Data Driven Decision Making is an Oxymoron. Here’s Why.

I admire the desire for any executive to use data driven decision making. On the surface, it is the responsible approach to avoid making costly decisions, especially since executives can directly influence hundreds and thousands of people’s livelihoods. However, this paradigm can end up becoming shackles that limit your team and company.

Why Data Driven Decision Making is an Oxymoron

Data driven decision making is all the rage in the world today. It seems like a natural evolution from a world that loves data and can capture anything and everything. After all, once you have captured every data point in history, you need to figure out how to use that data.

Decisions are also an unusual part of our lives. We are told from a very young age that we should make the “right decisions.” The weight of making wrong decisions is ever-present, and we can usually start to see the consequences of bad decisions in our early 20s.

It seems obvious that is if there’s anything that could increase the chances of us making the right decisions, we should take it and run. Data is supposed to be this panacea. If we can harness our data’s power, our decisions will be more effective and perhaps always right.

I don’t have to look very far to see a situation where this isn’t the case. I’m writing this in the middle of the COVID-19 pandemic. At this stage, there’s no lack of data about the virus. Governments know where it is coming from through contact tracing; they understand how it affects the human body and how fast it is spreading. 

Despite all of this information, it seems like governments can’t figure out how to handle restrictions. We are continually seeing stories of governments removing lockdowns and having to reimpose them. Stories of governments who aren’t able to communicate the restrictions are—businesses who are confused because of the lack of clear decisions.

This is not a lack of data. It is a lack of a proper understanding of how decisions are made and communicated. The data may be making things worse. There’s a point where we know too much information about a subject, which leads us to overestimate certain facts’ impact. Think about a restaurant inspector who can’t eat out because he knows all how restaurants fail to comply with health regulations.

I think data can support your decisions, but I don’t think it can drive. This emphasizes the wrong end of the equation (data instead of decisions).

Can You Make Decisions Without Data?

Let’s go into your world. What happens when you don’t have enough data? Are you still able to make a decision?

I have asked this question to my clients, audiences, and other blog readers. The answers range, but I’m always surprised at how many people struggle to make decisions when there isn’t enough data. This when you hear teams talk about “doing more research.”

The problem with this is obvious. Executives and teams need to make decisions. You can’t just wait until everything is perfect before you can move. There is room to be prudent, but you can’t be risk-averse. By this very definition, you’ll spend a portion of your time making decisions based on incomplete information.

How Informed Are You?
How Informed Are You?

When using data, make sure you’re properly informed.

I had a client who had fantastic data but couldn’t trust it. This is quite common among companies. If you can’t trust your data, then you won’t use it. If you don’t use it, you may struggle to make the decisions needed to move forward. We ended up bringing back trust into the data through audits and training.

Using Data to Support Decisions but Not Hinder Them

Speed matters when making decisions. Getting decisions “right” is important, but you can’t ignore speed. If a doctor diagnoses an issue as cancer too late, then the patient may die. It didn’t matter how “correct” the diagnosis. 

I had another client who was unable to move during the COVID-19 pandemic. Our project was completely brought to a halt because they couldn’t make rapid decisions with imperfect data. They wanted the data to be perfect before they moved, but that was a moving target. I was unable to break through this barrier, and the project failed.

The goal is to make effective decisions rapidly. Anything that helps this goal is welcome; anything that hinders needs to be removed. 

I’m not here to say that you should never use data and only rely on your intuition. I’m merely saying that you should focus on making effective decisions. If data can help, then so be it. If there isn’t any data, you still need to make the decision. Focusing on data driven decision making puts the focus on the wrong part of the equation.

One more thing before you go! Do you know how to get more insights out of your data? 

All companies are sitting on a goldmine of data that they haven't fully explored. It's not about technology or capturing more data. The key is to learn how to make the most of your current data and convert it into actionable insights. This is the main idea behind my first book, The Data Miage: Why Companies Fail to Actually Use Their Data

I'm excited to announce the release of the book through all major retailers. If you're interested, you can download the first chapter for free using the form below. You'll learn what the best data-driven companies do differently and how to make sure you're playing the right data game.

    Your information is secured. No spam ever.