A write-up to influence my manager – a gut-feel decision maker with a decade of experience – who is a non-MBA yet has a good skill-set, towards adopting DDDM. Key decisions are made by unstructured brain-storms and personal belief, and DDDM is vehemently opposed.
Over the last ten years, you have been doing a wonderful job as a manager. This is especially remarkable, considering your advocacy of instinct-based decisions. The bulk of today’s managers wouldn’t be as lucky though, to be endowed with such a definitive gut for decision-making. Nevertheless, there are several of them – with much lesser experience and exposure - who have apparently climbed the ladder faster and have stayed steady in their lofty roles. And there is only one factor that seems to have been the difference – devotion to evidence over instinct.
I totally understand your apprehensions about data-driven decisions, and with due respect, I request you to hear out my explanation. You might be an adversary of data-driven decision making, but any dignitary of your capacity will certainly be a strong adherent of reason and evidence. All of what I say is based on just pure and plain reason, more than anything else, and you will agree with me that data-driven decision-making is nothing but corporate pragmatism in its most palatable form.
The primary problem with data, much to the annoyance of managers, is the hefty costs incurred in collection and analysis of evidence. However, the paybacks and benefits offered by data analysis hugely offset the initial costs of analysis and databasing. It can be safely asserted that all multi-national companies have adopted data-analysis practices right from the operational level up to the strategic level. This has been the cornerstone of their survival stories along varied cultures, business models and tactical transformations across geographies. What might be a sunk cost on the balance sheet might actually be an asset to the fortunes of the company and its long-run sustainability.
There is a very valid argument about how today several companies fail in spite of using data-driven decision-making – I’m sure it has been a discerning insight in your mind too. It is one thing to gather and store data, and a completely different thing to analyze the collected database. Poor analysis of data is akin to searching for something in the wrong place. Carefully devoted time and effort on data-analysis has fueled the recovery and resurgence of several Fortune 500 companies from the brink of bankruptcy.
On closer observation, I find that the root of aversion to data-driven decisions has been more of an inexpressible psychological factor than anything else. The technicalities involved and directness expressed in evidence-analysis has fueled a feeling of insecurity among traditional decision-makers, who are staunch believers in their strong management foundations drawn by rich experience.
In reality, adoption of data-based decision making initiatives is not a means of discounting, but a strong facilitation of core management practices. Any gut decision backed up by appropriate data makes for a solid case since it adds a measure and credibility to the result. Data does not define the direction of action; it merely indicates the consequences of all possible paths taken. It is not a traffic signal, but a map. Also, data-driven decisions are not necessarily defensive. This is another common misconception; all that data-analysis does is to help take calculated risks.
You will appreciate that today’s businesses are steered by forces that are completely different from those a decade ago. Competition is getting tighter and survival tougher as newer and more agile enterprises are mushrooming in a bid to cash in on hitherto unseen growth-rates. Flexible operations and non-conventional marketing tactics are enabling these companies to gradually eat into the market-share of the incumbents. The only way to survive, therefore, for an established firm like ours, is to constantly top our performance by maintaining our competitive advantage. And the first step towards identifying and nurturing our competitive advantage is data-analysis on our core competencies.
We have to face the fact that whatever be the domain of profession, analytical models work better than human calculations and perceptions. Any sort of development or application of models begins with collection and analysis of data. With the advent of affordable technology, devices and programs have become increasingly more compatible to design models and programs. This has led to an unprecedented level of information processing, leading to a knowledge race, rather than a technology race, amongst competitors. As a result, firms that are too rigid to evolve from their legacies are under severe threat – invariably, these threats percolate to key stakeholders in each organization. Going global will demand us to learn and understand the tone of modern business. And all of today’s businesses across the globe speak one language: data.
Have you ever wondered why a bulk of our review meetings and internal conferences tend towards stalemates and end up with you having to take a call on the stakes? Any viewpoint without a firm backing of data is deemed as baseless and subjective. Even a surmountable, innovative solution will cease to be appreciated simply because people’s perceptions are different. An evidence-based approach, on the other hand, makes a strong pitch as it directly presents the consequences in plain, direct numbers – in black and white. Arguments and alternatives are better received, and every conference will lead to a consensus, not just a conclusion. Disillusion and skepticism at our board meetings will be replaced with confidence and clarity. After all, what is an organization but a set of reasonable men working towards a common goal? It is only natural that our reasoning be shaped by rationality and pragmatism, in the best interests of our stakeholders.
Decisions made based on data-analysis exude reason and rationale. This is the bare truth.
Thank you for hearing me out! I’m assured that if you have thoroughly considered my statement, you have already begun to appreciate the imperative to take a data-based approach to decisions. It is in the cause of our sustainability: as individuals, and as an organization.
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