Data-driven decision-making (also called DDDM or data-based decision-making) is a strategy that emphasizes analytics and research when making choices about a company rather than instincts, personal experience, or a gut feeling. 

Data-driven decision-making has grown in popularity and viability in the twenty-first century due to “data democratization,” or the growing ease with which companies can collect, organize, and digest big data with self-service analytics tools. A data-driven organization uses various business analytics tools to collect and review data. Business intelligence software features intuitive data visualization tools, making it easier for decision-makers to evaluate and monitor [business metrics](https://www.masterclass.com/articles/business-metrics) without requiring a dedicated data analyst or data scientist.
Using data in the decision-making process has several key advantages, including:

1. __Consistent business improvement__: Data-driven problem-solving allows you to make better decisions because you can see and track your organization’s successes and failures in real time. With data, you can work to strengthen future successes and mitigate or avoid potential pitfalls. 
2. __Higher confidence__: A significant benefit of data-driven decision-making is that it allows you to make more confident decisions. Rather than basing your decisions on intuition, which can be risky, you can base your decisions on facts and objective evidence. 
3. __Stronger forecasts__: A data-driven culture helps your business be proactive rather than reactionary. With data and research to lead the way, you can more reliably chart trends and make lower-risk predictions. This may help your company identify and act on new business opportunities, like developing new products or services to meet anticipated [customer needs](https://www.masterclass.com/articles/customer-needs).
If you’re looking to implement data-driven decision-making at your company, here’s a step-by-step guide to help get you started:

1. __Determine your metrics and KPIs__. One of the essential data skills is setting metrics, or key performance indicators ([KPIs](https://www.masterclass.com/articles/key-performance-indicators-explained)). It’s vital to narrow down your parameters to prevent yourself from getting overwhelmed by trying to analyze too much information. Looking at your [business goals](https://www.masterclass.com/articles/the-ultimate-guide-to-setting-business-goals), decide what’s most important to track, such as data about your field, product, target demographic, customer experience, pricing, or sales cycle. 
2. __Begin data collection__. Track your KPIs in your analytics and project management software. Many data visualization tools allow you to track your progress against benchmarks and goals over a month, quarter, or year. 
3. __Organize your raw data__. This critical step in the data analysis process can take the most time, though modern software helps make this process easier and quicker. Organizing data (also called “cleaning data”) is a process that involves gathering all the relevant information in one location and grouping it into spreadsheets or tables for easy skimming and analysis. Many companies use [data analytics](https://www.masterclass.com/articles/what-is-data-analytics) platforms to help make this process easier. Analytics software can automatically generate reports and create interactive dashboards and graphs that allow you to integrate and compare historical and current data sets. 
4. __Analyze the data__. Once your data is in a digestible format, you can begin the analysis process. Consider the metrics and KPIs you decided on earlier and observe your progress against these benchmarks. Look for patterns and trends and group similar data points to help you distill large amounts of data into one or two key conclusions or takeaways—the “bottom line” for [stakeholders](https://www.masterclass.com/articles/stakeholder-explained). 
5. __Make data-driven decisions__. After you’ve analyzed your data, use your discoveries to determine actionable insights and initiatives, and use these takeaways to make informed decisions about the direction of your company.
Get the [MasterClass Annual Membership](https://www.masterclass.com/) for exclusive access to video lessons taught by business luminaries, including Sara Blakely, Chris Voss, Robin Roberts, Bob Iger, Howard Schultz, Anna Wintour, and more.
In business, data-driven decision-making prioritizes informed, researched choices. Read on to learn how to make data-driven decision-making part of your business strategy.

In business, data-driven decision-making prioritizes informed, researched choices. Read on to learn how to make data-driven decision-making part of your business strategy.

Data-Driven Decision-Making: Tips for Data-Driven Decisions

Data-driven decision-making (also called DDDM or data-based decision-making) is a strategy that emphasizes analytics and research when making choices about a company rather than instincts, personal experience, or a gut feeling. Data-driven decision-making has grown in popularity and viability in the twenty-first century due to “data democratization,” or the growing ease with which companies can collect, organize, and digest big data with self-service analytics tools. A data-driven organization uses various business analytics tools to collect and review data. Business intelligence software features intuitive data visualization tools, making it easier for decision-makers to evaluate and monitor <a href='https://www.masterclass.com/articles/business-metrics' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/business-metrics","linkCopy":"business metrics","category":null}'>business metrics</a> without requiring a dedicated data analyst or data scientist.

