Data is the new currency… Harness it!!

The decision cycle will help you & your company make knowledgeable decisions that drive results. We use this process when making important forecasting and planning decisions. In this article, I’ll share my insights so you can see the impact on this process.

WHAT IS THE DECISION CYCLE & WHY IT’S IMPORTANT?

The decision cycle was a framework built from my public accounting time at Ernst & Young where I realized processes are the foundation of data driven decision making. Additionally, when establishing a data driven environment & culture it’s a simple process to follow to build a solid foundation for operational excellence.

 With data being the most valuable currency in the world, having a framework to implement & leverage knowledge sharing, data analysis and insights is the future path to sustainable competitive advantages.  Harnessing data for actionable insights to guide strategy & tactical operations is where future accounting & finance teams will have significant business impact & value production. Now, let’s explore the key elements of the decision cycle so you can begin leveraging this framework!

PROCESSES (Foundation)

The most significant element for this framework is processes. Processes are vital to any company as they identify the core steps needed to produce data.

Strong documentation, process mapping, and engaged process owners are the foundation of sound business decisions. For example, by incorporating process templates to department managers so they have a clear understanding of how to document their main processes. Additionally, it makes data collection much easier to proceed to the second stage of the decision cycle.  Also, establishing roles and responsibilities among your staff, as well as actively sharing information throughout the organization, are beneficial in building a high-performance team.

Do you currently utilize process templates? Do your employees know their roles within the organization? Are your company strategic goals communicated and understood by all members of your team? Ask yourself these questions, and make sure that you are implementing the processes necessary to optimize communication.

DATA (Data Mining)

The raw output of processes is data. Data are the tangible pieces of information derived from processes.

When evaluating & analyzing data, you must ensure the numbers are accurate. You will build comfort and confidence in accuracy by having well thought out processes and consistency in execution.

Once collected, you can begin to turn your data into information, thus laying the strategic groundwork that you & your team need to make educated business decisions.

INFORMATION (Data Analysis)

As soon as data is collected, you can proceed to the Information stage. During this stage, data will be consolidated to begin the most important element in the decision cycle: Data Analysis.

Analysis, analysis, and yes, more analysis is vital because this is where high value-added activities are established (i.e. variance analysis, trending, segment, and drill down analyses are performed). Anyone can gather data but turning that data into manageable & clear information is paramount to successful decision making.

There an infinite amount of ways to analyze data. For example, by analyzing trends of financial data, you could explore answers to the following questions:

• Is one customer yielding more revenue than another?
• How does our actuals compare to budget and forecast?

During the Information stage, you should take a deeper dive into answering these types of questions.

KNOWLEDGE (Insights)

Once data has been collected and transformed into information, you can turn that information into knowledge. This knowledge can and should be, shared with colleagues, managers, and executives.

 This stage is specifically where organizations realize the true value of the cycle - empowering future decisions, which are based on concrete information derived from data executed by process owners.

Knowledge is power and it creates an environment where people are empowered to execute data driven decision making.

DECISION (Execution)

The last step is making the decision i.e. Execution

If all the subsequent steps have been successfully executed, anyone can make or contribute to the final decision - not just the executive team. Its important to understand that as a result of the prior steps, both comfort & confidence are built to ensure a sound final decision is made. Therefore, execution is a comprehensive effort by all everyone because of the many touch points that the information traveled throughout the cycle.

Now that you know the steps of the decision cycle, put it into action!