Beware of the ‘data vacuum’

BOARD International

Mark Sands, BOARD International

Data should help to drive business decision-making, not simply reinforce decisions already taken, argues Mark Sands.

Every day, senior business people need to make key decisions that have a direct impact on their organisation’s future. The problem is, they often do this without a complete picture of exactly what is going on – they’re effectively operating in a data vacuum.

As a result, important decisions are all too often made on little more than gut instinct. Launching a new marketing campaign, making a large capital investment or downsizing staff can become more of an emotional rather than informed choice.

Interestingly, this is not happening because the data that could support such decisions doesn’t exist. Rather, it’s just not being made readily available and in a form suitable for those who could benefit from it.

Often this is occurring because senior managers have always tended to operate this way. They’ve not yet adopted the habit of seeking out data that can be provided by data analysis and analytics tools that are likely to be already within their organisation.

Research company Gartner recently highlighted this conundrum when considering what companies need to make the best possible business decisions. While recognising that technology is important, the Gartner analysts also said it needed to support a “decision-making culture” within an organisation.

Adopting such a culture means using relevant data to inform and support the decision making process. This data, and the analysis performed on it, could show both the pros and cons of any decision on the table. Even devil’s advocate positions could be posed to ensure that all avenues and options are considered.

This approach is very different from that used within large numbers of organisations. While data may be reviewed during the decision making process, it is often only acknowledged if it supports the “gut feelings” already held by those involved. The decision process is also often restricted by well known management shortfalls such as group think and confirmation bias. In these cases, data that does not support a decision tends to be discarded.

More informed decision making

Better decision outcomes are possible when senior managers take a different approach. Rather than looking for data that supports an already decided position, they instead turn to business intelligence and analytics tools to help them reach a decision in the first place.

These tools can assist when it comes to comparing the relative risks and rewards of a particular decision. They can also provide scenario modelling to support the need to assess the impact of potentially complex changes, in real time, across all data that is relevant.  The results can then be incorporated into a managed decision making process.  At the end of the day, this approach will allow decisions to be made that have higher levels of accuracy than those made in a data vacuum by gut feel alone.

It must be remembered, however, that not all BI and analytics tools have been created equal. Some are much better at supporting the decision making process and providing data in a form that is readily usable by those around the boardroom table.

There is little point offering an executive a tool that requires a degree in data science to operate. At the same time it’s not efficient for them to have to wait while others run queries and generate reports on their behalf.

The tools need to be powerful enough to deliver valuable results, but user friendly enough that inexperienced staff can extract the insights they require. They need to be able to quickly evaluate the impact of different outcomes and have those evaluations based on solid, real world data.

Over time, senior executives will come to trust the models and outputs of their organisation’s analytics systems by stopping to compare end results with those that came from their more traditional ‘data vacuum’ decision making sessions. By doing this, data-led decision making will become engrained in the culture of the organisation and deliver significant benefits over time.

By selecting the right BI tools and making them widely available to staff, an organisation can be best placed to ensure the most informed decisions are made at all times. The days of relying on gut instinct or group think will be over and the long-term benefits for the organisation will be significant.

 Mark Sands is general manager Asia Pacific, BOARD International.