Every business works in different ways to reach organizational goals. For a retail company, perhaps they use inventory metrics and consumer behavior to inform what to do next. For marketing firms, maybe the process looks like reviewing campaign engagement in order to understand what to optimize.
Whatever industry it may be, almost every company uses some type of data and information to make important decisions. Also known as data analytics, this is a common concept that is essential to recognizing where the business currently stands, and what needs to happen to sustain operations well into the future.
For many, data analytics feels like a simple concept to grasp. Often defined as using various tools and techniques to examine raw numbers, it is mostly used to uncover dangerous patterns and identify where the value lies. The ultimate idea is to use statistical information to answer questions, predict future trends, and improve processes over time.
Across the entire business landscape, data analytics have become a key driver in successful outcomes. According to a Coherent Solutions report, recent projections estimate that the global data analytics market will reach $132.9 billion by 2026. Furthermore, the same report suggests that 63% of companies increase their overall productivity when they employ data-driven decision making.
But even as data analytics help strengthen business settings, what most leaders are getting wrong is how they use the data. While many have the information to make assumptions about a company, they lack the education and awareness to understand how to turn the numbers into measurable insight. The result is surface-level understanding where the statistics are not truly maximized to their fullest.
Wendy Lynch, Analytic Translator Founder and an expert in data analytics, believes the key to business is not simply gathering and reviewing the metrics, but it is about implementing the practical steps that lead to far better results. To her, the problem is not the data itself, but rather it is the unhealthy habits that prevent leaders from using it well.
In other words, what Lynch also argues is that business leaders are making too many mistakes. When it comes to data, there are five common misconceptions that are causing companies to underperform instead of evolve:
- Resisting integration: Companies with more than 500 employees need internal analytic expertise and a fully integrated data platform. Otherwise, avoiding this type of integration leaves organizations without the proper information to progress.
- Relying on benchmarks: Benchmarks are safe, but they also prevent leaders from examining the real issues. True data analytics requires one to uncover findings that may not necessarily match industry trends.
- Allowing artificial separation: Too often, companies keep their data separate from other parts of the organization. But in truth, once data is interconnected with everything, the impact becomes that much more powerful.
- Asking the wrong questions: Even with better data, business leaders must broaden their curiosities. While many would assume the answers right away, it is important for companies to include external stakeholders in the mix. Results don’t just happen internally, they add meaning when cross-functional questions are answered.
- Relying too heavily on visual tools: While visualization tools can be useful, they can also go unused because leaders do not know how to work them. Instead of investing in attractive dashboards, teams need the metrics that will provide substance.
There are many reasons why business leaders have not caught up to proper data implementation just yet. People misread numbers all the time, and a lack of communication is often one of the main factors for misinterpretation. At the same time, a combination of cognitive biases, poor collection from the beginning, or ignoring the context at large can also cause incomplete analysis.
As the business world becomes more and more complex, data analytics will be the critical component that everyone needs to remain competitive. For those who are willing to use it wisely, the transformation could do wonders. But for those continuing to get it wrong, the business might just falter in no time.
