Putting Data Driven Business Decisions in simple way

Big Data, Analytics, Cloud Computing are the new concepts that are constantly being spoken about in the Business world. One of the fellow concepts is the Data Driven Business Decision – What is it and why do they do it?


In simple words, It means that the business decisions are taken based on data and facts rather than guess work and hunches.

Let’s take a simple example of one Mr. John.

Example of John the baker

John followed his passion and started a bakery on a busy street corner. It had a capacity to bake 30 units in the morning, 30 in the afternoon and 30 in the evening, to a total of 90 bakery units per day. He offers three types of bakery products namely Muffins, Brownies and Bagels. He hires 6 employees and assigns two for baking of each product type. For the first week, He bakes 30 units of each product and puts them on sale.

He notices that there are leftovers in everyday sales. Also he wants to sell fresh products to the customers throughout the day. He also wants to make innovations in the product to delight the consumer.

So he goes through the bill receipt copies and enters the details such as the Date, Day of the week, Time, Products bought , Quantity into a simple excel sheet.

Analysis of data

He sees that on every weekday , on an average Bagels went out of stock in the morning , Muffins outsold the stock in the afternoon and the entire stock of Brownies in the evening. On Weekends ,a lot of Bagels went unsold whereas the Muffins and Brownies were in greater demand and many customers left empty handed.

Now John knew that products going out of stock means Lost sales and that means they are not able to cater to the demand. Unsold stock means wastage and that indicates mounting losses. He realized the seriousness of his situation. So he started to analyse his data to find answers to these questions.

He wanted to know:

1. Which product to bake ; One , Two or all the three? (Which)
2. How much quantity should he bake of each product? (How much)
3. At what time of the day should he bake them? (When)

His findings

After seeing the data, He could see that all his three products have good customer demand. He immediately understood that it was wise to allocate a major capacity in the morning to make Bagels; in the afternoon to make Muffins; and in the evening to make Brownies. He decided to bake the average quantity of products sold.

He also remembers seeing that Kids who visit his store love the brownies, Working people bought Bagels in takeaway and the muffins are loved by the senior citizens. So he decided to make product innovations to make them even attractive. He purchased nice takeaway covers for the Bagels, introduced sugar free versions for the Muffins and make smiley face frosting design on Brownies.

The Business result of his analysis

John was able to deliver fresh products to his customers. He increased profit by catering to the demand and reduced wastage of products by planning the baking quantity. The buyers were pleasantly surprised to see the innovations and loved them even more. By analyzing these existing data, John took his business decisions which turned out in his favor. Overtime , his forecasting became more accurate and confident too.

In a real life situation

Now John was only a simple fictitious example. In real life , John could be running a chain of restaurants, with each offering 100+ dishes catering to 1000’s of customers. The complexity could be a bit daunting to look at.

The Caveat

And yes, it is also not correct to say that these forecasts would be always correct. But in the end , the quality of these findings depends on the questions you decide to find answers for; You still need your Business acumen and knowledge to succeed in your business.

Benefits of having a Professional analysis

A professional with the right set of tools can analyse you data and give you findings that would have a huge positive effect on your Profits and also your cost savings. The analysis could be done to the finest details, greatest depths and a lot of hidden but important facts regarding your business could be uncovered.

This article first appeared in LinkedIn. Check it out here.