BUT WE DON'T COLLECT DATA!
I’ve found over the years that companies can be very reluctant to create a data-driven culture and business practice - not because they do not see the value, but because of a misconception that all data is perfectly organized, intentionally and methodically collected, and has clear packaging with the label “important data.” Often, when I work with young companies, the response is, “But we’ve only been around for a short time! We don’t have any data!” Let’s clear this up.
I think there is a misunderstanding as to what “data” actually is, but it is quite simply any information floating around somewhere in your business. The key is to make the data usable. This starts with uncovering data: finding where it exists, in what form(s), and how to aggregate it. Sure, some of the best forms of data are clean, organized, and collected with purpose to obtain information. But in actuality most businesses do not do a great job of “collecting” and organizing data. Typically, when I start working with a company, I have to dig to find meaningful data and then it usually needs to be reorganized into a usable format. My favorite examples and the first places I will look are the financial reports (cash flows, P&L, and balance sheets, if available), customer reports, CRM exports, order history, and even employee feedback.
If your company has ever sold any goods or services, chances are you have some very useful historical data. This historical data should then be organized and benchmarked by setting reasonable and attainable short-term goals aligned with the long-term company vision. One of the most powerful metrics I recommend for companies to track and benchmark is the fully-burned cost per unit. In other words, when you include any and all operational expenses, how much does it cost to provide a service or sell a product per capita? This metric can give you insights into the effectiveness of efforts towards increasing operational efficiencies and ensure a sustainable pricing model, for example. It can also help when understanding how to scale a business and what the effects will be on the business in the long run, as well as providing insight into attainable profit margin goals.
So now you should have an idea of what you should track, where that information comes from, and an example of meaningful data that can be pulled from information that already exists within your company. Stay tuned for a crash course on how to organize and visualize data.