“Here’s the thing about data: We think we use it to make informed decisions when the reality is we use it to rationalize the decisions we make.”
Few things in my career have been harder, and at the same time more rewarding, than learning how to use data in my decision-making. To be clear, “learning” in this context means learning the hard way. As a 4X CEO, I’ve made most every mistake an executive can make…thankfully I’ve not made the big mistakes twice! Here’s what I’ve learned: The majority of mistakes in business don’t occur from a lack of data. They come from ignoring the data.
A quick scan of the headlines presents a good case in point. Elon Musk has declared that he is going to back out of the offer to acquire Twitter. Despite Twitter having sub-scale revenues compared to social media peers, sluggish user growth, and a significant amount of traffic being driven by fake, non-human accounts, Musk simply ignored “what the data shows” and now faces a $1 billion breakup fee.
Given the topic, I was thrilled to be asked to lead a session on “How to Become a Data-Driven CXO” at Cloud Wars Expo, which is where my quote from the beginning of this article comes from. The topic clearly resonated with the attendees. In addition to good questions and engagement during the session, the questions and comments afterward clearly reflected that many of us are struggling in our journey to becoming more data-driven.
This session was recorded and will be available on-demand starting July 20th. I encourage you to register now for the on-demand pass to gain access to all Cloud Wars Expo content. Here are a few highlights from this session.
Defining the Metrics That Matter
Let’s face it, most business leaders today are awash in data. From OKRs, KPIs, web metrics, analyst reports, sales forecasts, NPS, and more, there is more data available to and generated by the average company than any one person could possibly digest, let alone put to use. Further, this volume of data is growing. This is why it’s essential for business leaders to define the metrics that matter. Here are four frameworks for defining these metrics that I’ve effectively used:
- Metrics that map to the flywheel of your business. In essence, track the core metrics that demonstrate the demand-supply dynamics of your business.
- Keep it simple. While it can be tempting to measure everything, keep what you measure simple. When in doubt, cut it out.
- Your customers are leaving digital footprints. Customers are the ultimate barometer. Their digital behaviors can tell you a lot.
- Think Interest-to-Invoice. Most companies carefully track “quote-to-cash” but today it’s important to track your customer’s journey, from their initial interest to how and when they engage with marketing or sales, through to becoming a customer, to renewal.
Stop Tracking Vanity Metrics
Over the last decade, digital metrics have become popular and, in many cases, core to company goals and individual incentives. It’s critical to refine the digital metrics you track and measure on a regular basis. Are website impressions directly tied to your business flywheel? Are email open and click-through rates proxies for revenue growth or decline? Do you find yourself reporting on metrics that you share with the company and the board that don’t truly reflect the underlying health of your business? If so, you need to stop and replace them with metrics that matter.
Lessons Learned
Here are some additional lessons — all learned the hard way — that resonated with attendees:
- Operationalizing data is harder than tracking it. When viewing the on-demand sessions, see my fellow Acceleration Economy Analyst Scott Vaughan‘s session on “Creating a Data-Driven Culture.”
- Resist the need for 100% fidelity. Certainly, financial information needs to be 100% accurate. For day-to-day decision-making, most data is actionable at the 75th percentile.
- Don’t get bogged down in the technology. Using data to make informed decisions is a business challenge, not a technology challenge.
- Lead by example. If you don’t openly act on “what the data shows,” no one else will either.
- Think BIG. Start small. While becoming a data-driven CXO might feel like a daunting task, you can start with a project or avsmall test before you expand into your larger vision.
Don’t forget to check out the session as well as more than 40 hours of world-class content led by practitioners when the on-demand content goes live today. Also, please feel free to drop me a note with feedback on the challenges you’ve faced in becoming a data-driven CXO.
