Interesting article on Harvard Business Review site titled Is Your Business Masquerading as Data-Driven?
Now you probably feel that when are stumbling blind through an environment everyone says is without precedent, no existing data will aid in productive decision making. I suggest this is actually the perfect time to both scrutinize the data you do have on hand very closely to provide you with insights you may have been overlooking for years and to create processes and procedures to more effectively collect and analyze data moving forward.
I have written about data driven decision making before, as has Drew McManus. In most of these posts we both focused on the influence of Highest Paid Person’s Opinion (HiPPO) which often overrides data informed decisions and focuses on simple numbers absent of context and analysis.
The Harvard Business Review takes a different approach focusing more on employees vs. supervisors/board members. In both scenarios, people are acting in a manner that is not conducive to a company wide culture of data.
These organizations are “masquerading” as data-driven, meaning they have the data, technologies, and even the expertise, but their culture and processes are not aligned with those elements to produce the best outcomes. For example, data might be a part of every decision made, but employees may be making decisions first, then looking for data to back them up.
Factors like these explain the disconnect between investment levels and the disappointing results some companies report seeing. Businesses have more data than ever, but a culture rooted in top-down decision making and traditional tools like weekly reports and preconfigured dashboards means they cannot take full advantage of it.
Among the factors the authors say contribute to this situation are:
“Your Employees are Making Decisions Based on the Tyranny of Averages” – this encompasses modeling the average of all cases as the optimal approach rather than making note of significant differences. For example, if you determined in 2013 there was no need to ensure your website looks good on phones because the average ticket buyer uses a desktop computer, not only would you have created a barrier for younger users, you are creating a situation that will reinforce desktop users as an average user because phone users will have no interest visiting the webpage. Given the demographics of people using phones to navigate the web have broadened since 2013, your online purchases would probably have dropped even as the average remained steady.
Everyone Has Their Own Version of the Truth When employees argue that “my truth is better than your truth,” it’s a sign you’re masquerading as data-driven. Each team may be acting on data, but if they have different information, they are bound to disagree and some may even be misled…Getting stakeholders to agree on which data is important establishes a common source of truth to guide decisions and strategy.
More broadly, data should be available uniformly throughout an organization so all teams have access to the same information. The goal is outcomes, not ownership, and this may require a cultural shift that loosens the grip on data among senior managers.
Decisions Precede Data – this is the aforementioned scenario where you make a decision and then seek the data that confirms you are correct.
Employees Have Misguided Incentives – For many organizations this could be a focus on an ingrained subscription model or on optimizing the experience for high level donors which disincentivizes flex/single/group sales or cultivating young professional social groups or significantly changing the way people experience the organization. The way some museums in Philadelphia are using guest docents or with the same cultural background as the artifacts on display immediately comes to mind.