Many small and medium-sized businesses collect tons of data from IT systems, surveys and analytics. But many forget to unify them when it comes to strategy.

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The kick-off event is almost over. The strategy movie has been shown, the power point presented and the employees are enjoying the cake that has been served for the occasion.

Then it happens: The quiet guy from the IT department raises his hand and says:

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"I showed our platform to my older son yesterday. He said that someone at his high school was making a free app that could do almost everything we offer. How do you know if customers will pay for our solution in three years?"

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The CEO's answer will reveal whether the company is using data strategically. If the answer is full of hopes and hunches, warning lights should be flashing. Yet I've often found that hopes, hunches and personal experiences often overshadow solid data when it comes to strategy.

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A new report from security company Talend confirms this experience. The report shows that up to 78% of business leaders worldwide have no idea how to use data. And a third don't use data to make decisions at all.

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The same picture can be seen in a report from EConsultancy and the web analysts at Lynchpin. It shows that less than half of companies' available data is used to make marketing decisions. And that 48% of data is not incorporated into companies' business plans.

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Data needs to be collected - not just gathered

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My experience from 25 years of strategy consulting is that the challenge is particularly great for many small and medium-sized companies. Often it's about internal collaboration.

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Marketing buys surveys. IT pulls behavioral data. HR has a recruitment feel. Front desk talks to the angry customers. Communications subscribes to a bunch of newsletters. But data and knowledge aren't always collected, weighted and prioritized in the strategy.

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Often the data from the department that shouts the loudest dominates. I've even seen departments unknowingly work against each other because they don't unify their data. This leads to fragile foundations for business strategy and an unclear analysis of the future.

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Data determines the value of strategy

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As a business, you have to ask yourself: Are we using data correctly when designing our future?

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We live in a time when change is coming faster than you can almost write a strategy. And one change rarely comes alone. When a pandemic hits, it causes supply issues, new framework conditions - and maybe even new international tensions.

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This makes it even more important that data is used wisely, aggregated and weighted when drawing the map of the company.

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If the strategy is not data-driven, you risk drawing a map that doesn't match reality.

Yes, our product is in demand now, but what does marketing's data show about the changes in customer behavior? Yes, we have skilled employees now, but what does HR's data show about the future recruitment base? Yes, we have healthy supply lines from abroad now, but will the regional development continue or should we look for new suppliers?

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Using data has its pitfalls, of course. When there's a lot of data, you can quickly make the charts show what you're looking for - and then you're in trouble. That's why data-based strategy should be driven by curiosity - not the need to confirm your hunches.

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One thing you can be sure of, however. If your strategy is not data-based, you risk drawing a map that doesn't match reality. And even the best strategy movie, power point or kick-off cake can't save the day.

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This column is published on Jyllands-Postens Finance and in Jyllands-Posten, Business on February 11, 2022

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