What Is Data-Driven Decision-Making?

Using data in the decision-making process has several key advantages, including:<ol class="mc-m-4"><li class="mc-my-4"> 1. Consistent business improvement: Data-driven problem-solving allows you to make better decisions because you can see and track your organization’s successes and failures in real time. With data, you can work to strengthen future successes and mitigate or avoid potential pitfalls. </li><li class="mc-my-4"> 2. Higher confidence: A significant benefit of data-driven decision-making is that it allows you to make more confident decisions. Rather than basing your decisions on intuition, which can be risky, you can base your decisions on facts and objective evidence. </li><li class="mc-my-4"> 3. Stronger forecasts: A data-driven culture helps your business be proactive rather than reactionary. With data and research to lead the way, you can more reliably chart trends and make lower-risk predictions. This may help your company identify and act on new business opportunities, like developing new products or services to meet anticipated <a href='https://www.masterclass.com/articles/customer-needs' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/customer-needs","linkCopy":"customer needs","category":null}'>customer needs</a>. </li></ol>

3 Key Benefits of Data-Driven Decision-Making

If you’re looking to implement data-driven decision-making at your company, here’s a step-by-step guide to help get you started:<ol class="mc-m-4"><li class="mc-my-4"> 1. Determine your metrics and KPIs. One of the essential data skills is setting metrics, or key performance indicators (<a href='https://www.masterclass.com/articles/key-performance-indicators-explained' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/key-performance-indicators-explained","linkCopy":"KPIs","category":null}'>KPIs</a>). It’s vital to narrow down your parameters to prevent yourself from getting overwhelmed by trying to analyze too much information. Looking at your <a href='https://www.masterclass.com/articles/the-ultimate-guide-to-setting-business-goals' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/the-ultimate-guide-to-setting-business-goals","linkCopy":"business goals","category":null}'>business goals</a>, decide what’s most important to track, such as data about your field, product, target demographic, customer experience, pricing, or sales cycle. </li><li class="mc-my-4"> 2. Begin data collection. Track your KPIs in your analytics and project management software. Many data visualization tools allow you to track your progress against benchmarks and goals over a month, quarter, or year. </li><li class="mc-my-4"> 3. Organize your raw data. This critical step in the data analysis process can take the most time, though modern software helps make this process easier and quicker. Organizing data (also called “cleaning data”) is a process that involves gathering all the relevant information in one location and grouping it into spreadsheets or tables for easy skimming and analysis. Many companies use <a href='https://www.masterclass.com/articles/what-is-data-analytics' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/what-is-data-analytics","linkCopy":"data analytics","category":null}'>data analytics</a> platforms to help make this process easier. Analytics software can automatically generate reports and create interactive dashboards and graphs that allow you to integrate and compare historical and current data sets. </li><li class="mc-my-4"> 4. Analyze the data. Once your data is in a digestible format, you can begin the analysis process. Consider the metrics and KPIs you decided on earlier and observe your progress against these benchmarks. Look for patterns and trends and group similar data points to help you distill large amounts of data into one or two key conclusions or takeaways—the “bottom line” for <a href='https://www.masterclass.com/articles/stakeholder-explained' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/stakeholder-explained","linkCopy":"stakeholders","category":null}'>stakeholders</a>. </li><li class="mc-my-4"> 5. Make data-driven decisions. After you’ve analyzed your data, use your discoveries to determine actionable insights and initiatives, and use these takeaways to make informed decisions about the direction of your company. </li></ol>

How to Make Data-Driven Decisions

Get the <a href='https://www.masterclass.com/' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/","linkCopy":"MasterClass Annual Membership","category":null}'>MasterClass Annual Membership</a> for exclusive access to video lessons taught by business luminaries, including Sara Blakely, Chris Voss, Robin Roberts, Bob Iger, Howard Schultz, Anna Wintour, and more.

Want to Learn More About Business?

In business, data-driven decision-making prioritizes informed, researched choices. Read on to learn how to make data-driven decision-making part of your business strategy.

In business, data-driven decision-making prioritizes informed, researched choices. Read on to learn how to make data-driven decision-making part of your business strategy.
