Why data-driven businesses are more confident in a crisis
‘Uncertainty’ is the word of 2020. The unpredictability of a pandemic and subsequent travel restrictions mean plans are put on hold, some markets are in furlough, budgets are reined in — nobody truly knows how next year will unfold.
Seasonal cycles and familiar annual trends are off-kilter. In short, few industries — if any — can truly claim to be confident in the current environment. But that’s not to say organizations can’t put the odds in their own favor in turbulent times by being more reactive in the short-term, acting on the hard information at hand.
A YouGov study of 3,500 senior managers and IT decision-makers across the UK, France, Germany, and the Netherlands commissioned by Tableau has identified a divide between companies that are using data to inform decisions throughout the pandemic, and those that aren’t.
The report claims that leaders that are reliant on data to make business decisions are more optimistic about the future of their business. More than two-thirds (68%) claimed to have a positive outlook, compared to 58% of those who didn’t classify themselves as being “data-driven”.
What does being ‘data-driven’ mean?
The term is thrown around a lot, but being a data-driven business means actively creating and investing in tools, abilities, and culture that acts on data. While it sounds simple, it’s a tall order. Data collected must be the right data: relevant, timely, accurate, unbiased, and trustworthy. O’Reilly noted: “A small amount of clean, trustworthy data can be far more valuable than petabytes of junk.”
That data must then be accessible and queryable across the enterprise, with the most effective tools, training, and culture in place to do so. Mechanisms must be in place to report on findings and the results of actions taken as a result and serves as a baseline from which to observe changes and trends.
Data must be actively used to drive business progress — whether that’s in shaving minutes off manufacturing times or forecasting sales — for an organization to be considered data-driven.
An advantage in a crisis
Eight out of 10 business leaders from data-driven companies said they believed they had a critical advantage during the pandemic. Leaders were more committed to the important role data plays in the future of their business, with a large majority (76%) planning to increase investment in data skills as they look towards 2021.
What’s more, 79% were confident they will ensure business decisions are supported by data.
German chemical and consumer goods firm Henkel said that it started building data skills across the business in 2013, and reactions to the pandemic had “definitely” seen the company benefit from those capabilities.
“[…] we were able to record the entire control of our personal protective equipment within a few days so that every plant can see how we are equipped in this regard — allowing our business to continue operating,” said Dr. Dirk Holbach, the group’s corporate SVP & CSCO Laundry & Home Care. “I am convinced that we will take some good lessons with us into the future, especially when it comes to collaboration.”
Jay Kotecha, a data scientist at the complete food band Huel, said the firm’s data-driven strategy had seen the business better respond to changes in consumer behavior, enabling the brand to be reactive with better speed and clarity.
“Employees are exploring data from across the whole organization and turning it into insight we can act upon, whether that’s revenue forecasts, distribution effectiveness, or marketing spend.”
What the pandemic has shown businesses, at least according to YouGov’s study, is that decisions made with the evidence of good-quality data lead to more agility, better prioritization of tasks, and better company-wide collaboration and data access — the latter being more important than ever as businesses work remotely.
Looking across Europe, findings show that just over half (56%) of business leaders consider their companies to be data-driven, while one in three (38%) believe their businesses are not.
As such, there’s a clear opportunity for companies to harness data to support business resilience and decision making during the uncertainty. German companies take the lead with 62% saying their business is data-driven, while the UK lags with only 46% in agreement.