DEATH BY NUMBERS
We have all heard of the phrase “Analysis Paralysis” – the idea that we have too much data and can over complicate the decision-making process by trying to find patterns, trends, and answers in our data, to such an extent that we never really decide on anything.
But what is the alternative? Surely there has to be a middle ground between ‘Gut instinct’ and A.I. doing it all for us?
Bisnode recently published a report where they found that 60% of all companies make decisions on “Gut Feeling”.
Using “Gut feeling” as a decision-making strategy – in 2019? Really? This is a little bit scary, in our opinion.
The legend that was Steve Jobs, famously spoke about early decisions he made at Apple, using his instinct, that came back to haunt him – the worst being his decision to hire John Sculley to help him, which ended up with him saying that John “destroyed everything I spent 10 years working for, starting with me.” Jobs learnt from his mistakes, and in his second period at Apple, he relied more on others input for key decision making.
It’s quite romantic to think of amazing decisions being made through the power of intuition, rather than the boring world of spreadsheets, dashboards and pivot tables – making your business a place of inspiration and vision – rather than a place of planning and number crunching.
It raises the question – Does ‘Gut instinct’ decision making work better, compared to new data-driven strategies – or is it really just ‘ego’ speaking? Anyone can run the numbers, right? – But the top, top, business elite have the “gift of a good gut”, to really make a difference in a business. They don’t need complex data, or insights-driven strategies, to bring results.
Former, Johnson & Johnson CEO Ralph Larsen once said
“Very often, people will do a brilliant job up through the middle management levels, where it’s very heavily quantitative in terms of the decision-making. But then they reach senior management, where the problems get more complex and ambiguous, and we discover that their judgment or intuition is not what it should be.”
This kind of leadership opinion, seems more like a way to justify a high status and a high salary within a company – ensuring that those who have “super-human intuition” will be the ones that attain the top spots, and those who don’t have this super-power, will never make it.
Is it realistic to expect people to deliver important decisions, consistently, using a vague ‘gut feeling’ that they themselves may feel is their super-power or their unique skill that’s been finely tuned into an art form – compared to using modern analytics technology and some proven strategies.
We need the perfect Combo…
It’s fair to say that there needs to be a contribution from both ‘the gut’, which is in fact the limbus part of our brains that creates emotional responses – and technological solutions that can provide real-time answers and insights, that teams can analyse and take action on – or solutions that are automated for even quicker actions.
The reality of handling and analyzing data is complex and a major challenge for all organizations.
But maybe the issue is this – it’s not that companies Don’t want to be more data-driven. It’s that they Can’t.
Bisnode’s report also shows that of the 300 people surveyed, 47% say they don’t have the knowledge to become more data-driven.
Developing current employees and recruiting those with the right skills, are also major issues for senior managers, when it comes to improving data-driven results in their business:
- More than 70 percent of mature companies see a lack of talent as a primary challenge
- 35% of the CxO:s. state that lack of staff to handle the transition towards becoming more data-driven is a concern
Companies need to start investing in knowledge and training for their teams, in order to benefit from the data that they have, or the data they plan to start capturing. Companies must prioritise company-wide analytics skills, from top to bottom.
For employees to become skilled analysts in their job, they need to be data proficient. That doesn’t mean that they only need the technical skills, they must also have a data-driven mindset, which will help them to be more relaxed and comfortable around large sets of data, whilst knowing how to use it in the right way – PLUS understand the contribution their work provides to the greater goals of the business.
Companies that have a great ‘Data Culture’ hire both those with the right skills, but also invest in developing their current teams, through attending expert-led events like Analytics Day, in a structured and consistent way.
SUCCESS COMES DOWN TO CULTURE
The lesson here is to get proactive about talent attraction at an early stage and invest in your employees, continuously.
“Early recruitment of employees with relevant data competence is essential” a Swedish CEO in healthcare stated, on the key challenges in becoming a more data-driven organization.
Is there really any data – to back up the data?
McKinsey Global Institute reported that data-driven organizations are 23 times more likely to acquire customers, 6 times as likely to retain customers, and 19 times as likely to be profitable. This is supported by Bisnode’s report which also shows data-driven success in key areas of the business – Sales and HR:
- The data-driven organizations report a much lower staff turnover
- Among the data-driven organizations, more than 3 out of 4 CxO:s report that they are top performers with regards to innovation, sales growth, operational efficiency and attracting talent
There is so much value in using Data Analytics to help steer your business, and it doesn’t need to involve complex algorithms and Data Scientists, to get started. As Biznode say “Successful companies often start small – with a specific challenge that they solve in an agile way, such as to create growth by finding new customers in a specific market or line of business – and scale fast”. Involving customers in product development, and the use of social media for crowd feedback, at a low cost, are other great ways to use data to make decisions, in a basic way.
None of us, are as smart as all of us!
The days are long gone when a lone wolf at the top makes all of the key decisions, based purely on ‘Gut feeling’, a 6th sense, a flip of the coin, or intuition.
It seems, unfortunately, that there are still many executives operating in that way, usually driven by their very large ego. It’s time to remember that “Data solves every argument” but when the numbers yield a question rather than an answer, maybe some intuition is needed to help make that final decision.
Bisnode are a partner of Summit&Friends and will be appearing as guest speakers at our Analytics Day event in Stockholm, on February 5th 2020.
So, how Data-Driven is your organisation? What was the one big step that you took in 2019, to improve your Data Analysis?
You can find more information and sign up for tickets here: Analytics day event page!