Data is becoming one of your most valuable assets.
Now is the time to invest.
As a business professional, you must always assess your return on assets. Return, as the numerator, can be measured on how you earn, quantitatively or qualitatively. Assets, as the denominator, come in many shapes and sizes.
As an example, relationships are one of your greatest assets. You nurture, understand, connect, and invest in them to drive return.
Today, data is becoming as important as your relationships and you should treat it similarly; nurture, understand, connect, and most of all, invest in data.
Here are 5 simple reasons to invest in data.
1. Customers & Context
Business success rests on one fundamental goal: selling a product or service to your customers. Therefore, understanding your customers wants, needs, problems, and desires is at the heart of every organization. As options to purchase exponentially grow, customers have countless options. For this reason, consumers’ tastes, desires, and expectations are changing far more quickly than in decades past. Similarly, the marketplace for your business and your customers is more dynamic than ever. Understanding and evaluating how economic, demographic and even weather are impacting your bottom line provides you with the marketplace context required to make informed business decisions.
2. Business Model.
As customers’ demands change, products and services change. These changes force a change to your business model. One easy and obvious example is the shift from software licensing to the software-as-a-service business model. Just 20 years ago, everyone bought a copy of Microsoft Office, installed it on their local hard drive and began their day in Word or Outlook. This license required local storage, constantly adapting hardware, and an IT support team. Today, you can literally accomplish the very same tasks with your mobile telephone. Monitoring and investing in marketplace data such as rising star companies and those that are shrinking and showing signs of weakness may help you understand where to take your business model. Utilizing your internal data in concert with these additional marketplace factors can help you learn from your past performance and the significant factors which drive your business, to inform strategic decisions moving forward.
Adjusting your business model could seem daunting. However, leveraging data can help you overcome this challenge and make you more agile in how you react to customers and market conditions. As an example, we have a client that sells Rolex watches. Through their success, they are looking to geographically expand. Leveraging and investing in control data such as interest rates, average household income, consumer sentiment, housing and other public data allowed them to map the targeted geographies where they felt they could build on their success. Furthermore, they used this type of data to better manage inventory and adjust personnel levels in their stores — all resulting in increased profitability. Investing in data significantly improves predictability of business forecasts and allows you to be proactive to anticipated shifts in the marketplace.
4. Machine Learning.
Modern and evolving tools are now available at our fingertips. Tools such as machine learning and artificial intelligence utilize voluminous amounts of data to help create predictive models. From a business perspective, we understand return on investment, profitability, margin, and market share. However, many variables can affect these numbers. In fact, the interdependence of all the variables can be overwhelming for even the brightest of analysts. Computing power and machine learning algorithms can greatly aid this effort. However, the fuel that drives this engine is data; therefore capturing, organizing, and investing in all types of data is extremely important in leveraging these tools.
Simply said, data can be fun! We all know business is a combination of action, reaction, adjustment, measurement…and back to action. In the growing world of data, analytics, and feedback, the measurement phase can be really rewarding. Combining your business intuition with empirical support not only eliminates guesswork, but it can also be downright rewarding. Much of business frustration stems from not knowing why. Data can help answer why, which is fun.
Continue to create a data-driven culture.
Nurture, understand, connect, and INVEST in your data.