November 20, 2012
Creating a Data Driven Culture

Small companies have lots of advantages over their bigger
competition. With less bureaucracy, less politics and fewer obligations
to existing customers, they are more nimble.

In short, small companies can make faster decisions. But there’s more
to being successful as a small company than just this. If you can
combine your ability to make fast decisions with making better
decisions, then you’re on a path to success. And making smarter
decisions comes down to making decisions based on data and quantitative
analysis instead of your gut or internal politics.

The key becomes answering the question “How do you create a data driven culture at your company?”

But how does one create a truly analytical culture at his or her own
company? Here are three initial steps you can take as a leader.

1. Universal Data Access

If you want sound, quantitative decision making, the first thing you
need to do is make the data available and accessible to all employees.
Too often, analytics tools are too intimidating, too difficult and
reserved for use by the chosen few ‘trained’ administrators. Or the data
needed for making decisions is locked up in a system without widespread
access to all of your employees.

There’s no reason for any of that.

If you want your employees making data-based decisions, they need
access to as much data as possible. The data should be available,
flowing freely to all.  At my previous company, we accomplished this by
shoving as much data as possible into a single reporting system from as
many sources as possible. Not only did we have sales data from our CRM,
but marketing data, consulting data, customer service data and product
usage data; all readily accessible to all employees and centralized. If
anyone had a hypothesis they wanted to test out, they were free to go in
and figure out the answer.

There was no reporting guru. You have a question? Go figure it out yourself.

2. Ask Everyone for Quantitative Proof

Small companies are full of good ideas. There is never a shortage. But which ideas are the right ones that provide the big wins?

I asked Mark Roberge, VP of Sales and an early employee at HubSpot, how HubSpot created a highly analytical culture. He had a simple response: “There was always demands for numbers”.

Having a good sounding idea isn’t enough. To create a data driven
culture, you need to expect quantitative analysis to back up every
assertion. Every early employee responded to each new idea or hypothesis
with the question “What is the data that backs your idea up?” and it’s
up to everyone, not just management, to demand those numbers.

If you don’t have it, go generate it. Run a test. Run an experiment. Generate the data needed to make the decision.

3. Transparency and Honesty

Lastly, practicing and abiding by a policy of absolute transparency
creates an expectation of honest and frank dialog around your decisions.
This is in part inspired by SEOmoz’s (a Seattle based startup) TAGFEE tenets.

Take a counter example: a highly political company. Such a political
environment is one in which pre-held conceptions are clung to by
employees independent of real data. Instead, data is selectively used to
back up preconceptions. Once you go down this path, the power of your
data-driven decision making is corrupted. People do what they want to do
with the data they choose to use or not use.

Transparency and honesty in your dialogs roots out misuse of data. Sunshine becomes the best disinfectant.


To summarize:

  1. Provide widespread data access
  2. Expect numbers to justify your ideas
  3. Be open and honest in your use of the data

How have you created a data driven culture?

Josh Payne is the Director of Product Management at InsightSquared.  You can find this blog post, as well as additional content on their blog called Blog-sight Squared.  You can also follow Jost on Twitter (@joshpayne) by clicking here.