5 Reasons Building a Data-Driven Culture is a Good Idea

Is your company data-detached or data-driven? This is a key question to answer as you navigate the “next normal," building a data-driven culture as you grow your business in the midst of the confluence of a global pandemic and economic uncertainty. In the current landscape, it’s essential that everything from your performance metrics to profitability to employee engagement is measured in a way that minimizes our inherent bias and maximizes forward-looking insights.

Being data-detached doesn’t mean you don’t have data or don’t use it regularly; it means it’s not essential to how you operate. Today, most organizations, regardless of their size, have an abundance of data—read: your teams are generating useful data points on a daily basis. But is the presence of this data being actively relied on for effective decision making? If not, here are a few reasons to pull data to the forefront of your operating procedures and incorporate it into proactively driving your business:

Creating Clarity, Reducing Uncertainty

Setting clear expectations related to business performance metrics is essential to startups. When in startup mode, focus can be hard to come by. There’s always a purple squirrel to chase on the road to growth and teams are often sent in multiple directions in pursuit of the “shiny object” that will make a name for the company. However, what startups need to get clear on are the essential metrics that drive the business forward.

When you have measurable goals tied to KPIs, you create clarity about where the business is going and head off uncertainty when it comes to the mission and vision. This is critical to employees feeling engaged and like their work has meaning and purpose. Data-driven management puts the right KPIs front and center and drives the team towards achieving these metrics, creating clarity in company focus and reducing uncertainty in direction.

Your Gut Won’t Cut It

If you’re the CEO or leader within a startup, you’re probably used to having to make on-the-fly, gut-check decisions and you’ve been doing well so far—look how much you’ve grown your company. You’ve taken it from its infancy into its teenage years, but unfortunately, we’re here to tell you—this is when “gut” isn’t good enough, and it’s only exacerbated by the uber-competitive, rapidly evolving landscape driven by the current state of affairs globally.

Making decisions grounded in data and fact is the hallmark of a data-driven culture. When you migrate away from temperature checking your goals and truly understanding when a goal is on track or off track based on data there’s freedom in the way you operate. You abandon what “feels right” for what is truly the path forward.

Measurement Increases Engagement

We’re big fans of Patrick Lencioni and one of his key tenants of employee engagement is measurement. Everyone in your organization should be able to gauge their progress and level of contribution without depending upon the opinions of another person. This means your KPIs tie directly to job functions and key accountabilities that are grounded in data and fact. For your employees, without tangible means of assessing their success or failures, their motivation eventually deteriorates. 

The reality is, only 34% of employees are engaged at work. If we want to measurably shift this statistic, we have to operate as though we’re turning the titanic away from the iceberg and making decisions and KPIs based on what we know to be fact, not feeling. Measurement increases engagement by giving your employees a goal to work towards regardless of whether it’s revenue generation, feature enhancements, or customer retention. Carefully choose your KPIs to ensure employees feel motivated and incentivized to achieve the company’s goals, because they are their goals too.

Sharpening Your Toolset for Scale

Enhancing your data-driven management skillset only sets you and your organization up for success—and scale. To succeed with data, your employees will need specific data-related knowledge and skills. While you may or may not be able to hire people with data skills, your existing workforce possesses valuable domain knowledge and expertise. Coupling a data-driven mindset with that domain expertise can prove to be a powerful differentiation for growing organizations.

The reality is, most individuals within your organizations want to continue to hone their skills and add value. Allowing individuals to become citizen data scientists not only sharpens their skillset but optimizes your organizational toolset when it comes to scaling. Most small companies today need to grow these skills inhouse and doing so can pay large dividends in the long run.

Transparency Breeds Trust, Trust Breeds Loyalty

Transparency and direct communication are core values for many organizations today. These values take on different forms when it comes to data-driven management. On the one-hand you want your managers driving towards the right KPIs, on the other hand you want enough autonomy to foster innovation and iteration. Transparency around the data that’s being collected by managers and teams is important to ensuring your employees continue to trust the organization’s leaders. Furthermore, it should empower your managers to lead without micromanaging.

Creating an organization where there’s transparency around KPIs and measurement of each function’s contributions should foster trust, not dissention. It’s a mindset shift for organizations and employees to understand that just because there are KPI dashboards scattered throughout the office, doesn’t mean managers are spying on you or limiting your autonomy. It’s simply a visual representation of the direction everyone is rowing in and an opportunity for healthy challenge when objectives are off track.

Being data-driven means you’re not ignoring the massive amounts of data your teams are constantly generating. It means you’re leveraging this data to craft a forward-looking strategy for achieving growth and scale. Embracing data-driven management is a mindset shift that starts at the top. One of an organization’s most difficult challenges is to shift the collective mindset of your people to embrace data. Be diligent and patient as you attempt to steer your team in a new direction.