Data is the lifeblood of business. Whether you’re part of a small, family-run business or a global corporation, being a 21st century employee means working at the forefront of the data analytics revolution. Today, businesses are operating in an environment of increasingly large and complex sets of data – the ‘global datasphere’. What’s more, every business decision you make will rely on your ability to interpret, argue with and glean insights from that data.
To understand how data powers business insights, we spoke with industry experts about the benefits – and challenges – of making data-driven decisions. Discover how combining data analytics with gut instinct can lead your business to a strategy sweet spot.
Data is power: how attitudes to analytics are changing
By 2025, the world’s data is predicted to grow to 163 zettabytes, a figure ten times the amount of data generated in 2016. With this growth in data will come changing attitudes to data analytics, as businesses wise up to the wealth of new business opportunities data can bring.
For Edith Cheng, Head of Digital Marketing and Analytics at Lens10, managing clients’ digital analytics has allowed her to see the shift to data-driven strategy up close.
“Almost everything can be tracked. Every time you view an ad, click on an ad, anything you do on a website, it can all be tracked. And my clients can use that high quality data to validate or invalidate a hypothesis, as evidence for a strategy they want to implement.”
Phil Bolton, Director at PwC and an expert in professional services consulting, has also seen an attitudinal shift.
Fifteen years ago you had to tell someone how to spell analytics. Now everyone wants it. We’re seeing clients wanting to do enterprise-wide data analytics strategies, to make sure they’re getting ROI.”
With companies around the world scrambling to access and explore their big data, some clear leaders are emerging. So, which business sectors are ‘doing data’ well?
e-Commerce is a data-driven leader
Cheng believes e-commerce industries are leading the way in data-led strategy, for two reasons. First, they can act quickly on the insights their data provides. And second, their way of thinking about business is inherently digital.
“e-Commerce companies can immediately make small tweaks to the website, their checkout funnel, or the way they display their special, which can impact their bottom line quite significantly. And many are ahead of the curve in terms of the way they track, because they started out as a digitally-led company,” she explains.
“As a result, they’re always thinking, ‘How can I measure this, how can I optimise this particular area of my website, or my marketing campaign, to drive a better ROI?’
Banks are redefining customer value through data
Not too distant from e-commerce is banking, which Bolton points to as a sector whose strength in data analytics has been driven by the need to sustain a competitive advantage.
“Maturity around data collection, understanding, governance, model-building and surfacing insights is at a much higher level in industries like banking, who’ve experienced greater competition for longer,” he says.
La Trobe alumnus David de Garis (Bachelor of Economics – Honours, 1975), economist and Director at National Australia Bank, agrees that banks’ inquisitive approach to data has led to a rethinking of strategy. Banks are becoming more focused on analysing their own data for insights they can share with customers. In his opinion, they’re becoming a ‘bank of information, rather than a bank of money’.
Banking is changing. A lot of interaction with clients is over data and information. The questions you can answer down to a reasonably micro-type level – that’s the sort of thing that gets customers excited,” De Garis says.
So how are banks using data to add value for customers? As an example, De Garis describes a test project involving employment data. Realising that his bank was ‘sitting on 800,000 wage payments every month’, he used that internal data to create an analysis of employment of greater quality than the Australian Bureau of Statistics’ Labour Force Survey, which uses a sample of 26,000 households.
“Employment is a pervasive indicator of the economy. Through our own internal data, we’ve put together a series going back for the better part of a decade. It’s opening up a whole myriad of questions that we can ask, and that we can help clients with.”
With so much data being collected each day, why do some sectors still lag behind in applying data to strategy? And, more to the point, how can they develop a pro-data mindset?
Blending hard data with ‘gut feel’ to overcome challenges
According to Bolton, there are some common challenges preventing companies from embracing data-driven strategy. In his opinion, many companies:
- Don’t know how to access to quality data
- Don’t have the talent to generate and effectively communicate strategic insights from data
- Mistrust analytics models and operational systems, because they go against ‘gut feel’
- Use data post-hoc – to justify a strategy that’s already designed, rather than use data to design the strategy in the first place.
To overcome these challenges and transform organisations into data-savvy decision-makers, Bolton believes a blended approach is best. He advocates for businesses to keep using human intuition and gut instinct, but to do so in combination with advanced data analytics.
“Data first and create the strategy, or strategy first and then bring the data? I don’t think it has to be one or the other – the more pragmatic approach is to do both. It’s about those two streams coming together to form the best solution,” Bolton says.
To do this, business teams can use their subject matter expertise and gut feel to produce hypotheses. They can then test these hypotheses through a data analytics project, using advanced techniques to explore possible scenarios and observing the trends that emerge. With the data-driven answers that result, the teams can refine their strategy, plan and budget for the coming year.
“They’re still bringing their expertise – and we’re still allowed to put things on the table that they didn’t know – but they’re now shaping where they’re going to invest their finite resources of people, money and time, based on the answers to those questions,” Bolton says.
Benefits of a blended approach
A major benefit of this blended approach to business strategy is that it shortens the process of building and breaking hypotheses.
It also opens to the door to adaptive problem solving, where you run a quick, agile experiment to test a hypothesis and then evolve your business strategy. Says Edith Cheng:
Gut instinct is good, but the problem is everyone has a gut instinct. If your marketing team is a team of six, you have six different gut instincts to resolve into one definitive strategy. With digital marketing, to settle these gut instinct disputes we run A/B tests or multivariate tests in a very short amount of time.”
Clearly, there’s power in using data to drive strategy. But that’s not to say ‘data eats strategy for breakfast’. In the eyes of these experts, human thinking and data analytics work best for your business when they’re served on the same plate.