MBA Resource Article

Three Examples of How Companies Make Data-Driven Decisions

By Lisa Roepe

More companies are relying on data to help them identify challenges, capitalize on opportunities and make timely decisions that could affect their bottom line.

A recent Harvard Business Review study, “The Evolution of Decision Making: How Leading Organizations Are Adopting a Data-Driven Culture,” found companies that rely on data expect a better financial performance. The study, which surveyed 646 executives, managers and professionals from all industries around the global, found many corporations are integrating data capture and analysis into their decision-making processes. In fact, many business executives are enhancing their skills to allow them to integrate analytical tools into their business decision-making practices.

As more companies rely on data to make their most important decisions, earning a Master of Business Administration degree can be a game changer for your career. Utica College offers an online MBA program that features core courses such as data-driven decision making. Designed to be integrated and applied, these courses establish critical thinking and problem analysis for executive decision-making and data-context relevance. The program can be completed in two years of part-time study and many requirements can be completed online, and/or on campus, due to its blended learning format.

Here are examples of how three companies – Google, Amazon and Southwest Airlines – are using data to make decisions that increase their success and profitability.

Google’s name is synonymous with data-driven decision making. The company’s goal is to ensure all decisions are based on data and analytics. In fact, part of the company’s culture is to discuss questions, not pithy answers, at meetings.

Google created the People Analytics Department to help the company make HR decisions using data, including deciding if managers make a difference in their teams’ performance. The department used performance reviews and employee surveys to answer this question. Initially, it appeared managers were perceived as having a positive impact. However, a closer look at the data revealed teams with better managers performed best, are happier and work at Google longer.

The next question Google tackled was what makes a good manager. Google created the “Great Managers Award” to encourage employees to nominate managers they felt made a difference. Employees were required to provide examples of good manager behavior in the nomination application. Google also interviewed managers about their practices.

Using this data, Google established eight behaviors for good managers, as well as the top three reasons managers might struggle in their roles. Google then used this data to measure managers against these behaviors, enact a twice-yearly feedback survey and revise its management-training program.

Ecommerce sites typically use data to drive profits and sales. If you’ve ever shopped at Amazon you have probably received a product recommendation while visiting the Amazon website or through email. This is an example of a data-driven business decision.

Amazon bases its recommendations on what customers have bought in the past, the items in their virtual shopping cart, what items the customer has ranked or reviewed after purchase and what products the customer has viewed when visiting the site. Amazon also uses key engagement metrics such as click-through rates, open rates and opt-out rates to further decide what recommendations to push to which customers.

By integrating recommendations into nearly every aspect of Amazon’s purchasing process, from product browsing to checkout, the company has found that product recommendations, in fact, do drive sales and increase the bottom line.

It’s no secret airlines use data to track customers’ luggage, personalize customer offers, boost customer loyalty and optimize their operations. At Southwest Airlines, executives are using customer data to determine what new services will be most popular with customers and the most profitable. Southwest has found that by observing and analyzing customers’ online behaviors and actions, the airline can offer the best rates and customer experiences. As a result, Southwest has seen its customer and loyalty segments grow year after year.

So make a data-driven decision to see how an online MBA from Utica College can help you advance your career.

Sources:

https://hbr.org/resources/pdfs/tools/17568_HBR_SAS%20Report_webview.pdf

http://www.smartdatacollective.com/bernardmarr/85871/analytics-google-great-example-data-driven-decision-making

http://fortune.com/2012/07/30/amazons-recommendation-secret/

http://fortune.com/2014/06/19/big-data-airline-industry/