Kathy William Chiang VP, Business Insights, at Wunderman Data Management, is a co-author of the new book, Monetizing Your Data: A Guide to Turning Data into Profit-Driving Strategies and Solutions [Wiley]. With the explosion of information available from emails, online searches, text messages, blog posts, and postings on Facebook and YouTube, Chiang has seen a shift in how data is being used across all business sectors and have unique insight and knowledge into the analytics that business leaders should be using to increase their profit.Read on for what Kathy has to say.
Faten Abdallah (FA): Why is it important for companies to collect data?
Kathy William Chiang (KWC): Data captures the life flow of the business. It is a record of each and every activity that the business conducts. Since practically every key system that a company uses is now computerized, such as CRM, Point of Sale, Production Management, Billing and so on, a digital record of every important activity the company undertakes is available to be collected, stored and studied.
Through collecting and analyzing their data, companies have a window into the health of their business. This is analogous to going to your doctor to have medical tests performed. You may be feeling just fine but when data on vital stats is collected, potential underlying issues are revealed that if addressed early can be prevented from impacting your health.
If companies don’t collect, monitor, and analyze their data, they will end up making decisions based on feelings or prior experience which may not be representative of the market forces they currently face. Without a good understanding of the trends and patterns of their business, managers can find themselves reacting to the noise of the day. Today’s sales are down, yesterday’s were up. How do you know which is more representative of the trend?
FA: What kind of data should companies collect?
KWC: The short answer is all the data they can at the most detail level possible.
This is because you cannot predict what business challenge you will face this week, next month, or next year. Is it a demand issue? Then comparing seasonal patterns of sales by product type is important. Is it a supply issue? Then looking at production output, completed orders, backlog will be key. Is it a product quality issues, then looking at customer complaints to the service center or online comments are critical. When an issue arises, if you don’t have historical context to examine, you will be flying blind when deciding how to react.
Additionally, you want to keep the data as granular as possible, that is data at the level of individual transactions. Summarizing and averaging data causes valuable information to be lost. If one particular plant or supplier is the source of a production issue, this information can be lost if production data from all sources are summed up to save space or reduce the quantity of records.
The dramatic reduction in data storage costs, the increased power of computer technology and the proliferation of cloud based systems are making storing and accessing core business data a financially feasible proposition for companies large and small. These new technologies are leveling the playing field with respect to business analytics for small and medium companies. Competing on Data is no longer just an option for large enterprises.
FA: Often times, it is common to find data stored with no action. What should companies do with collected data?
KWC: Having just said you should keep any and all of your data, the flip side is that you should not simply start funneling all that data to your managers. Being overwhelmed by a flood of data, reports and analytics is a common problem today.
Once companies have made the effort to collect a treasure trove of data, the temptation is to try to use it in daily business but oftentimes astrategy to use it to drive actions and decisions is lacking.
A common mistake companies make is to think they can hire data scientists to mine their data for ‘nuggets’ that will then give them insights on how to improve the business. But as the old adage goes, if you don’t know where you are going, any road will take you there. Managers need to spend time thinking through the actions they need to take and architecting the decision process to make those actions productive and meaningful.
Data is the ‘hard’ quantitative side of the business, but the ‘soft’ qualitative side is equally vital to making smart decisions. Being aware of and actively managing biases and points of view that managers bring to the table when facing a business issue, helps companies to make more objective and thoughtful decisions. Furthermore, historical data of the business can reveal insights about the future only to a point, probability and uncertainty also need to be considered when developing strategies and plans.
FA: What are some tools useful for collecting and implementing data driven information?
KWC: Tools needed to collect, store and analyze data are becoming increasingly affordable and easy to use. A good database to store and structure your data is a must. Add to that a good data visualization tool and you have everything you need to get started. All of these assets are available as on-premise or cloud-based services eliminating the need for large up-front investments.
In business, there is a common expression. If you don’t eat your lunch, someone else will. Competing on data is now a core business process. If you don’t start learning how to deepen your understanding of your customers, their needs and wants, then someone else will come along and serve them better.
Bringing data into your business management and decision processes is a journey. No one starts the process with a perfect understanding about how to go about it and everyone is learning more each day. The important point is to get started.
We talk about the ideas presented here in much more detail in our book, Monetizing Your Data: A Guide to Turning Data into Profit-Driving Strategies and Solutions, available on Amazon.com. You can also go to our website: monetizingyourdata.com for more information and tools to help you start your journey.
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