In this A:360 podcast, we discuss what it means for an organization to be data-driven. We describe some of the traits and features that a data-driven organization possesses.
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Welcome to today’s A:360 podcast. My name is Brewster Knowlton, and today we’re going to be talking about what does it mean for an organization to be data-driven. The phrase “becoming data-driven” or a “data-driven organization” is being thrown around more and more frequently as organizations start to invest more in data and analytics. But, before this phrase becomes a sort of buzzword, I want to take the time and explain “what does it really mean for an organization to be data-driven” as there are some really valuable aspects that a data-driven organization possesses.
The first trait of a data-driven organization is that the organization uses data – instead of gut instinct – to make decisions. This is a paradigm shift from “I think” to “I know”. Rrom using gut instinct to using information and analytics.
The next trait of a data-driven organization is that they ask “what will happen next month” instead of only asking “what happened last month”? I see this a lot with the banks and credit unions I work with where all of the questions surround [questions like]:
What did we do last month?
What was our loan growth last month?
What was our deposit growth last month? H
ow many members or customers did we add?
But there’s never any thought about what’s going to happen next month. Data-driven organizations try to focus on what will happen as opposed to only looking backwards and saying, “What happened in the past?” There are many instances where looking backwards is important, but there also has to be this idea that we want to look forward and try to figure out what’s going to happen in the future.
Next, data-driven organizations use visualizations. They don’t sit there and stare at overly complicated Excel spreadsheets with these formulas that may or may not even be accurate! What they do is use visualizations through dashboards and other visualization techniques to make complicated information very easily digestible, so with a quick glance, anyone can figure out what’s going on and what the data is telling us.
Another common trait of data-driven organizations is they have all of their data in one, central location. For the listeners of this podcast, that’s – more likely than not – going to be a data warehouse.
As organizations grow, the number of applications they have also tends to grow which makes data more and more disparate. For the credit unions I work with, for example, they have a lot of third-party applications that house valuable member information about their members’ product and service relationship with the credit union. Without having all of that data centralized, it’s very, very difficult to look at a member’s relationship with the credit union holistically and in a 360-degree view way. It’s critical – and it’s a common trait of data-driven organizations – that all of your data is in one, centralized location, more likely than not, a data warehouse.
Data-driven organizations also use data as much as possible to automate business and reporting processes that are manual and recurring or redundant. I work with a number of organizations where simply by automating some reporting processes – which are very easy in the scheme of things – they can save hundreds or even thousands of hours per year. That’s a huge efficiency gain! Data-driven organizations tend to automate as many of those processes as they can.
Last but certainly not least, data-driven organizations are able to go to different departments and ask the same critical business question and get the SAME answer back. In the credit union space, this could be, “How many members do you have?” In a retail environment, “How many customers purchased a product last month?”
The key point of emphasis here is that there is a clearly-defined definition for that key business term, and every member of the organization understands that definition and applies it. That’s a critical component of a data-driven organization, and we will talk about that more in later podcasts when we discuss the concept of data governance.
In summary, data-driven organizations do the following:
- They use data instead of gut instinct to make decisions
- They ask “What will happen next month?” instead of just asking “What happened last month?”
- They use dashboards and visualizations to quickly digest information
- They have all of their data in one centralized location (probably a data warehouse)
- They use data to automate reports and processes so they are efficient as possible
- They have good data governance where they can ask six different departments a key business question and they get the same answer back
Those are just a few of the common traits, but probably the most important traits of a data-driven organization. And that explains what does it mean to be data-driven.
Thanks again for listening to today’s A:360!
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