July 02, 2012, 5:53 PM — Our most successful business leaders have often had one thing in common: an innate instinct for the direction of their organisations that has repeatedly enabled them to make the right calls.
But we are fast approaching a time when the idea that business decisions are based on instinct rather than data will seem quaint and anachronistic.
Already, many successful modern companies are run on data. Google and Amazon are obvious examples, but data is driving business decisions at companies beyond the technology sector too.
Procter & Gamble, for example, is in the middle of a company-wide push to digitise every possible aspect of its business.
To compete, their rivals will need to catch up quickly.
Data has become a strategic asset and a company's success will in future depend on how well and how often its employees, at every level of the business, use that asset.
Maturing technologies are driving this trend. A decade ago, data was expensive.
While companies might have recognised the attractions of data-based decision making on everything from operational savings to market opportunities and from financial modelling to supply chain risk, the cost of working this way was prohibitive.
That is no longer the case. CIOs can now commission systems that will capture and analyse vast amounts of internal and external company data.
And this data can be shared across the organisation, enabling informed decision-making at every level of the company.
New culture needed
Still, making the most of these opportunities requires companies to do more than simply invest in better data technology.
What's really needed is a cultural shift: for companies to ensure all their employees across the business are sufficiently data literate to both recognise the information they need in order to make better decisions and to know where to find it.
Fostering such a culture is easier in newer organisations not held back by legacy IT systems, which is why the likes of Amazon are often trailblazers.
But long-established businesses are beginning to make the transition too.
Proctor & Gamble's digitisation process is one example, while oil and gas businesses are making great use of huge amounts of exploration data.
The pay-off is worthwhile.
A recent study of 179 companies, led by an economist at the MIT Sloan School of Management, concluded that organisations that have moved to data-driven decision making have productivity levels 5 or 6 per cent higher than could be explained by any other factor.
Making the change