In Data analytics, several jargons, such as “big data,” “cloud computing,” and “data-driven,” seem complicated to a layperson. Establishing a firm knowledge footing by learning these terms can be one clue to start with a promising career in data analysis career.

What Does It Mean to be “Data-Driven”?

Data has become a viral word. The term “Big Data” is commonly used to define the importance and complexity of information. Even small content could be considered “big data” if we can pull a large amount of information from it.

What do you understand by the term “data-driven”? This term defines a decision-making process of collecting data, pulling imprints and facts from that data, and employing those facts to make deductions that impact decision-making.

The strategy of making executive decisions based on actual data rather than instinct or observation alone is Data-driven decision-making (or DDDM).

Today every business aspires to be data-driven, and most experts understand that prejudice and incorrect inferences can cloud judgment and lead to poor decision-making without data. In a recent survey, 58 percent said that their businesses make almost half of their regular business decisions on instincts or impulse rather than data.

Therefore, data-driven findings are free of prejudice and focused on straightforward questions which ultimately empower your organization.

How to Make Data-Driven Decisions

To effectively utilize data, professionals must execute the following:

1. Know your mission

A data analyst knows the business well and has strong managerial acumen. You should know your industry and competitive market’s problems and recognize and understand them. Setting this basic knowledge will prepare you to draw better deductions with your data.

Determine the business questions you need to answer before data collection to reach your corporate decisions. You’ll be able to simplify the data collection process and avoid wasting resources by setting your mission.

2. Identify Data Sources

Identify and assemble the references for data extraction. You need to synchronize details from various databases, customer web-driven feedback forms, and trends from social media.

It would help if you found common variables from the dataset, which can be a challenging task. It would be best if you sought to develop a technique to present the data you could use in the future.

3. Skim and Organize Data

Eighty percent of the time is needed to clean and organize data. And for analysis, only 20 percent time is spent. This “80/20 rule” accounts for the importance of having skimmed useful information, and then you can interpret what you need for your organization.

Prepare raw data for analysis by discarding or correcting inaccurate, vague, or unrelated data. You may make a data dictionary, catalog your variables, and document them for future reference. This info could contain the data type and other processing factors.

4. Statistical Analysis of Data

Once your data is assembled, cleaned, and stored, you will have to analyze the information using statistical models. At this stage, you can use the data to answer the questions you had identified earlier in the process. You can determine which testing tool best suits your data set, like linear regressions, decision trees, random forest modeling, etc. You will need the following three ways to demonstrate your findings:

  • Descriptive Information: Just the facts that you have with you.
  • Inferential Information: You must draw an inference or interpret the facts for the particular project.
  • Predictive Information: You can now substantiate an earlier assumption with facts. Further course of action will be based on logic.

To stay methodical when it comes time to interpret the data, you need to:

  1. Draw Conclusions

 Data-driven Decision making is the final step in concluding. You can have a quick recap of the events that led to this last step.

Many businesses make a lot of assumptions about their products or market. Study the market and demand for your products before aspiring for new information; you need to put existing beliefs to the test. If your assumptions prove correct, it will give you the platform, whereas if these assumptions make you aware of any wrong claims you made about your product, it’s better to discard them before it impacts your company. It is always an exceptional data-driven decision that generates more questions than answers.

The data analysis eventually aids your business and leads to more knowledgeable decisions and plans to help move forward based on your previous data analysis. The data thus collected are only helpful if appropriately used, and data storytelling conveys conclusions to crucial stakeholders to help in DDDM.

Now technology drives almost every aspect of your business. 

 You can take some simple steps to make your business decisions more data-driven.

  1. Give Precedence of Data over Instinct

The top companies worldwide use data to make decisions about their businesses. They’re leading the way because they’ve earned a strategic edge over their rivals by turning their focus on data rather than depending solely on business acumen.

It is seen that Fewer top-performing companies (40%) than slowpokes make the bulk of their business decisions on instinct or experience (70%). Companies that make data-driven decisions gain more than businesses that act on instinct.

A data-driven organization has the edge over others in the following manner:

  • The use of data to their benefit makes them remain competitive.
  • The customer focus on the customer and their journey help data-driven company benefit more than other companies that don’t.
  • It is expensive to store considerable volumes of data, so to keep it cost-effective, use data that are important to you.
  • Catch newer possibilities, enabling your company to expand. Take advantage of data that could be useful.
  1. Large Data Base Might Have Negative Impact

You have to use vast amounts of data at your disposal judiciously. All data sometimes add little value.

Data will be valuable depending on how much insight you can draw from it. There are chances of going astray because of the vast database that you have for yourself.

Therefore identifying which data to use is essential. The metrics, like page views or conversions, decide how vital are your data-driven decisions. 

5 Steps to Data-Driven Decision Making

Step 1: Strategy

Data-driven Decision Making should begin with an Only-All-Important strategy that helps you to carefully prune all the data that’s not useful for your business.

The first item on your list is to set your objectives — why do you need the data? How are you going to use them? Maybe you need new leads or find out which strategies are working or aren’t.

Looking at your business goals, you should build a strategy around them, and big data won’t leave you confused.

Step 2: Identify Critical Areas

After collecting data from all directions — from customer interactions and the devices used by your team, it’s essential to handle the multiple data sources and determine the beneficial areas. Finance or operations could be your priority.

Step 3: Data Targeting

You have already located areas of your business. How you manage the analytics and the issues datasets will answer all those questions.

Your data sources will furnish you with the most helpful details to facilitate your database. Remember that different departments use separate systems that can lead to inaccurate data reporting. Target data according to your business goals, keeping data storage costs low and confirming that you’re acquiring the most valuable insights.

To keep an eye on costs, you need to keep the data board simple and less crowded. Focus only on the data you need and discard the unwanted data.

Step 4: Collecting and Analyzing Data

The heads of departments are generally the managers of key data. Data comes from external and internal sources, which means you know what’s happening across the business.

You may require integrated systems to join all the different data sources to examine the data. The skills needed to analyze data will vary; the more complex the query, the more technical skills you’ll need.

Similarly, simple analytics requires working knowledge of Excel. Some analytics platforms offer easy accessibility to the workforce. When the data remains more available, it is easier to find more insights.

Step 5: Action Items

The insights extracted from the data decide how much you benefit from them.

Multiple business intelligence tools can pull together complex data sets, which helps Data-Driven Decision Making.


  • Let Data drive and shape your business.
  • To become a data-driven business, you need to use data to drive your business decisions. You must pick the best analytical tools to help draw insights from data with the right technology architecture.
  • Make sure everyone knows the value of the data in your company— and how to reap benefits from it.
  • There will be a need to transform company culture, and the change should start from the top. It means onboarding the leadership. Leadership should understand the fact that analytics will bring value to the organization.
  • The decision-making process must be data-driven and will soon ingrain within the company.

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