Data is the Silver Bullet for Your Business in a Slow Economy Economic uncertainty can create gaps in your business strategy. Here's why data must be part of the solution
By Christal Bemont Edited by Micah Zimmerman
Opinions expressed by Entrepreneur contributors are their own.
History has shown that the greatest weapon against uncertainty is information. During the pandemic, companies with a strong understanding of their business — from their customers to their suppliers, based on their ability to wrangle data effectively — fared significantly better than others.
Now, understanding your business on both a microscopic and holistic level is more critical than ever. As the threat of potentially tougher times looms, information must be treated as the central tool in leading a business through the storm.
When in a chaotic landscape, far too many organizations are operating blind, prone to making impulsive decisions, overlooking trends and missing out on market opportunities until it's too late. Most companies dedicate resources to the wrong things, often choosing panic over potential. Instead, leaders must dive into their data to determine how each piece of their business contributes to their overall success — and how to pivot quickly if it's not.
Related: How to Use Real-Time Data to Fine-Tune Your Business Decisions
Make your data work for your business
Data has had the attention of businesses for quite some time. The uncertainty from the pandemic accelerated various changes, and leaders quickly grew to understand that action was needed to avoid failure.
With a possible recession on the horizon, understanding that data is necessary is simply not good enough. The most well-positioned leaders know what information matters, where it is and who it is for.
A great example of fast decision-making during uncertain times is Vyaire Medical, a major respiratory player in the global healthcare ecosystem. Following a massive spike in demand for ventilator equipment in 2020, the company used trusted, in-depth supply chain data to quickly scale ventilator production from 60 per week to 600 per day. Data allowed the company to predict trends, develop informed solutions, understand where there was flexibility, and take action to remain competitive.
Data as a dynamic solution to recession responses
Research indicates that an intentional mix of defensive and offensive strategies helps companies survive during — and thrive as they come out of — a recession.
The most prepared leaders know how to play defense with efficiency gains — reducing costs, requirements for skilled resources and time-to-value — while playing offense by judiciously investing in the future with strategic data-led initiatives such as AI or digital transformation.
These strategies allow companies to manage their way through the recession without impacting near-term business competitiveness or compromising long-term strategy.
This can manifest in many different ways, but at a high level, leaders should approach their data as a vehicle to capitalize on every business opportunity by understanding areas such as:
- Buying behavior prediction: Necessary to inform scaling up or down as products and customer needs evolve
- Revenue forecasting: Data gives leaders the information needed to budget accurately ahead of time and avoid being blindsided by major shifts
- Data democratization: Advocating for company-wide accessible data is a must for agile, informed teamwork so IT teams aren't overwhelmed in hectic moments
Related: Why Both Quantitative and Qualitative Data Are Vital for Results-Driven Businesses
Estee Lauder is a powerful example of a company that leveraged data to survive and overhaul its business model in response to the pandemic. Before COVID-19, the company had a high dependency on in-person business. Even though 80% of customer interactions began online, 85% of actual transactions occurred in stores. As thousands of storefronts shut down, company leadership turned to innovative data use to completely revitalize its core business model and take full advantage of an all-digital consumer world.
Using data, Estee Lauder built a 360-degree view of customers to increase personalization, deliver innovative marketing and predict consumer trends. This resulted in an uptick in revenue, improved management of supply chain inventories and overall elevated competitive presence in the face of an economic downturn.
For most organizations that prioritized innovation during the pandemic, each solution and strategic decision can ultimately be tied to smart data use.
Truly knowing what you have has always been a crucial piece to running a successful business. Pandemic disarray taught us that data is necessary for survival and will continue to be a major tool as the economy grows more unpredictable.
Being "recession-proof" is never guaranteed — the uncertainty of these difficult periods ensures that. However, leaders owe it to their customers and employees to take a strategic approach to provide the most protection possible. Businesses prioritizing data are much more likely to weather economic downturn successfully and emerge on the other side with an established competitive advantage.
Related: 5 Rock-Solid Leadership Strategies That Drive Success
