Data visualization has become an essential tool for strategic decision-making across many organizations and it has also gained significant interest among decision-makers. Nowadays, data is often mentioned as the "new oil" because it can drive innovation and growth. But just like crude oil, raw data needs to be refined and processed to unravel its maximum potential. According to AWS, data visualization is the process of using visual elements such as diagrams, graphs, or maps to represent data. It plays the role of the "refinery" that translates complex, high-volume, or numerical data into visual representations that are easier to digest.
From bar charts and pie charts to radar charts and scatter plots, data visualizations are everywhere in our daily lives. Each of them has different purposes:
- Bar charts are useful for making comparisons on categorical data
- Pie charts are suitable to show compositions or proportions
- Line charts are best for visualizing trends over time
This spike in usage of data visualization is also supported by the growing number of applications and platforms like Tableau, Microsoft Power BI, Qlik, and even Microsoft Excel with its easy-to-use visualization features.
Why Data Visualization Matters
In today's fast-paced world, decision-makers are often faced with situations that force them to make informed decisions quickly. And with data being more abundant than ever, data visualization comes in handy for them. With organizations dealing with vast amounts of complex data every day, the ability to transform raw numbers into clear, actionable insights is critical.
A survey from Aberdeen Group revealed that by using data visualization, individuals can collect relevant information 28% more effectively than by just viewing raw data in tables.
There are three main reasons why data visualization could help and boost the performance of decision-making:
- Dashboard-form visualizations enable aggregation of multiple data sources in one single place, helping decision-makers to identify patterns and correlations between different sets of data faster.
- Visualizations offer a helicopter view of organization operations and allow comparisons between today's performance and historical data or long-term organization goals.
- Visualizing trends in real time allows decision-makers to take immediate action based on current patterns in their organizations.
There are plenty of applications of data visualization in organizations, ranging from predicting customer behavior, measuring an organization's productivity levels, to analyzing bottlenecks in business processes. Through visualizations, decision-makers can quickly understand and interpret trends, patterns, and outliers within complex data in just seconds. Effective and efficient decision-making like this helps organizations remain competitive and achieve their goals.
How a Dashboard Can Improve Data-Driven Decisions
A business performance dashboard can support strategic decision-making by providing insights on sales trends, sales distribution by region, and profitability across all product categories. Users can also interact with the dashboard by adjusting key parameters such as range of time, product category, customer segment, sales region, shipping mode, and discount range, allowing them to explore different contexts for their analysis purposes.
From this kind of dashboard, various insights can be drawn. One example is that the overall sales cycle tends to peak in the last four months of each year. Thanks to this information, decision-makers can prepare to allocate more resources and push their marketing initiatives for this period.
Another interesting insight is that the top three categories in terms of sales quantity are not the same as those in terms of profitability. Surprisingly, the Copiers category generates the highest profit despite having the lowest sales volume. This reflects the Pareto principle, where 20% of product categories contribute to 80% of profits. Therefore, decision-makers can prioritize these 20% to maximize their profitability.
Case Studies: Data Visualization in Business Action
Many global organizations have embraced the use of data visualization in their operations to enhance decision-making. One example is Procter & Gamble (P&G), a multinational FMCG company based in the United States. P&G developed a platform called the Decision Cockpit, a centralized dashboard that integrates multiple real-time data at the company. This tool covers 56% of P&G's business operations and has transformed its decision-making processes. Patrick Kern, former Director of Business Intelligence at P&G, stated that the Decision Cockpit has improved the company's decision speed and quality, contributing to reduced operational costs and increased customer satisfaction. It has also significantly reduced the volume of email exchanges between employees previously used to share and read reports.
Another example comes from Netflix, a streaming service provider that also leverages data visualization for its content strategy decision-making. Netflix identifies trends and customer preferences by analyzing their huge amount of data on viewers, ratings, and watching habits to decide which shows or movies to produce or acquire. The result was the creation of one of their most popular original series: Stranger Things.
Conclusion
Data visualization has hugely transformed organizations' approach to decision-making. Whether it is a small business or a multinational organization, adopting effective data visualization techniques will help to identify opportunities, reduce risks, and enhance operational efficiency. As volumes of data and technology continue to grow and advance, organizations' ability to visualize data effectively will become more crucial. Those who possess this ability will have a strategic edge over their competitors.