Humans aren't perfect. We get sick, we get angry, but most importantly — we make bad decisions. And it's not just someone in the supermarket getting the wrong brand of peanut butter — it's also influential decision makers in multinational companies.Managers, Vice Presidents and even CEOs — they all mess up sometimes. Even for someone with decades of experience in their field it's impossible to never make a mistake. So what do we do when we're bad at something? Just like with many other things, we leave it to the machines.
Data at the center of your company
Every modern company produces loads of data — it just depends if you're capturing it or not.
For some this comes naturally: an online publisher obviously tracks the amount of visitors to their website, how much time they spend on it and many more data points. All of this data can be analyzed and used to optimize the product, adapt the business model or make other changes to the company.
But what if your company, for example a bakery, mostly exists offline? Well, there's still tons of data being produced, but you're probably not keeping track of it. Things like the best-selling bread types, where your customers live and how much they spend on average — it's all data that could be used to optimize your business.
It's not impossible to capture this offline data, it just requires a bit more effort.
Supermarkets are a great example of this — customers can often sign up for a loyalty program, giving them access to exclusive discounts. To get access, however, they need to sign up with their personal data and present their membership card at checkout, linking their purchases to an identifiable user. Combine this with Wi-Fi tracking of devices entering the store and you’re suddenly drowning in data to work with.
Data-driven decision making
When you have all this data on your customers and other aspects of the company, what do you do with it? Simple — you feed it to computers and let them do the work.
Some businesses develop their own software to parse the data they gather and turn it into actionable information. Netflix is a great example of such a company — it uses its vast amount of subscriber data to influence business strategy, all the way down to the content it produces for its customers.
House of Cards, a remake of a BBC miniseries, was up for sale in 2011 — a project attached to actor Kevin Spacey and director David Fincher.
When Netflix looked at its data, it clearly indicated that people who watched the original series were highly likely to watch movies featuring Kevin Spacey, and also those directed by David Fincher.
Convinced that there was an audience for this project, they ended up financing the project. With its sixth season currently in the works, it's now widely praised as one of Netflix' biggest successes.
But it's not only about your customers
Most businesses gather data about their customers but fail to do so when it comes to their employees. Obviously we are not talking about search history or lunch preferences but about information that can really help you make strategic decisions as a CFO or HR manager.
By effectively using data, businesses are able to make well-informed decisions that could end up being extremely lucrative. This kind of data-driven decision making doesn't just apply to billion-dollar companies, either — any size business can apply a similar strategy
"Torture the data and it will confess to anything" - Ronald Coase
With the help of the right tools, spending data of your employees can be gathered and used to adjust business strategy or internal policies.
Let's take a travel platform like Maya, it gives you direct insight in your employees' travel behavior, what hotels are most booked, what airlines they use, do they prefer plane or train for certain destionation etc ... - These information help you decide on what you need to negociate on or what action you need to take to change the company's travel budget.
On the other hand, Xpenditure makes it possible to see what your employees are using their company credit card for. If your employees are using and abusing Uber on business trips, may be a car rental service would be more efficient. It gives you all the necessary information to make realign everyone on the company's expense policy.
There's no way around it anymore: data analysis needs to be at the heart of every company. Leave it out of your business strategy and you'll risk missing out on valuable chances, while the data-driven competition inches closer.