What does it take to build a data-driven business? Founders of automation firms often succeed by distinguishing themselves as technical experts and then by creating value for others through that expertise. For self-reliant leaders who feel they’ve hit a plateau when it comes to scaling a business, adopting a data-driven approach can be a breakthrough success strategy.
Using data in a more focused way helps good engineers become good entrepreneurs. It’s about creating balance, where data helps you become as effective at working “on” your business as you are at working “in” your business.
1. Using data for better planning
The “get work, do work” loop can become all-consuming, especially in the demanding world of technology-driven services. When was the last time you sat down with your key managers and got clear on what success really looks like for your firm? Make sure each goal includes at least one measurable factor that confirms your efforts are moving you closer to your vision.
- Define key performance indicators (KPIs) for each important area of your business
- Use these KPIs to create a strategic plan that looks three to five years into the future
- Go smaller to go big – narrow your focus to concentrate energy in high growth areas
2. Using data to improve processes
Every business has a set of key processes (something you do the same way from start to finish, every single time) that are essential for success. Capturing the right data points consistently can help you understand the operational details that have made you successful in the past. From there, you can apply those insights to continuous process optimization and improvement.
- Remember to track products through the system in addition to hands-on activities
- Pay attention to internal transfer – the process-to-process handoffs in your system
- Explore ways to digitize and automate manual steps for greater efficiency
3. Using data to develop people
One of the best reasons to extend data-driven thinking to people development is that it gives your whole organization a common vocabulary for conversations about performance. Sharing data transparently helps everyone get engaged with the process of setting and achieving goals, which leads to shared accountability for defining and replicating success. Your people will be more willing to invest discretionary effort in the success of the firm when they can see in the numbers how their work has real meaning and impact.
- Give employees a voice in selecting KPIs – they are closer to the work and the variables
- Use people-centered data to reduce burnout and to boost employee retention
- Frame performance discussions around metrics everyone can support and understand
As you build momentum and begin to apply data-driven thinking to planning, processes, and people, it helps to zoom out and view all three areas in a unified way. From this wide-angle view, there are two “macro” ways to apply data to your business – data helps you not only to understand your own performance, but also to benchmark your firm against broader industry performance. What you may think is a mediocre number might be high for your industry overall. Conversely, what may look “great” individually may be below average for companies in your market sector. Using data can help motivate your team to dig in and figure out why.
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Clayton & McKervey advises business owners in the industrial automation, manufacturing & distribution, and architecture & engineering sectors on ways to boost performance, productivity, profitability, and overall financial health. We can also help with tax strategies, succession planning, and financial reporting. To learn more about how to put data to work for you, we invite you to contact us to discuss your individual business situation.