Many times I am faced by decisions taken by leaders in family businesses and I wonder on which basis where such decisions taken on. I then feel more perplexed when I learn that the family businesses lacks the most basic timely reporting of financial information and key KPIs. Becoming a data-driven organisation requires persistence, resilience, execution and a relentless drive to employ data to make more informed business decisions. This is what distinguishes those businesses that prevail from those who continue to struggle.
The biggest challenge for family businesses to become data driven organisations is that this requires a cultural change. Becoming data-driven is about the ability of people and organisations to adapt to change. Long-established family businesses, which have been successful over generations or centuries, find it even more difficult to change.
However, the Covid-19 pandemic — and the disruptions it caused — raised awareness of the importance of data driven decision making. While companies may have paid lip service to the importance of data before, the case that good data is essential to making informed, prudent, and judicious business decisions has been made crystal clear over the past two years.
Many family businesses also overlook a simple yet crucial fact. In the course of their business and their normal interactions with stakeholders – suppliers, clients – they, each day, create a huge amount of data that increases at exponential rates. Hence the importance of having automated systems that can allow computing power to process massive quantities of data to generate precise answers.
It is true however that the task of being data-driven keeps getting harder. Today, businesses encounter vast new volumes of data, as well as new sources and forms of unstructured data. This means that all this data, especially the unstructured type, is not easily captured or made quantifiable. Increasingly, businesses must come to recognise and appreciate that data is a business asset that flows through an organisation. The fluidity of data compounds the complexity of managing this asset in a way that consistently delivers business value.
Becoming a data-driven organisation is a journey, which unfolds over time, measured in years, and sometimes decades. What steps can organisations and business leaders take to accelerate these efforts? Research shows that data-driven organisations consistently demonstrate qualities that distinguish them from the rest. Data-driven companies consistently execute on these three driving principles:
They Think Differently. Data led business organisations recognise that becoming data-driven requires a different mindset. Organisations must be prepared to think differently – based on a critical way of thinking and a view to creative innovation.
Fail fast, learn faster. Business leaders in data led organisations understand that individuals and organisations learn through experience, which often entails trial and error. It has been said that failure is a foundation of innovation. Companies that are prepared for faster iterative learning — fail fast, learn faster — will gain insight and knowledge before their competitors.
Focus on the long-term. Business leaders in data driven organisations appreciate that the data journey is a transformation effort that unfolds over time. Becoming data-driven is a process. Perfection is rarely achievable, but instead improvement can be seen and felt growing and spreading over time.
To compete in the increasingly data-driven world of the twenty-first century, family business leaders must learn and actively work to avoid the pitfalls of the past. Now more than ever, it is important that such organisations become driven by data and facts
This will be one of the topics that will be discussed during the FREE online event that is scheduled on Tuesday 8th March at 6pm to discuss matters affecting Family Businesses. To register your interest please click HERE.