What is data-driven

What is data-driven

One of the questions I get asked is what Data-Driven means, is the reality of this concept possible? To understand the question, let us take a data-driven approach and look at the alternative or “What is done today.” Across a business, there are three types of decisions: Operational, Tactical and Strategic.

Operational: Day-to-day decisions, “Fred is sick, so Owen and Jeff will need to cover some of the tasks.” 

Tactical: Short-term plans, “Fred has been sick, so Project Champion risks delay, there is a penalty clause so to avoid that we need to either provide overtime or seek a contract resource.”

Strategic: Medium and Long-term plans, “We must expand our delivery pipeline and take on more projects so we can increase our revenue and cash reserves. We will achieve this by taking on two additional developers.”

If this seems familiar to you, then I have done a reasonable job of setting out what I see when people first start their journey with us. Operational and Tactical decisions tend to be data-driven by definition; something has happened and requires a response. The options available are limited. It is possible to define actions through if this then that style of remediations. The strategy is where data-driven typically fails for many businesses. There is a common misunderstanding that Goals and Strategy are the same; they are not. A company may have the goal of “Expanding operations in China”, or “Grow 3% YoY”. A strategy is a broad view of how to achieve the goals “In the next two years we will open a service centre in China” or “We will establish a staff development pipeline to support our growth”. When excessive detail becomes part of the strategy, then it drifts very quickly into the realms of Tactical or even operational decision making. When that happens, the result is Chaos! The Data Community must take their share of the blame for why Good Strategy goes bad as well.

The CEO needs three lights on her desk; Red, Amber & Green if Green then she can play golf.

While that’s a joke, there is a surprising amount of truth in the statement; your CEO must be focused on strategy. When you routinely present management layers that should be focused on strategy with Tactical or Operational data, you invite them to micromanage. So there has to be a balance as you move to become data-driven. Your strategy needs to define success factors and then review the validity of those periodically. REMEMBER – “wrong” does not always mean incorrect; great strategy drives behaviours that will lead to the goal. So those defined “Success Factors” will lead to your tactical decisions being far more transparent with people able to pre-empt changes. Operational decisions are also able to influence “Success Factors” so you see Tactical changes being made as a result.

Let’s put this into a scenario to see if it makes sense. In 2020 COVID has had a significant impact on our lives. In the UK, we have adopted a Micro-management strategy, that makes it impossible to plan or prepare anything beyond a week or two in the future. What would the data-driven alternative be?

Goal: Preserve the UK economy and workforce

Strategy: In the absence of a vaccine ensure that support services are not overwhelmed, and businesses are given the best chances of remaining viable. 

“Success Factors”

  1. R-rate 
  2. Intensive Care Bed Utilisation – %

Ideally, you want to look for four or five success factors. Each success factor is then assigned a Red, Amber Green value, i.e. R-Rate less than 1 = Green, 1.0 – 2.0 = Amber greater than 2.0 = Red. By combining your factors, you can build up local pictures to allow people to engage and prevent the tactical decision to implement restrictions actively. So, by presenting your Success Factors together and defining clear rules, i.e. all green = low risk, one amber = medium risk, three ambers = High risk, All Amber or one Red = Very High Risk. By adopting this view, it becomes possible to present just the four levels when required and a local breakdown of those figures for people to be able to understand where their area is today and if it is moving in a positive or negative direction. 

I hope you can see from this simple example that when you become data-driven decisions become clearer, and most importantly, things stabilise. It becomes clear what will be done under the circumstances, and that brings greater levels of clarity to your business. Like building innovation requires stability; so if you want your business to benefit from Continual Improvements or foster Innovations, then you need to provide that stability. My goal has always been to empower businesses through their data. Geordie Consulting brings a wealth of experience and skills to support your business transformation.

Ross Waterston
Director (Founder)
Geordie Consulting & Geordie Intelligence

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