Data, data, data — we hear this term so often that it has now become a basic word. Here in this article, I’ll discuss how data is a powerful tool that influences us in ways that we are not conscious of.
Data is simply a collection of different facts, including numbers, measurements, and observations, that have been translated into a form that computers can process. Data is useful information that is collected to support organizational decision-making and strategy.
Businesses run on data, most companies use data for their insights to create and launch campaigns, products, services, and design strategies or try out different things. Data is effectively changing the world we live in and the way that we work, here’s why data collection is extremely important in today’s businesses.
Data Helps In Making Informed Decisions
The fact is data is knowledge, the more data companies have at their disposal, the better position they’ll be in to make good decisions and take advantage of new opportunities.
Good data provides indisputable evidence, while anecdotal evidence, assumptions, or abstract observation might lead to wasted resources due to taking action based on an incorrect conclusion.
Good data also provides justification and concrete evidence to back up the decisions for clients or stakeholders.
This would make the organization or individual feel confident about their choices and be able to provide reasoning for every decision going forward.
Data Helps In Identifying The Problems
Every organization has problems and inefficiencies due to the ever-changing nature of the business climate and society as a whole.
The first step is to identify the problem and only then one can solve it.
Data lets them find the most painful problems people have, not what they think the problem should be.
Many times the real problem isn’t the problem you’re looking at, it is easy to lose sight of the forest amidst so many towering trees.
Problem identification is a difficult task and being able to find significant problems early on is going to reduce any wasted resources.
Find Solutions To The Problems
After realizing the real problem, data lets the organization gain insights to solve the problem and provide better offerings, whether marketing materials or products.
Through the use of data, organizations can understand how to identify which business-relevant problems can be best solved by their particular abilities.
Creating consumer demand forecasts, prototyping new services, and continuous improvement are some of the solutions organizations go for.
They don’t have to wait to find the answer to the problems, it is right there in the data.
As long as organizations are transparent about their collection efforts and provide appropriate rewards, the data can be used to further propel growth.
Stop Molehills From Turning Into Mountains
Data allows organizations to monitor the health of important systems.
Utilizing data for quality monitoring and responding to challenges before they become full-blown crises will allow them to achieve results and maintain best practices over time.
The sooner you detect a possible problem, the easier it is to mitigate the risk.
Data will let the organizations eliminate the potential risks long before they start causing any significant damage.
Data Helps In Getting The Desired Results
As the data is vast you can filter out the data which is not relevant to your organization’s goals and focus on the most critical information.
By focusing on the most vital insights and applying data-driven solutions an organization can achieve the results they want in real-time.
Know What You Are Doing Well (and not well)
As organizations engage with data more and more, it helps them develop a deep understanding of what works and what doesn’t.
Data allows organizations to measure the effectiveness of a given strategy. When strategies are put into place to overcome a challenge, collecting data will allow the organization to determine how well the solution is performing, and whether or not an approach needs to be tweaked or changed over the long term.
Organizations will be able to pause the underperforming strategies, this lets them realize the biggest winners (and worst losers) and optimize time, energy, and resources accordingly.
This directs them to replicate the decisions which net more results.
Stop The Guessing Game
With data informing the decisions and consistently leading the organization on to the right path, it lets them stop the guessing game prevalent in many businesses.
Organizations will make decisions with greater accuracy and more confidence than relying on intuitions and guesswork — they don’t have to stress over the right selection.
Utilizing data efficiently makes it easier for them to overcome competitors that are still letting gut feelings and assumptions guide their decision-making processes.
It will eliminate the unknowns i.e. whenever a decision is made on guesswork you don’t 100% know the outcome. On the other hand, data-driven strategies have ample evidence to predict the results of the decision.
Make Strategic Approaches
It is said that a strategy is akin to a battle plan. A poorly thought and executed strategy can lead to losses or failures.
At the time of making a strategy, an organization needs to question the what, why, and how of business motivation and actions on a deeper basis.
