Data Driven Decisions Will:
Provide a strong foundation for confidence in your choice.
Allow you to analyze the situation from all angles.
Help you convince stakeholders of your reasoning.
You have countless decisions to make every day, and those decisions will impact the success of your business and your life. Rather than blindly arriving at each decision, you should employ the benefits of data to make stronger decisions. This is called data driven decision making.
3 Pillars that Impact Decision Making
The decisions you make in your life and your business are always based on something. Most often decisions are based on a combination of the three pillars that impact your decision making:
- Quality – The quality of the product produced by the task.
- Speed – The duration of time that will be required to complete the task.
- Cost – The amount of money and resources that will be required to complete the task.
Think about it, when a client or customer makes a request of you, your immediate thought is often, “Do you want this done right, done quickly, or done inexpensively?” In most circumstances, your customer can set two of the three pillars as their highest priorities. The status of the remaining third pillar will be determined by the level of priority for the other two pillars. See below examples:
High Quality + High Speed = High Cost
High Speed + Low Cost = Low Quality
Low Cost + High Quality = Low Speed
But how do you know which combination of options is best for each specific situation, and how does increasing / decreasing the level of one pillar effect the other two? The answer is found by making data driven decisions.
What are Data Driven Decisions?
Opposed to decisions based on gut instinct or emotion, data driven decisions are based on analysis of numbers and the insights gained from that analysis.
The benefits of data driven decisions are numerous, however the biggest include:
- Greater Confidence in Making the “Right Decision”
- More Decisions Based on Fact
- Better Assumptions About the Effects Your Decision will Have
Finding Data for Data Driven Decisions
The first place to begin looking for data to inform your decisions is within your Key Performance Indicators, which are the metrics that you should be measuring to track the progress against your goals.
By utilizing your Key Performance Indicators, you’ll be able to analyze actual and accurate data about how adjusting the levels of each pillar will impact the others.
For example, your historical data may show that the average logo design project requires 15 hours of work, a duration of 2 weeks, and produce revenue of $1,875. If a client requests that their logo be completed in a duration of 1 week, you can reference your data and immediately know that the client is asking for a 200% increase in production speed, and you should consider charging them a rush fee. Without having first analyzed the data, your decision about how the client requests will impact the cost would have been based only on instinct.
How Data Driven Decisions Eliminate Uncertainty
By making data driven decisions, you are able to remove the phrase “I think” from the explanation of your decisions, and replace it with “I know” or “The data shows”. That shift will allow you to more confidence in yourself as a decision maker.
This increase in confidence can greatly improve the power you have to convince team members, clients, and other stakeholders that the decisions you are making and the directives that they require are fair, accurate, and in the best interest of all parties.
Start Making Data Driven Decisions Today
The next time you are faced with a decision, first ask yourself if there is data that you can reference to better inform your decision. By asking the right questions, and analyzing the data for the proper answers, you’ll be on your way to making better decisions.