Data-driven tips: accuracy

Number four of the data-driven tips for 2023 is accuracy. In this blog, Data Strategy Leader Louis de Roo tells you more about how the accuracy of your data ultimately enables you to make better decisions.

The more accurate your data, the better your prediction, right?

Anyone starting out with data-driven working is in many cases faced with the challenge of switching from decisions based on gut feeling to decisions driven by data. And that is where the discussion starts: when is the data good enough to base decisions on? The more accurate your data, the better your prediction, right?

Not necessarily. Because the only truly accurate data is data after the fact. That is of course quite useful for evaluating your decisions afterwards and learning for the future, but you would rather base your decisions on data that actually looks ahead.

Because the future is hard to predict, forecasts about that future are by definition inaccurate. And that is where many managers get a bit nervous; because what if the prediction turns out to be wrong? Or could have been better? What if, in hindsight, that decision turns out to have been the wrong one?

Data as a navigation aid

Let's first take a deep breath and realize that a decision based on gut feeling is still worse substantiated than a decision based on inaccurate data. And that it is – of course – wise to match the impact of your decision to the accuracy of your data. If your data isn't all that reliable, be somewhat cautious about making very drastic decisions about the future of your organization. See data about the future as a navigation aid, not as a watertight prediction.

KPIs

We have written before about the usefulness of the right KPIs to help you navigate. But how do we get away from that constant tendency to regard KPIs only as an assessment after the fact?

Anyone who wants to steer their organization with data will have to look for the KPIs that make decisions possible. And to find those, it is important to know your business processes, and to understand where in those processes the essential decisions are made. The annoying thing is that most business processes tend to become very complex quickly, and that the number of exceptions to the basic process in particular soon becomes unmanageable. Looking for the right decision points in your process, you soon can't see the forest for the trees, and it seems easier to just review the process afterwards and assess it with a 'lagging' KPI.

It is precisely that complexity that makes the added value of data-driven decision-making so great. Because by basing small decisions on data at the right points, you carry out dozens or even hundreds of small process optimizations. Which of course translates into increased efficiency, more profit or higher customer satisfaction.

Process mining

Wonderful dreams, but fortunately far from unattainable. Where mapping out a process in detail used to be a weeks-long job for a business analyst, with modern process mining software it is a matter of minutes to get your process, and all its deviations, clearly and neatly in view. What's more: with that analysis in hand, it is a piece of cake to estimate the impact of your process decisions. Do your orders sit for days on a manual transport price? Or do you pay some invoices twice because they are booked in two categories? Making irregularities in your process visible is the first step toward improving decisions based on data – and toward optimizing your process!

Knowing your process steps and their peculiarities allows you to work out within which bandwidth certain figures need to lie for the process to function optimally. And at which deviations you want to reconsider the decision.

Visualizing those deviations gives you your first set of 'leading' KPIs: inaccurate, but closer to the decision. So that afterwards, with your 'lagging' KPIs, you can accurately establish that you made the best possible decision.

Getting started with KPIs?

Want to know more about KPIs and how to identify them? Then the KPI Masterclass training is definitely something for you. View more information via the button below.

KPI Masterclass