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what is data driven

Blog October 15, 2018

We say "Data Driven" - But what does it mean?

Growing up, me and my brother played a PC-game called Simon The Sorcerer 2. The comic relief of the game was the Evil Wizard’s dimwit assistant, who responded to any "genius" plan with: "It’s wonderful Master!!!" …3 second pause…. "But what is it?"

I come to think of this little assistant every time I hear someone talk about being "Data Driven". The reason is that when you dig a bit deeper, it is quite apparent that very few have a clear understanding of what being Data Driven actually means.
"Well, it something with data. That drives… decisions or something…?" 

But what is it?

The meaning of “Being data Driven”?

Is it the data availability itself? Was every business decision 5-10 years ago based on pure guesswork without input from various sources? Of course not.

Is it the amount of data then?
Since human decision makers only can consider seven pieces of information at a time, this seems very unlikely. Too much information is actually harmful to swift decision making. Anyone trying to buy a new OLED-TV knows exactly what I mean…

Is it the frequency of data updates? Well, again, what changes frequently is details and as humans don’t fare well with too much details, this is not quite a good thing (for humans. Algorithms is a whole different story).

Is it the data quality that has wildly improved? Hard to tell. Most organizations do not track overall data quality and cannot answer this question truthfully. But that notion alone lends the answer to a big "No".

No clear answers yet. Keep reading!

The confusion partly stems from the fact that Data Driven depends on your current maturity in using data in the daily business. Being Data Driven 10 years ago was about establishing a BI-process. That is not enough anymore. What is Data Driven in today’s context? What has changed?

The organization.

The Data Driven race

Two types of organizations pioneer the Data Driven race. The first is the Cloud-born companies, they treat data as if it were gold. The second is the mature-enough companies that have a solid BI-process in place but realise that the data could be much more useful.

So they change. Instead of having data as an addition to an existing legacy process, they tailor the business processes with Data First in mind. When the business process every step is built with Data in mind, when every actor in the process have the necessary data available to them and when the outcome of the process is automatically monitored and fed back into the process, then the business process has become fully Data Driven.

I will give a few examples from recent customer cases.

Company 1
: Fairly new on the market, very entrepreneurial. Data is The Key asset. They know that providing an online payment service to other retailer is a bread-and-butter product. Instead, they harvest web interactions; analysing clicks and paths to purchase, exit points and more. Then they sit down with the retailer and help them redesign their web page to maximize turnover and minimize exit points. Data is at the core of every business process.

Company 2: Had a major market share of the online payment market 7-8 years ago but have since then been heavily beat by Customer 1. Realising that, they created a new legal structure and moved the whole online payment business to the new company, including new logo and facilities. They still sell an online payment service as the main product. They do not have co-invention in an iterative format with the online retailer that is the customer. They focus on having low latency in their service. They are still heavily beat by Customer 1.

What does this tell us? Many things. One thing is that even the best intentions are beaten by legacy processes and a company culture that does not embrace a data driven approach.

It is not only technology and data, the culture and hunger to change is as important!

So where do you start? Well, it depends on your current state. Do you need to get a BI-process and an Analytics-platform in place? Or do you need to change your culture? We at Enfo Analytics can help with the complete range!

Continue on the subject by reading this blog: How to become a Data Driven Organization 


Magnus Hagdahl
, Enfo Analytics