Drowning in Data? Make It Work for You

90% of the data in the world has been created in the past two years. Big Data is everywhere. There is a treasure trove of information about consumers, markets, and anything else you can name. Sounds good, right? How could it possibly not help you as you think about growing your business? And the answer is, of course it can, but…

The big question is, will you drown sloshing around in data? Will your company waste enormous resources tracking and reporting on information that no one looks at? Will you miss the forest as you peer at the tree, and even worse, at the leaf…and the vein on the leaf?

Work backwards from the answer: Think about possible outcomes and actions, and then construct the key questions to be answered. In this way, you can use the results of your analysis to validate or invalidate your hypothesis, which then lets you take action. This is the only way to maximize effectiveness and avoid “boiling the ocean”. It also helps to sharpen your thinking through the options upfront, versus wallowing around in the data and hoping it tells you something.

An example – Option One: We think that future platform customers are likely to be existing customers who have been doing some customization already. Option Two: We think that customers in certain industries have a deeper need to customize their applications, hence they are the best targets for the platform. Analyzing your data to assess both options will let you figure out the best approach to targeting and segmentation.

What do you really need to know? What decisions will it help you make? Who else needs to know? Think hard about what you need to know to do your job. Figure out how to crystallize and minimize the data you are looking at and ensure you know what action it will help you take (or not take). Lots of data can be very distracting. Think about who else will gain from sharing in the information. Who needs to know it all? Who just needs a top-line summary? Would it help someone to have the big picture versus the detail?

How often do you need to look at the data? It all comes back to actionability. Some information can tell you what to change on a weekly basis e.g. results of a marketing campaign. Other information is more actionable monthly e.g. if your company has monthly quotas for sales reps, the real story emerges at the end of the month, though of course there are lead indicators you can track by week or even day. And last, some trends emerge in broader timeframes, e.g. changes in customer satisfaction, and should be reviewed appropriately, e.g. twice a year.

Note that some data exists to be looked at only when diagnosing the root cause of an issue so you can figure out how you can fix the problem. It is important to have the data at this deeper level available, but only to dig into for problem solving.

Remember “good enough” is sometimes all you need: Precision is over-rated. Of course there are times that it is important, such as reporting on your company’s financials. But often, you only need to know “directionally correct” information. There is a temptation to drive to accuracy at the cost of massive time and energy. This is when you need to think about whether having more accuracy will change the outcome of the decision. For example, if a product line is wildly unprofitable when you do the directionally correct math, it is unlikely to change with more decimal points and granularity. It is more important not to miss any material factors entirely.

Never let data alone drive your decision: Data and analysis provide a way to flag the opportunities, risks and the boundaries, but should never be, in isolation, the way to make a decision. Use the data to talk to others and get input from those with experience and insight that will often go way beyond the data. Supplement one with the other to come up with the right decision (one reason I think it will be a very long time before computers and robots can do it all).

The top skills that got people hired in 2014 include data mining, statistics, marketing analysis, business intelligence…you get the picture. It should make you wary; data can show how to drive growth for your business, but it can result in wasted resources. And the danger is it can also result in flawed decision-making when it’s looked at incorrectly without the right “lens” of qualitative input.

Be afraid…approach with caution, but do approach, and dive in to see what your data can do for you. It’s the price of entry.

And it can unlock magic.

 

Originally published on LinkedIn