Data helps organizations to formulate operational, financial, marketing, human capital, and various other business strategies to accomplish their vision. Strategy is governed by future business goals and profits.
In the lack of proper and accurate data, this type of reasoning takes a backseat.
Proper utilization of data lets them identify risks and opportunities as well as evaluate past and future trends to arrive at a robust, effective strategy.
Keep Track Of The “Big Picture”
Data allows companies to zoom in on the individual tactics that are working or not working, it also enables them to view a more complete “big picture”.
That is organizations will be able to visualize relationships between what is happening in different locations, departments, and systems.
By studying the relationships between different data sets, organizations can track how one change impacts other strategies, departments, systems, etc.
It allows organizations to set better goals, establish solid benchmarks, understand their performance, and more.
Having a complete view of the organization or the business makes it easier to deliver a cohesive experience to the customers, even when several different departments or teams are involved.
Data Helps In Getting Hands-on Funding
Funding is increasingly a matter of proving achieved outcomes.
Using data visualization can help narrate the organization’s story in more compelling ways.
By mapping out ideas and numbers in a more visually appealing way, it helps the organization to not only present what of the data but also help potential investors understand why.
Organizations presenting their projections over time visually using simple spreadsheets or charts lets prospects see expected business growth over time.
It lets organizations able to answer prospects’ questions about where their money will be going in the business.
Using proper data visualization like pie charts and other visuals to illustrate pieces representing areas that will receive the most or least allocation will attract the investors and increase the funding.
Organizations must be able to establish evidence-based practices and develop coherent systems that collect and analyze data as much of the funding is data-driven.
Utilization Of Resources
A resource is both necessary for an organization and a potential source of yet unrealized benefits. Among the list, several categories of resources used by modern organizations include traditional resources like financial, human, plant and equipment, raw materials, and energy, and the so-called information age resources like data, information, and knowledge.
Using any resource most beneficially is always a challenge.
For traditional resources, the principal issue is resource allocation among various organizational units that submit requests for a limited supply of the resource.
The challenge of optimizing the use of data is quite different. Many organizations or enterprises do not use the data that are readily available effectively.
Most organizations use data reasonably well in operations, but not in planning and decision making. Many organizations admit that they are data-rich and information poor.
Unlike other resources, data can be readily copied, shared among many people using information technology(IT), and then used in dozens of different ways. Thus proper utilization of data as a resource is necessary for organizations to work effectively.
Also, judicious exploitation of data is important for managing traditional resources.
Data Saves Time And Money
Investing in proper data collection will prove beneficial for the company’s productivity, profitability, and even morale as a whole.
The data can pinpoint the areas of production that take the longest amount of time. This allows the organization to determine the roadblocks, thereby finding ways to improve efficiency and cut down the time it takes for the product to reach the market.
Improving efficiency using data can lead to a significant reduction in production costs. Thus advancements in data can save organizations time and money.
Impact People’s Life
Data helps organizations to improve the quality of life for people which is the foremost reason why they should be using data.
Providing products, or services that are cost-effective and efficient or that make people’s lives easier is going to help the organization stand for the long term.
To conclude, data is present in vast amounts today as such is readily accessible, thus accurate data can empower companies to analyze data easier and make better predictions than ever before. All it takes is the right approach and proper know-how to utilize its potential. A prime example of this can be found in the company Netflix. It began its service as a convenient and affordable alternative to renting movies. As demands and technology evolved, their service gradually evolved too. First, by offering streaming services as a secondary viewing option. Quickly, customers recognized its convenience, and the streaming service grew to become the most popular viewing model. Smartly, Netflix also anticipated the demand by gamers, adding games to their entertainment rolls. Finally, they wisely saw the opportunity of squeezing the last pennies of profit by selling their previously viewed games and movies to loyal customers. This example perfectly demonstrates how a company can follow data each step of the way to piggyback off initial successes for continued growth and success.