For a modern business leader, the ability to make well-informed decisions makes a difference between being successful or not. As a result, data-driven decision-making has become a mantra for almost all companies and corporations that want to survive in the growing AI-driven economy.
A variety of frameworks, tools, and approaches have been utilized and implemented in the current business place to ensure that all decisions are always data driven.
While the C-suite defines the Objectives and Key Results (OKRs) along with Key Performance Indicators (KPIs), departments are left to navigate the data landscape to meet these targets. This approach, though well-intentioned, raises questions about efficiency, resource utilization, and cross-departmental collaboration.
Thus, a new shift in the C-suite is occurring at many companies – the introduction of fractional and more dynamic executives to translate between the C-suite and the departments to drive strategy by using data more effectively and efficiently within the company.
This post discusses an innovative Data Analysis for Results Enhancement (DARE) approach that challenges the way the current executives and leaders use data to drive decision-making.
This model is based on input received from colleagues, business owners, and various industry experts. This innovative model can revolutionize decision-making in small to medium-sized enterprises (SMEs), unlocking the true potential of data for sustainable growth.
The Current Paradigm
One can assume logically, that since the Executive Team defines OKRs and KPIs, they have access to the full spectrum of data within their organization.
However, in the current paradigm, this assumption falls short for various reasons, often tied to structural or strategic issues within the company.
These issues include:
Lack of Data Awareness
Within the C-suite, there is a tendency to establish ambitious objectives without a comprehensive grasp of the data landscape or recognizing what truly lurks within the river of large data that is being collected by the modern organization. This lack of data awareness can impede their ability to make well-informed decisions because the resources required to separate the wheat from the chaff in the context of data are either absent or undiscovered. Most Executive Teams lack a direct “data translator” between them and the departments that they oversee.
Redundant Data Collection
Each department independently collects or extracts the necessary data from a central repository (if available) or alternative sources. They then analyze this data according to their assigned KPIs. This approach often results in duplicated efforts, squandering valuable resources in terms of time and budget. Furthermore, it fosters distance between departments instead of fostering collaboration.
Departmental Silos
As each department focuses on its own data-driven decision-making, barriers are likely to form between them. Information becomes compartmentalized and communication stagnates. Departments transform into isolated entities, operating independently without benefiting from insights gained by others. This siloed approach hampers the organization's agility, its capacity to seize opportunities, its ability to mitigate risks.
As depicted in Figure 1, the C-suite primarily communicates with departments regarding their determined OKRs and KPIs. Each department collects and analyzes its own data to make relevant decisions. The interactions between departments mainly occur at higher levels or within the C-suite. Data-driven decision-making loops are mostly confined to existing within the departments.
These departments often have limited communication with each other which can result in repetitions and inefficiencies as discussed earlier.
These C-suites typically lack a Data-translator or a Data Officer capable of identifying analyses that could benefit the company's overall bottom-line rather than just specific departments.
A quick SWOT analysis of the current paradigm in most businesses would indicate that these issues can lead to a business overlooking its strengths, missing available opportunities within or outside itself, underestimating its weaknesses, and failing to identify threats in a timely manner.
The Need for a Paradigm Shift
To overcome the limitations of the current so-called data-driven decision-making paradigm, a fundamental shift is required in how organizations approach true data-driven decision-making.
The first step is for business leaders, owners, and board members to closely examine their company's needs and determine if their C-suite composition is meeting these needs effectively.
An emerging trend in executive hiring is the recruitment of flexible and dynamic fractional executives, as opposed to full-time executives, which can often be cost-prohibitive for SMEs.
The members of the C-suite play a critical role in shaping both short-term and long-term strategies for the company's growth and success, so choosing the right people is of utmost importance for sustainable growth.
The next step is to understand how the new proposed paradigm would actually work within a company, assuming that it has more agility and ability to rotate their C-suite members based on productivity and promise.
Here are the key aspects of the Data Analysis for Results Enhancement (DARE) approach:
Direct Data Access
The executive team gains direct access to data by including a full-time or Fractional Chief Data Analysis Officer (CDAO) in their ranks. This expert serves as a data navigator and translator, providing immediate access to crucial insights. With a CDAO on board, the executive team gains a deeper understanding of their organization's data landscape and can get access to the treasure that lurks within the dataflow within the company.
Efficient Communication
DARE introduces an "outer loop" that connects departments to unified data banks, data analyses, and decision-making processes enabling seamless communication to share discoveries and insights. This interconnectedness promotes collaboration, eliminates redundant data collection, and accelerates information flow.
Feedback Loop
The DARE approach incorporates an “inner dynamic feedback loop” that continually informs decision-making at the Executive level and departmental levels. The executive team sets OKRs/KPIs based not only on historical data but also on real-time insights from departments and analysis. This real-time feedback ensures the organization can adapt swiftly to changing conditions and consider cross-departmental impacts of decisions simultaneously and in real-time.
Inter-Departmental Collaboration
DARE encourages departments to collaborate when making cost-benefit decisions. This reduces inefficiencies, frees up labor for reallocation, can boost employee morale, and creates opportunities for cross-departmental training. All of this ultimately improves the profit and productivity margins of the company, without significant additional costs.
As depicted in Figure 2, the DARE paradigm places the data at the core of the entire organization and structure. The data is shared with the Executive Team, which determines what data should be collected and what is essential. Data also contributes to the definition of OKRs and KPIs as well as to decision-making and implementation through analysis.
The C-suite members continuously update the KPIs (and OKRs, if necessary) based on the ongoing analysis results and departmental decisions.
The constant communication between the departments and the Executive Team ensures that both loops can simultaneously and efficiently operate, leading to continuous improvement in decision-making.
Conclusion
In today’s competitive landscape and the world of Large Data and Machine Learning, the growth of a company does not depend on how big its dataset is but rather on how efficiently it is being utilized.
The outlined DARE approach offers a transformative solution, eliminating departmental silos, providing direct data access, promoting efficient communication, and fostering inter-departmental collaboration.
It is not just about how to utilize data but presents an entire new method of approaching how decision-making is driven strategically, logically, and collaboratively.
So… Do you dare to DARE? Together, we can explore how the DARE approach will optimize your resources, drive growth, and shape a brighter future for your business. Your organization's success story awaits – reach out to us today.
About the Author
Dr. Kruti Lehenbauer
Fractional Chief Data & Analysis Officer
Dr. Kruti Lehenbauer is a professional with a Ph.D. in Political Economy, renowned for her exceptional academic achievements. With a wealth of experience in consulting and economics teaching, she has made her mark as a global influencer in quantitative and qualitative research methodologies, economic analysis, and risk assessments for various entities on local, national, and international scales.
Dr. Lehenbauer is recognized as a strategic mastermind, effortlessly deciphering complex data analysis and research to deliver actionable insights. Her prowess extends to crafting reports with captivating visuals, analysis, and presentations that make intricate information easily understandable and actionable for businesses.
Read Kruti’s bio.
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