"Whatever a manager does, he does through decision-making", said by none other than the man who invented management theory Peter Drucker. Decision-making is an indispensable component of the management process. It is a well-balanced judgment and a commitment to action. What a manager needs to do is rational decision making to achieve his objectives effectively.
If you have been successful in taking decisions with your intuition, which means that you have acquired the skill through experience. In the fast moving world where change is only constant, decision making requires the scientific approach .The time has come for you to acquire an additional skill if you want to be a competitive and an updated manager.
A decision should be rational because it may facilitate expansion of business and give more profit, goodwill and fame to a business unit. Decision making is continuous activity, mental/intellectual activity, based on reliable information, time consuming activity, and a responsible job. Good decisions are always taken by proper analysis of reliable information. The decision making process at all levels of the Organisation can be improved with the support of an effective management information system (MIS). This facilitates the manager to take a bold and confident decision.
Reasons to use data based decision making
Storing of data is becoming more cheaper and easier. The data is flowing with a characteristic of 3V's (Velocity, Variety and Volume). The velocity of data incoming to companies is very high. This is through various mediums like sensors, transaction systems, social media web sites, forums, research reports etc. This data is coming in variety of formats like text, numbers, audio, video and images. The volume of the data is a similar to tsunami. As of 2012, data that is created in a day is 2.5 Exabyteâ€™s (2.5Ã—1018). Every two years, the amount of data available on internet is doubled.
Companies boast of their growth in terms of
- Customers grow at x%
- CAGR grow at y%
So it is time to realize that data also grows at an even faster pace. Ignoring this vast amount of data is nothing but losing a wonderful opportunity to dive in and taking better decisions. Decision-making is an intellectual process which involves selection of one course of action out of many alternatives. The effectiveness of management depends on the quality of decision-making.
Here are some of the Loop holes in decision making through gut and intuition
Â· Decision depends on the mood of the manager
- The decision on same situation can be contradicting when a manager is in different moods if he is not using data.
Â· Especially in Uncertain environment, it is the most difficult task to take decisions. So without the use of data, you are in great risk.
Â· A situation may be encountered wherein a manager have too many choices. Moreover more than 1 seems to be right. Then the manager faces the dilemma of which choice to be selected.
Â· Personal element in decision-making is a common phenomenon in the process. Similarly, every decision-maker will have his own personal background in the form of personal beliefs, attributes, preferences, likes and dislikes and so on.
Need for data driven decision making
a) The higher u climb up the corporate ladder, the more data is available just before you. Remember the more power you get, the more responsible you become. Consider a situation wherein you were managing hundred people. You may know each and every name of them and how they work. You may be very comfortable to take decision on promoting a certain employee. But, when you are given a responsibility of a thousand or more employees under you. Then the importance of data comes into picture.
b ) A person at management position can be posted in any division of the company. The manager at different division who took decisions based on his experience may no longer be able to do the same.
c) Data driven decision making is always backed by logic by proper analysis of relevant data.
d) This power of analytics is realized and now, it is extensively used by top fortune companies of the world.
Ways of data based decision making
- Big data is the emerging trend in the world now. Companies are investing heavily on the use of big data to get the powerful insights from data. This data may be of various formats as mentioned before.
- Many statistical tools like SPSS, SAS are available for analysis of data. These tools facilitate the manager to get important insights from the data. Open source tools like R and weka are gaining popularity these days.
Finally, Nothing but Change is constant in this world. So the manager should be embracing change
It is in your moments of decision that your destiny is shaped.
Do it wise...
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