Harnessing the Power of Data: Driving Action in Business

December 4, 2023 | by Todd Hanlin

Data is the lifeblood of modern business. In an increasingly digital world, it’s become an integral part of who we are as companies. We invest time, money, and resources into collecting data, from labor transactions and delivery statistics to quality control and inventory levels. But the crucial question remains: what are we doing with all this information?

After many years of partnering with businesses of all kinds, I’ve observed a common scenario. Companies have become proficient at gathering data, so much so that it’s ingrained into their operations. They assign teams to analyze, interpret, and report on this data. The challenge lies not in the collection or analysis but in driving action from the data.

The Struggle with Data Interpretation

Within these teams, you’ll find individuals from various backgrounds, each trying to make sense of the collected data. Some may be adept at number crunching, while others may struggle. Ultimately, if the data doesn’t lead to actionable insights, the analysis is likely flawed.

In our industry, we often encounter Lean and Six Sigma methodologies. Lean focuses on reducing waste such as inventory, downtime, overprocessing, and defects. Six Sigma, on the other hand, is about variation reduction.

For instance, consider the everyday task of commuting to work. If you take the same route every day, your travel time will show minimal variation. But if you change routes frequently, the variation in travel time increases, making it harder to improve the process.

Standardization in processes allows us to narrow down the data set and reduce variation. However, if we’re not pulling out actionable insights from this standardized data, we’re essentially collecting information for nothing.

From Data to Action

There’s a phrase we often use–”build parts, not charts”. Many businesses spend significant time making their data look pretty for upper management, losing sight of the primary objective–using the information to improve operations.

The challenge is twofold. Firstly, it’s about predicting future problems based on data. Secondly, it’s about identifying which data to look at when addressing present issues. Often, there’s a disconnect between these two aspects.

This is where outside guidance can be beneficial. Consultants bring a fresh perspective, helping businesses identify valuable data sets and how to analyze them for actionable insights. If your data collection isn’t driving action, then why collect it in the first place?

The Unused Data Dilemma

According to an article in Inc. Magazine, between 60% and 73% of all data within an enterprise goes unused for analytics. This statistic is concerning. Imagine buying a new car, parking it in your garage, and never using it. It’s a missed opportunity and a waste of resources.

The same applies to data. Like a powerful vehicle rusting away in a garage, data not analyzed to drive positive impact or guide direction is a missed opportunity. It results in lost productivity and profit.

Most companies do not intentionally fail to utilize their data. The issue lies in the lack of knowledge and skills to interpret the data effectively and derive actionable insights.

Not In Vain

As leaders, to get the most out of business, we need to ensure our data collection efforts are not in vain. Our focus should shift from merely collecting data to using this information to drive action. By doing so, we can harness the true power of data, leading to improved operations and business growth.

Data-driven decision-making isn’t just about numbers and charts; it’s about using data as a tool to make informed decisions, solve problems, and ultimately, drive our businesses forward.