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Data-driven Leadership (originated from Data Driven Decision Management) is an approach to business governance that values decisions that can be backed up with data that can be verified. The data-driven approach is gaining popularity within the enterprise as the amount of available data increases in tandem with market pressures. Data-driven Leadership is usually undertaken as a means of gaining a competitive advantage.

A study from the MIT Center for Digital Business found that organizations driven most by data-driven decision making had 4% higher productivity rates and 6% higher profits. The success of the data-driven approach is reliant upon the quality of the data gathered and the effectiveness of its analysis and interpretation. Errors can creep into data analytics processes at any stage of the endeavor and serious issues can result when they do.

It’s easy to forget about the human side of business because numbers are what drive a business' survival. But without the people to innovate and sell new products or train new hires, the only number that you as founder will be looking at will be zero.

Jeff Boss in his blog post talks about 5 different tools that can help to measure human capital. In the past few posts such as Lean Leadership and Leading Gen Ywe talked a lot about the importance of feedback also Jeff mentions:

Fortunately, is a great resource for tracking feedback and measuring leadership effectiveness, not only in your company, but industrywide. Theleader.iohelps identify sources for disgruntled rumblings within your organization so you can nip them in the bud before they sprout into full-blown resentment.

There is a hierarchy in quality of decision making when it comes to data driven decision making which is explained in following image and you read more about it here:


HBR did a global survey of 646 executives, managers, and professionals across all industries and geographies reveals a significant, albeit subtle, change in decision-making processes and their use of  analytics, some of the key survey findings and in-depth telephone interviews with a dozen respondents indicate the current practices of decision making, including some frustration as well as enthusiasm over how the process is changing:

  • Compressed time frames: 74 percent of the respondents felt pressure to achieve results in less time.
  • Decisions lack transparency: Almost three-quarters of companies have no formal corporate-wide decision-making process; therefore, nearly half of respondents say there is no transparency in how their organizations make decisions.
  • Data drives decisions: 80 percent say they are reliant on data in their roles, and 73 percent say their areas rely on data to make decisions.
  • Skills being enhanced: 52 percent of the respondents say the use of analytics at their organizations required them to enhance their skills, and 43 percent say the use of analytics increased the importance of their function.
  • Wider use of analytics pays off: More than 70 percent of the organizations that had deployed analytics throughout their organizations reported improved financial performance, increased productivity, increase employee engagement, improved leadership, reduced risks, and faster decision making. Organizations with less widespread distribution of analytics access were typically 20 percentage points less likely to report such benefits.

As a leader you can use in order to improve your leadership as well as moving to a new era of decision making based on data.

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