughout every part of the organization is not done in a heartbeat. It requires a willingness to invest in people – and it requires, from the people, a willingness to challenge their beliefs and embrace change. Becoming emotionally detached from decision-making processes, learning to celebrate failures and rewarding innovative voices, is key, but might initially slow down decisions and seem counter-productive in the short term.

But once data becomes the default starting-point for any decision-making process, the competitive edge is honed. Decisions become smarter and faster. And just as important: When everything is evolving rapidly, the culture must adapt to embrace change. And when everyone is eager to adapt, as well as being equipped with the data to illuminate why and how you need to do it – change turns from threat to opportunity.

Moving from "what" to "why"
Large, data-driven enterprises like Amazon excel at substantiating their business cases with data. But you do not have to be a Fortune 500 company to achieve faster and better decisions through a data-driven culture.

For smaller companies, the crucial step is having quality assured and meaningful data in place. In stead of discussing what a specific KPI should be, the organization could rather focus on discussing why it has the current value and what actions can be taken to improve it. Moving from "what" to "why" lets people focus their energy on high-value business decisions. AI and ML methods can in some cases be applied to assist human creativity to solve the why questions and arrive at potential mitigations and actions.  

Typical questions the organization can focus on are:

  • Why are some customer segments more profitable than others?
  • Why is a specific department overperforming or underperforming?
  • Why is a business process efficient or non-efficient?

Being data-driven does not necessarily mean having a big data infrastructure with a large data science team leveraging advanced AI and ML algorithms. In fact, we could argue there is no direct correlation between the number of in-house data scientists and the degree to which the organization is truly data-driven. A more central characteristic is the ability to ask why and focus on smaller, incremental improvements. 

Culture starts at the top
In our e-book we stressed that organizational culture has to start from the top. However, the actual innovation typically happens at the lower levels such as the controller working on automating his or her own workflows. Thus, leaders need to facilitate innovation by encouraging every employee to embrace the use of data – and invest in technological sandboxes where innovative creativity is cultivated.

Lastly, when employees throughout the entire depth and width of the organization have a conscious awareness of what data is, how important the data might be – and that numbers are not just numbers – a sounder decision-making foundation trickles up. When the employees know well the importance of data, they are more likely – and eager – to contribute relevant, high-quality data whenever possible.

To sum it all up

A data-driven culture uses facts, not faith or guesswork, to drive decision-making. At the same time, the positive feedback loop between a data-driven culture and data quality ensures that the decisions are not only made faster, but are increasingly smarter.


Download free e-book: Building a data-driven organization

Terje Vatle

Terje Vatle

Terje Vatle is Chief Technology Officer at BI Builders. With a background from data & analytics advisory and development, Terje focuses on how to make organizations more data driven and the journey towards a modern data platform in the cloud. Terje has a passion for skiing, traveling and international politics.

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