Big data is consistently cited by business leaders as a central driver of business innovation. Harvard Business Review states that the rise of big data — and the challenges it presents — is one of the “most important features of the contemporary economy and society.” There is an explosion of big data, and an ever-increasing need for professionals trained to make sense of it.
What Is Data-Driven Decision-Making?
Data-driven decision-making (DDDM) is defined as making decisions based on hard data as opposed to intuition, observation, or guesswork. The value of data-driven decisions is dependent on the quality of the data and its analysis and interpretation. DDDM is generally used to gain a competitive advantage but can be used to help organizations reduce costs and run more efficiently.
Data-driven decision-making is now prevalent in almost every sector, including financial services, telecommunications, healthcare, travel and hospitality, manufacturing, retail, and entertainment. You can find big data careers in any of these sectors. Management roles might include management consultant, project manager, social media manager, or business development manager. Some increasingly common C-suite positions are chief data officer (CDO), chief information officer (CIO), chief digital officer, chief technology officer (CTO), and chief analytics officer.
Other positions that work with big data include data scientist, data analyst, database manager, IT director, general and operations manager, management analyst, and big data architect.
In the early days of DDDM, an IT specialist would both collect and interpret the data. The advent of business intelligence tools has changed that. It is now possible for business managers without IT backgrounds to generate reports.
The 5 Essential Steps for Implementing Data-Driven Decision-Making
According to NewVantage Partners’ 2018 survey of top executives, 73% of respondents said they have seen measurable value from big data initiatives. This value has been realized in the form of advanced analytics/better decisions, improved customer service, expense reduction, innovation and disruption, better speed to market, and data monetization. An Economist study showed businesses that use DDDM perform better and are more profitable than those that don’t.
There is a danger in relying too heavily on data and algorithms, however, especially when they are not in line with a company’s overarching goals and philosophy. One recent cautionary tale is the Apple Card, issued by Goldman Sachs. Its algorithm consistently gave women lower credit limits and higher interest rates than men. This led to an investigation by New York state regulators.
Data must be deployed ethically, and data-driven decisions must be informed by a company’s mission and values. Data is a vital business asset that must be appropriately managed — and decision-makers must have the proper training to leverage it.
Businesses seeking to implement data-driven decision-making should follow these five essential steps:
Determine Business Questions or Issues
What does the company want to accomplish? Identify the areas most important to achieving its overall strategy. Is the company trying to assess an opportunity or diagnose a problem?
Strategize and Identify Goals
Determine what you can realistically accomplish with data. It’s essential to have a clear analytical objective. Who will oversee the collection and analysis? What personnel will you need for the project? Can in-house employees do the analysis, or will you hire consultants?
Identify what data should be collected and how to acquire it. What specific data is needed to answer the original questions?
Collect and Analyze Data
You will need to put in place the processes and personnel to gather and manage the data. Your company may already have some of the data it needs in-house. In some cases, it might be possible to purchase access to an existing data set. Although data is becoming ever cheaper and more plentiful, the cost of acquiring the right data can still add up. Data can be generated from a variety of sources, such as computer software, online sources, cameras and imaging platforms, environmental sources, or personnel.
Once the data has been collected, it must be analyzed to glean strategic insights. Common types of analytical methods include text, speech, and video/image analytics. Many available platforms for big data analysis are available.
Make Decisions Regarding Findings
Key decision-makers can then turn analytical insights into actionable ideas and projects.
How Data-Driven Decisions Shape Business
Data-driven decisions are shaping all types of businesses in ways large and small. Big data drives the three tech giants: Google, Amazon, and Facebook. In fact, after Facebook put in place self-service data access for employees, the company underwent a major operational change. An intern used the data to generate a report showing Facebook’s global reach. That report led to the transformation of Facebook’s connectivity model.
Data-driven decision-making isn’t only for tech companies — it has also entered the corporate mainstream. Nearly all respondents in the NewVantages survey wanted their firms to make the shift to a data-driven culture, but only about a third felt they had succeeded. As a result, many companies are creating new data-related management roles, such as CDO, CIO, and CTO.
The Ohio University Online Master of Science in Management and Ohio University Online Graduate Business Certificates are designed to prepare students for big-data careers and teach them how to implement data-driven decisions in different types of businesses.
Ohio University’s Online Graduate Business Certificates allow students to focus on a specific area of knowledge, such as the Business Analytics Certificate, which teaches students to interpret, summarize, and communicate insights learned from data analysis. This is one of seven online business certificates that can be earned in as few as 21 weeks. Certificates can also be applied to a graduate business degree.
Sound, ethical, and innovative data governance is essential, no matter the business sector, company, or goal. DDDM requires leaders who can strike a balance between using analytics and managerial instincts, and who can set the standard for best practices.
Explore a Career in Data-Driven Decision-Making
If you see yourself as part of the exciting and challenging world of data-driven decision-making, explore the Ohio University Online Master of Science in Management and Online Graduate Business Certificates programs. Discover how Ohio University can help you acquire the core competencies for a career in big data.