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The advantages of data-driven management

March 21, 2017

The Harvard Business Review’s (HBR) post “The Rise of Data-Driven Decision Making is Real but Uneven” offers some interesting insight into how the decision making process relies more on the supporting data and less on intuition. As technologies advance, they deliver faster, cheaper, more accurate data, making data-driven management a must for companies of all sizes.

HBR printed the following tables based on an analysis of the most recent US Census Bureau information on manufacturers. Here’s what they found:

This trend isn’t restricted to US manufacturers. There are a lot more data available now than there were 7 years ago, and companies in all other industries are finding ways to benefit from access to both massive internal data and external data sources that are newly available for analysis.

Companies across the board are turning to data driven management for a variety of reasons, but most importantly to keep pace with or ahead of competitors using data to grow their business.

Advantages of data-driven management

Industries like healthcare and retail, education institutions, and even those in the service sector are using data to make more informed critical business decisions. Here are a few of the advantages of a data-driven management culture:

  • A roadmap to where you want to be. You wouldn’t head out on a trip across the country without good directions to help you get to the final destination. Predictive analytics work much the same way, giving you direction on making important decisions. A good analytical program will make sure you’re understanding the data correctly to avoid being mislead.
  • Transparent information. When digital information is available to everyone regardless of their job description, you can unlock significant value for frontline decisions and those at C-level. While there may be some data not yet in digital form (e.g., paper files), this is changing daily. Access across all levels of the company to the same data helps collaboration and feeds better insights.
  • Data leads to a data-driven company culture. Data-driven management decisions are excellent for challenges company-wide. From tracking product inventories and determining pricing changes to managing employee sick days, data driven management decisions help companies streamline all workflows and processes, resulting in a more efficient company on every level.
  • Tailored customer offerings. Big data allows you to segment your customer base into more narrow tracks, helping you develop better customer experiences and reach customers and prospects with highly targeted campaigns. For example, you can segment customer data by geographical location and identify what sells better at each store location.
  • Insights come to light. A sophisticated analytic platform can not only improve your decision-making, but help to minimize risks and shine a light on insights that may otherwise remain hidden. For example, a retail chain can adjust inventories at the individual store level by analyzing weather predictions that affect how and what customers purchase.
  • New products and services surface. Consider how manufacturers can imbed sensors in their products to gather data about how and when customers are using their products. They can use this data to streamline current products, or offer a completely new product or service, like proactive maintenance for their different lines.

How to develop a data-driven management culture

You need a data analytics engine that lets you draw from a variety of data sources, both internal and external. A cutting-edge analytics platform will blend all of the data to narrow it down into actionable insights.

Every level in your company should be able to access these data sources for use in real-time decision-making, particularly your frontline managers and staff. A data-driven management culture isn’t created for C-level use only.

Finally, measure everything. The data should reveal quantifiable results so you can analyze its effectiveness. This helps you determine which data sources yield the best results, depending on its use. For example, you wouldn’t use the same data sources to help determine your seasonal sales offerings that you would to determine if employees are hitting their productivity goals.


Being data-driven isn’t about receiving a weekly summary report for scanning. It’s about using the data available, internal and external, to explore independently and find insights.

Employees at all levels need to be able to ask questions and get answers from the data that helps them make better decisions. Analytics, resources, and skills shouldn’t be limited to a few departments. Everyone should leverage the benefits of data.

About the author

Kathy Edens is a digital content creator who enjoys writing about cutting edge technology and how it can disrupt and innovate the way a business operates.

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