With the advancing technology and the internet, data has started to grow more than ever. Each day, we continue to produce enormous amounts of data. While the data size is growing this much, the data-driven decision-making concept, which has existed since the 1990s, has become more visible. Today, it is a concept that startups must adapt to in this era called the "information age". So, what is the significance of data-driven decision-making for startups and companies, and what are its advantages? In this blog post, I will try to answer these questions while discussing why data-driven decision-making is necessary.
What Is Data? Before discussing data-driven decision-making, I believe it would be helpful to briefly touch on what data is and why it is so critical to us today. Statistically, data are numerical expressions of qualitative and quantitative variables collected about events, facts, and people. In a sense, we can say that data is information. However, this is not entirely true because each data may not generate meaningful information. Processing data is necessary to extract meaningful information from it. I have tried to provide a brief description of the data. So, why is data now more crucial than ever? Let's try to find an answer to this question. Although data is a concept that has been in our lives for centuries, the most significant reason why data has gained so much importance today is the processing power provided by computers with the developing technology and the ability to process and analyze data thanks to this processing power. Let's give another example to understand the data's importance today better. According to an article published in The Economist magazine, the world's most valuable resource is no longer oil but data.
What is Data-Driven Decision-Making? In some circumstances, making decisions with human intuition can be challenging. Moreover, having certain prejudices may lead to making wrong decisions. Also, recognizing daily life's structures is not always possible due to the day-to-day work rush or other elements. These structures can sometimes be related to employee performance or customer behaviors. Failure to detect them can affect employee performance and sales, which are critical for startups. Here, data-driven decision-making uses data, allows us to conclude without human prejudices, intuitions, and individual observations, and helps us make scientific decisions based on these results. Since data naturally contains information about the past and present, it can uncover structures that may be unnoticed in daily life. We can divide the data-driven decision-making process into five steps; 1. Describing the problem or task, 2. Identifying data sources, 3. Cleaning and organizing data, 4. Making statistical analyzes, 5. And demonstrating results and making decisions accordingly. Data-driven decision-making provides many benefits. The most significant benefit here is that it lets us make reliable decisions. By demonstrating the possible error ratio of the statistical analysis and determining the success criteria, data-driven decision-making allows us to make reliable and scientific decisions. Among the other benefits is that data provide future projections. Thus, it allows us to be informed regarding the threats or opportunities that may occur in the future. In this environment where the competition among companies has never been so fierce, knowing the threats or opportunities that may arise in the future is of great importance.
In conclusion, data-driven decision-making has become much more significant for startups and companies in this period when data is called the oil of the 21st century. It seems that startups and companies that will thrive in the future will be those who leverage data accurately, interpret it, and make decisions accordingly.