Ultimately, running a successful business is a matter of good decision making. If you can make good decisions in who you hire, what products you develop, how you distribute those products, and how you treat your customers, among other things, you should have no problem dominating the competition.
These days, it’s easier than ever to access quality data and analytic tools that allow you to harness that data and integrate it into your decision making. But how exactly are the best businesses using advanced analytics to make better decisions?
The Many Forms of Analytics
Today, we have predictive and prescriptive analytics. We have machine learning tools and natural language processing (NLP) analysis. We have sophisticated forms of data mining and practically unlimited sources of data. Data and analytics take many forms, so there isn’t a single, universal approach that all businesses can follow; in fact, it’s a bit misleading to even attempt to characterize this field as a singular concept.
Why Advanced Analytics Is So Important
Why are advanced analytics so important?
· Accuracy. Business decision makers need access to accurate, precise, and reliable information if they’re going to make better decisions. You can’t steer the company into a new direction based on a whim, and you certainly can’t do it based on bad data or faulty reasoning. This serves as a kind of grounding mechanism.
· Speed. Advanced analytics also allow businesses to make decisions faster. Instead of spending months crunching the numbers, you can often run calculations in a matter of minutes – and perhaps even get firm recommendations on how you should move forward.
· Efficiency. Data analytic tools are relatively affordable and accessible. They also offer access to real-time data streams in many cases. Accordingly, advanced analytics provide much greater efficiency when it comes to making business decisions.
· The competitive edge. Although nearly all businesses use data and analytics in some form or another, not all businesses are using them consistently – or tapping into their full potential. Mastering the art of advanced analytics means you’ll get an edge over your competitors, especially if they don’t have similar processes already in place. If they are using analytics, you can think of this as a defensive measure.
How Businesses Are Applying Advanced Analytics
Businesses can apply advanced analytics across several categories, including:
· Customer insights. One of the best applications is gleaning customer insights. Through data, you can better understand the minds of your customers and ultimately serve them better with improved products and services.
· Market analyses. You can also use data analytics to study the market and your industry as a whole. What are your competitors doing and how should you respond in kind?
· Internal efficiency. Analytics can reveal gaps in your internal processes and inefficiencies that are holding your business back. Used effectively, this can greatly increase your profitability.
· Predictive modeling. Data can tell you everything that’s happening in the present, but it can also help you predict what might happen in the future. It’s not perfect, but it can be very powerful.
· Personalization. You may also be able to collect and harness the power of data for personalization. Serving your customers as individuals at scale is challenging, but it’s much easier when you have the right data.
Key Strategies for More Objective Decision Making
So how exactly are our businesses using these tools to achieve their ends?
These are some of the most critically important strategies:
· Use the best tools. There are many tools designed for data harvesting and analytics currently available on the market. However, some of them are more robust and accessible than others. Be discerning in the tools you use, and make sure you implement them effectively.
· Verify data integrity. Just because you have a lot of data doesn’t mean that data is reliable. You need to take extra precautions to ensure your data is of the highest quality. Without objective, accurate data, even the best analytics approach isn’t going to help you.
· Account for your own biases. We all suffer from cognitive biases, distortions, and heuristics. These can affect how you view objective data, even if you’re trying to be as objective as possible. Be proactive in accounting for your own biases and compensating for the weaknesses in your own logical reasoning.
· Examine outliers closely. It’s tempting to ignore outliers, especially when you’re studying broad datasets. However, outliers can tell you a lot about what’s really happening, and they can close gaps that other forms of analysis can create.
With the help of better data and advanced analytics, your business can start making better decisions. These are some of the best tools we have for objectively understanding our business environment, and they can lead us to much more efficient, effective processes.