'You can have data without information, but you cannot have information without data.' — Daniel Keys Moran.
For many business owners and leaders, data is primarily used as units of information to track and report on and help them answer "what happened." Although they know their data holds untapped value, they lack the time, resources, or expertise to delve deeper into what their data is telling them.
The problem with such an approach is that it inadvertently leads to valuing consistency, predictability, and non-validated assumptions over learning, questioning and challenging.
Where to Start?
Becoming a more data-driven business isn’t simply about diving deeper into your available data. Data insights need to be guided and targeted to be of value. Otherwise, it will lead to unnecessary and unwanted analysis, confusion and distractions. The first step in becoming a “data-smarter” business is to frame what you want out of your data within the context of your business strategy.
The 4 W's of Insight
To ensure your data is meaningful and actionable, it must effectively answer four fundamental questions: what happened, why it happened, what will happen, and what should be done.
- Descriptive Analytics: What happened? This involves reviewing past performance using basic metrics. Examples include, "Sales increased by 10% last quarter" or "Our website had 5,000 visitors last month."
- Diagnostic Analytics: Why did it happen?. This step focuses on understanding why something happened. For example, "Sales increased due to a targeted campaign for young adults" or "Most website traffic comes from social media."
- Predictive Analytics: What might happen? By analyzing trends and patterns, you can forecast outcomes, such as predicting a 15% increase in sales next quarter or anticipating a spike in inquiries during the holidays.
- Prescriptive Analytics: What action/deciding what to do? AI-powered insights recommend strategies to optimize results. For instance, "To maximize sales, increase marketing spend by X% on these channels" or "Offer personalized recommendations to improve customer satisfaction.
Learn, challenge and grow with Insight.
In all our conversations, we've never had any challenges conveying to business owners that their data isn't just for tracking performance but is a tool to help them unlock the potential of their business. However, what is not always understood is that adopting such a data-driven approach also tends to come with particular behavioural, leadership and decision-making changes. Instead of starting with a cultural change conversation - which is always tough - we recommend beginning with this practical "4 W" approach to creating an environment of learning, questioning, and selective experimentation. Start small, ask the right questions, and build a culture of data curiosity within your team.
