Many companies are sitting on top of loads of data as they grow, but they aren’t tapping into the full potential of it. Simply reporting on your data doesn’t mean you’re data-driven. You also need to take action based on what data is telling you — that’s how you’re going to gain a competitive edge.
Here’s what you can do now to create a data-driven culture and maintain it as your company scales.
If you don’t have the right tools that make accessing, working with, and analyzing data easy, you’re not setting your company up for success. When you’re starting out, using spreadsheets to manage your data is enough. But as your company grows, spreadsheets no longer cut it.
Once you have two or more systems that are generating data, setting up a modern data stack makes it significantly easier to combine multiple data sets and analyze them. Here are the four tools you need:
If you’ve never set up a data stack before, the thought of it can be daunting. But there are now out-of-the-box solutions, like Mozart Data, that take as little as an hour to implement and don’t require engineering resources.
Now that you have the right tools to automate the process of pulling raw data and turning it into dashboards, it’s time to establish the metrics that everyone will be driving toward.
Once you’ve determined your key metrics, it’s important to clearly define them. Failing to define metrics can result in confusion, arguing, and teams that aren’t working toward the same goal.
For example, let’s say one of your key metrics is daily active users (DAU). If a user logs into their account, does that count as a daily active user? Or does the user need to take a specific action? If teams are defining DAU differently, they’ll arrive at different answers. One team might think the company is on track to reach its DAU goal, while another team believes the company is behind.
Putting key metrics in place and defining them not only aligns everyone at your company, but also ensures accurate reporting. When teams aren’t arguing over metrics, they’ll get more time to dig into their data to understand how they can deliver on their goals.
You can create as many reports and dashboards as you want, but if team members aren’t comfortable using them or digging into the data behind them, it’ll be difficult to create a culture where people take action based on data.
Aside from arming people with data, you also need to make sure they understand it. This means educating them about the data behind the dashboards. Teach them how annual recurring revenue (ARR) is calculated, for example. Or, what the impact of decreasing retention is and why.
The more employees feel they understand data, the better equipped they are to ask questions and make informed decisions.
Start-ups undervalue having a single source of truth until they start running into issues where people arrive at different answers. The earlier example of teams defining DAU differently is exactly what happens when you don’t have a single source of truth. Establishing a single source of truth early on mitigates this, speeds up analysis, and makes it easier to scale your data as your company grows.
To create a single source of truth, you need to gather all your data in one place and then transform your data to create tables that everyone pulls from.
Data analysts can end up falling into the trap of building endless reports and dashboards. If you find this happening at your start-up, you’re not using your analysts to their full potential.
Analysts have the most impact when they have context on the business and are able to use that to ask smart questions, find valuable insights, and work with others to take action. You’ve got to involve your analysts in the rest of the business to achieve that, so make sure they’re working alongside other teams, understanding what makes the business grow, and not just doing reporting work.
When set up for success, data analysts can help others become data-driven.
Creating a data-driven culture usually means data is shared with more people. And when more people have access to data, there are more points of vulnerability. If you collect personally identifiable information (PII), it’s especially important to have strong data security practices.
Here are a few steps you can take to make sure your data stays secure:
Creating a data-driven company takes time. Now that you’ve got some of the first steps toward achieving that and you’re able to anticipate potential roadblocks, you’re well on your way to fully taking advantage of your data and equipping other people at your company to do the same.