Not a week goes by without hearing a new statistic on the value of data and how much is being created on a daily basis. Whether it be big data, small data, internal data or external data, everywhere we look data is being created and captured. Much of this data is used to make decisions, but a staggering amount of decisions are not supported by data. In fact, they are often based on gut feel or X years of experience. Whilst the latter may have merit, how can we prove the hypothesis was right or wrong? Should we not incorporate evidence based decision making into our businesses? Would it not make sense to fight feelings with fact?
Type of Flare: Business (with a sports impact)
Owner of Flare: You. Me. Everyone.
Source: Various including Harvard Business Review, Inc.com ad Forbes.
Key Snippet: “As at Sept 2015, less than 0.5% of all data is ever analysed and used.”
This week we’re looking at the impact of data and how it should be incorporated in to everyday lives, and especially business decision making. Data is here to stay. The rise of the internet has spawned unbelievable growth in the amount of data which is created. Gone are the days when things were written by hand (think back to copying out your phone book when you bought a new phone!). Today, data is all around us. Created by machines and joined via the Internet of Things (IoT) or by us. According to Forbes in late 2015:
“Facebook users send on average 31.25 million messages and view 2.77 million videos every minute”.
There are staggering statistics about the amount of data we have created globally; it is thought that by “the year 2020, about 1.7 megabytes of new information will be created every second for every human being on the planet.” (Forbes) Data is no longer a fad. It is no longer restricted to small groups of people in organisations who may ‘blind you with science’ when articulating the benefits. It is here to stay. But the question raised is, are we using the data at our disposal to make the most informed decision possible? Should we not be better at using it to our advantage?
As someone who has worked extensively in the ‘data world’ for several years, I see this situation time and time again. Significant decisions are made on poor information supported by loose assumptions. Emotions can run high in decision making and it is at this point, sensibility can be thrown out the window.
I once worked for a Senior Executive who loved these types of encounters. He positively encouraged the animated discussions and always fought “feelings with facts”. Whilst some of his methods were questionable, the principle here rings very true.
How can you expect to make a business decision, which could impact the entire firm, millions of USD and 1,000’s of people, without having the data to prove / disprove the hypothesis?
The problem is, in my opinion, the emotional or unsubstantiated approach is not restricted to one demographic. From huge multi-national organisations to smaller family run businesses, data can often be lacking in the support of a decision.
However, just collecting data in the hope that you will be more informed in your decision making is not the answer. Blindly collating data for the next 2 years will bring you no closer to the answer you are looking for. Unless…you know the question! Yes, I know this sounds obvious but you would be flabbergasted by the number of times I have seen this happen in businesses. So much so, that it lead me to create a methodology to tackle it (if you would like to know more, please send me message).
So much so, that I became like a broken record asking “What is the exam question you are trying to answer?” If this couldn’t be answered quickly and succinctly, it needed more refining. Without a clear understanding of what is trying to be achieved, how can you tell what success looks like?
A counter argument was raised by a client who suggested that we started the data collation process and refined the question afterwards. Yes – this is an option, but why would you not want to be as efficient as possible in your approach, so you can focus on the insights rather than process?
Whether you are looking to improve revenue, open a new office or refine costs, determination of the underlying (exam) question is key.
HBR stated in an article on data that:
“companies in the top third of their industry in the use of data-driven decision making were, on average, 5% more productive and 6% more profitable than their competitors”.
I don’t want to get bogged down with the intricacies of systems implementation or data management as that would be a much much longer post, but it is also important to remember that you can be completely overwhelmed by too much data. You’ve probably heard the phrase ‘paralysis by analysis’. All this means is you can’t see the wood from the trees and don’t know what to do with your data. You have so much at your disposal, you just don’t know where to begin.
Take a step back and look at your exam question. If the data you have answers the question, then you are ‘a for away’. However, if the answer is still unclear, break the question down and tackle it in bite sized chunks. I’m more than happy to have a chat with anyone who needs help with this.
So bringing the discussion back to the world of business and sports, there has been a boom in recent years in the use of data. The crossover of efficiencies and competitive advantage have been plain to see. The successes in British Cycling can be attributed to the adoption of the ‘marginal gains’ mantra introduced by Sir Dave Brailsford.
Brailsford described it as:
“the 1 percent margin for improvement in everything you do.”
He firmly believed that if you improved every aspect related to that task by 1 per cent, then the small gains would add up to a remarkable improvement. The differentiator was that Brailsford and his team went over and above what every other team had done, they looked for the 1 per cent improvement everywhere.
This could not have been achieved without data.
Sir Clive Woodward is another exponent of using evidence based decision making. In the run, up to the 2003 rugby world cup final, Woodward asked for unwavering commitment to the cause. He promised that by following his guidance, a world cup victory was within their grasp. He was obsessive in the pursuit of success. With a keen eye on detail, Woodward used data to support his approach. This was showcased in the introduction of an eye coach for the players, after data highlighted that their eyes got tired towards the end of a game. Tired eyes, leads to poorer decisions & those poor decisions could result in losing a game.
It is not just elite level athletes who use data to improve their performance. Have you ever been to the gym and looked up what the weight you lifted last time was? Or the distance and speed you ran at? This is all data. It is leading you to making an evidence based decision. One which has facts at the core, rather than guess work.
Business is no different. Every day, companies are using analytical tools to help improve decision making. Leading firms like Google and IBM have created tools which you and I can use. Google Analytics is such a tool. ThoughtSpot is another. Whether it be visualisations (Tableau) or advanced analytics (Watson), there is a tool for everyone’s needs.
This is a subject where the lines between business and sports have become blurred, but in a good way. The cross pollination of innovation and ideas has improved both sides. The desire to gain competitive advantage is a mind-set very at home on the sports field. But now, the methods employed in the business world are taking sports achievements to the next level.
As glamourised in the movie with Brad Pitt, Michael Lewis’ book ‘Moneyball’ showed how analytics was used to reverse the fortunes of the ailing Oakland Athletics baseball team. There is no doubt that the development of data approaches in sport will continue to grow and evolve.
Conversely, the next time you are in a business situation which requires a significant decision, just ask yourself ‘is this based on facts or gut feel?’ If it is the latter, getting some data to support your decision might not be such a bad idea…
The Knowledge Flare Comment:
So why should I care about this?
- Data is all around us – data is everywhere and no matter what business you are in, there will be information at your disposal. Not knowing what to do with it, is no reason not to use it. If in doubt, ask some to help you; it could make a significant difference!
- Data leads to actions – by using the data you have, you will have (if nothing else) a better understanding of situation. From here you can change direction, speed up or do nothing. The difference is that you will be in control. Lead rather than be led. Data gives you the chance to drive actionable insights. Use them.
I have tried to outline the benefits of using data to support your decision making both in business and sports. Sometimes it is easier said than done, but that is not a reason to try. You may not think it is important or has an impact, but if there is one thing I can impart it is, ‘better make a bad decision based on facts, than no decision at all.’