Ask any senior leader whether they make decisions based on data or on intuition, and you’ll get a mixed response. In my experience, experienced leaders will talk about a mixture of data/insight and “gut” – a combination of hard facts and intuition. Often they’ll talk about how hard it is to get timely information from their systems and processes, and they’ll talk about how they can’t always trust the data that they receive. They might mention their frustration that they can’t get access to data quickly enough, that they are constantly looking in the ‘rear view mirror’ and they fear that the data they see is flawed.
There’s no doubt that making a decision on flawed, incomplete or misrepresented data or insight can be dangerous. Understandably, many organisations of all sizes – whether mid-size or multinational – are focussing on improving or implementing systems that provide timely and accurate data to business stakeholders. However, in this article I want to explore something that is rarely spoken about: The danger of forced data and I want to make the argument for data transparency and conviction transparency within organisations.
As organisations grow, there can often be a move towards more rigorous analysis of decisions. Before launching a project or initiating a project, there will need to be a ‘business case’ with a cost/benefit analysis attached. Put simply, the company’s directors and shareholders want to know the size of bet they are placing, and the likely rewards, before investing the money. All of which is perfectly understandable and sensible.
A danger comes when people within an organisation fall in love with an idea and feel they must pursue it at any cost. They just want to get going, and some stakeholders may even find the business case a rather bureaucratic exercise – rather than appreciating that it can be a valuable quantification of costs and benefits. With this mind-set, rather than objectively looking at data to see whether the idea is viable, they might choose to approach the exercise differently. It almost feels like they ask “What data can I selectively use to make sure this project gets off the ground”. They might ‘cook’ and cut the data in creative ways to over-inflate a business case. In reality, their sheer “gut-feel” and conviction that the project will be a success leads them to ignore any data that doesn’t support the view. And the trouble is that the people approving the decision are unlikely to go back to the source data and probe further.
Informed decisions are generally better than uninformed decisions, and decisions based on false or forced data are potentially amongst the most dangerous. Two remedies that can help in this situation are data transparency and conviction transparency:
Freeing the data with data transparency: Put simply, it is better to empower more people in the organisation by providing them with appropriate access to data so they can quickly drill-down and sense-check proposals that are put forward to them. Rather than relying on a static summary in a document, decision makers can cut the data in different ways, interactively, and spot the potential benefits and costs. They can challenge, probe and ask questions. Implementing analytical capabilities that allow decision makers to slice/dice the data and extract true actionable insight is key. The Business Analysis function is often well placed to act as a ‘critical friend’ and ask the unpopular (but important) questions that may lead to over-inflated business cases being scrutinised and brought back down to earth…
Being honest about conviction and “gut”: However — we’re never going to entirely eliminate gut-based decisions from business – and in my opinion, neither should we try to. There will be times when organisations take bold moves on new products that go against the market. We may well need to put some interpretive spin on the data we find. Some of the most innovative products of recent years are the result of brave decisions. However, it’s crucial for those involved to know that the decision is based on conviction and interpretation (not data). If a business case is based mainly or entirely on “gut”, simply label it that way. It’s about honesty and informed decisions. If an organisation wants to take a gamble based on a gut feel, that’s absolutely fine – but surely it’s best to have the courage to know that it’s a decision based on gut feel?
In summary: it’s important for decision makers to know whether they are approving a proposal that is based on “data” or “gut”. Cooking the books to make a business case look better is rarely helpful for anyone!
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This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. I’ve been compensated to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies or opinions