Innovation Trend #2: Data-driven Decisions

  KB_small By Kirsten Butzow, Pragmatic Institute Instructor Data is all around us. We have the capacity to track and quantify anything we want. The issue is not whether we have access to data, but what we do with all that data. How do we turn it into actionable decisions and leverage it to build innovative products that resonate in the marketplace? The Right Data If you have any doubt as to the profusion of data, just look at the increase in Big Data vendors. In 2014, they generated $30 billion in revenue, and that is expected to increase to $76 billion by the end of 2020. The amount of data and its accessibility has fundamentally changed the way we do business. Data sources like A/B testing, Google Analytics and product usage information are embedded in products. Yet, despite all of this data, so many of our products don’t seem to hit the mark upon release. It’s certainly not because we don’t have data. It’s because we aren’t using it well—and, perhaps, because we are so focused on “Big Data”, we are often overlooking the impact of Little Data. A decade ago, we could easily observe our customers walking around our stores and making decisions. But today, so much of our customer interactions are online and via mobile apps. We’ve reduced our customers to bits and bytes—so, we have lots of data, but no real information. If, however, we answer a few key questions, we can make that data actionable.  What Story Does your Data Tell? For data to drive actionable decisions, we need to first be able to turn our data into a story. Ask yourself: Do you understand the story your data is telling relative to how your customers use your product throughout the product lifecycle – from customer acquisition to implementation and on-going support activities. In other words, do you know:
  • How buyers engage with your company?
  • When, how and why customers use your products?
  • What overall customer experience are you driving?
Ultimately, your data should reveal market problems that relate to your customer’s entire experience, not just individual product touchpoints. Here’s why it matters: According to a McKinsey study, companies that leveraged data to understand their customers’ complete journey saw faster revenue growth; in fact, in measurements of customer satisfaction with the firms’ most important journeys, a one-point improvement on a ten-point scale corresponded to at least a three-percentage-point increase in the revenue-growth rate. Do you understand the most common customer interactions? While it is easy to get carried away with data, the best place to start is with a very clear understanding of your buyers and users. In other words, who are your buyers and users and what are their most common interactions with your company and products? You may be tempted to study all the bits and bytes available; however, it is common that just a few key customer interactions most affect the bottom line: some combination of sales and implementation; one or two key support issues; and your customer renewal process. Narrowing the focus of your customers’ story and interaction with your organization can enable you to cut through the data clutter and prioritize those interactions that matter the most. Are you stuck in analysis paralysis? Ask yourself: What problem am I trying to solve for my customers? Then, work to leverage the data you have available vs seeking data perfection. For example, maybe you have silos of data in marketing, operations and support that can help tell the full story about how your customers interact with your company if you would just tap into it. You can always refine the information as you learn more, but don’t hold out for perfect. Get started with the information you have. Can you connect the dots? Companies tend to focus on generating reports with pie charts and graphs of their data. However, the real value of data is gained if you use that information to tell a complete story that can be used to make informed product choices. NEXT WEEK: What other trends affect product innovation? Check out the final piece of our three-part series: The Emergence of Design. And if you missed part one on the rise of agile, click here.

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