How to Build Your Data Diet
The three-step plan to take you from gut-feel to data-driven
What Makes Data-Driven People Different
I do a lot of writing about what it means to be data-driven. It’s the #1 quality that separates our best management teams from everybody else. When we see our people use numbers to talk about their business and get real about how they can make it better, we get excited. Good things are usually around the corner.
But there are a few misconceptions out there about the term “data-driven’ - not only about its practical definition, but also about what makes data-driven people different. And after a few discussions on the topic this week with executives inside our companies, I thought I’d share some of the same thinking I’m sharing with them.
Here’s the most important of those misconceptions. Being data-driven isn't about replacing your instincts with math. And it’s not about adopting a cold, calculated, unfeeling style of decision-making. So, don’t worry. You don’t need a personality transplant to start being data-driven. You can do this and still be you.
Here’s the truth. Being data-driven is much more about complementing the way you think than it is about replacing it. It’s about bolstering your well-honed instincts by building yourself a more objective way to measure what's going on and a way to decide - using a combination of metrics and your intuition - what most requires you and your team’s attention.
More good news: This is not an innate quality.
Most data-driven people aren’t gifted - they’re taught. This stuff is learnable.
And here’s more good news. Getting started is probably simpler than you think.
The Three-Point Data-Driven Plan
When I work on improving "data-driven-ness" with my portfolio companies, I always use the same three-step process.
First, we start by co-creating a menu of questions - the questions that, if we answered them, would make it really clear whether we're on-track or off-track. The good news? These are usually the questions the team is already asking themselves every single week. Questions like:
Are we going to hit the number this quarter?
Which deals matter the most + what are our chances of winning?
Are we creating enough new opportunities?
How is the sales team performing?
Where are we winning and losing - and why?
We don’t worry about the data, numbers, or answers yet. We stay focused on the questions, because, as the saying goes, “Without a good question, a good answer has no place to go.” We pick good, basic questions that, if we answered them clearly, would explain 80-90% of what’s going on inside the business. Questions that make it clear where we’re doing well and where we can get better. When you can clearly tell where you’re winning and losing, you almost can’t help but start to adjust your gameplan. Those are the type of questions we’re going for.
Second, we select the easy-to-get sources of data that answer those questions objectively, help the team take stances on what they're seeing, and decide what to do next. We make sure the data is trackable in a system-of-record (usually the CRM) and that the team understands what they need to do to make sure the data is believable. And we try our best to make the process of fetching the data as automatic as possible. That means building the reports and tucking them in an easy-to-find place, making the presentation of the data simple, visual and intuitive, and (when possible) automating as much of it as possible.
Third, we create opportunities for reflection and review. We publish the report frequently (in my world of sales and marketing, that means every week) and put recurring time on the to talk about what we're seeing and what we should do about it. We use a "templates build trust" approach and make 80%+ of the outputs rinse-and-repeat, so the team can focus on answering "So what?" instead of wondering "What do those PE guys want us to show them?"
And, honestly? That’s kind of it. If you take the time to nail down the questions that matter most, agree on the data and metrics (and their clear definitions) that answer those questions, and make space every week to think and talk about it, you have all the ingredients you need to start becoming a little more data-driven.
A Few More “Getting Started” Pointers
Build Your Data Diet Menu
That “start with the question” menu thing I mentioned above is important. Part of the reason so many teams continue to run their business by gut feel is that selecting the metrics they’ll use can feel overwhelming. There’s so many numbers you could look at - how do you choose? One thing that seems to help: Actually write down those questions we talked about above. Then write down the specific data-point that answers each question, ideally with a target that you’re shooting for for each metric. Keep the list short. And make it clear which questions you’ll answer every week/month vs. those that warrant less frequent review. If you’d like an example, here’s an example “data diet menu” I use with my teams, written from the perspective of a software CRO. Your mileage may vary - feel free to make it your own.
Make It A Recurring Thing
It’s the last step - the reflection and review - where the data-driven goodness happens. As I like to say, “Data is only as good as the conversation it creates.” You can track the right metrics and present them beautifully, but if all that data doesn’t lead to a conversation about how you can win more, you’re not there yet. A little thing that seems to help: Decide ahead of time when you’ll talk about what you’re seeing in the numbers. You want these discussions (which can feel a little invasive for some people at first) to feel as non-interventional as possible. This is about the search for the truth, not defending how well you’re doing your job. And having the time set aside each month or quarter tends to lower the defensiveness in the room a bit - especially when you’re just getting started.
Choose Your “Big 3”
If you’re still uncertain whether you’re tracking the right numbers, here’s a heuristic that seems to help: Try to nail down your “big 3” metrics, using these prompts as guidelines.
The Results Question: “How did we do?”
The Predictive Question: “How will we do?”
The Quality Question: “How well are we doing it?”
Here’s an example set of “big 3” metrics for a sales leader.
Sure, there’s a lot more you can track than this. But if you only provide answers to these three - how you’re doing, where you might land, and how well you’re doing it all…well, that’s not a bad start, provided you’re answering these questions objectively and honestly.
And especially if you’re working with your team to use those answers to address the important data-driven question of all: