With more data at our fingertips than ever before, surely the need for making ill-informed business decisions has been eradicated. And yet, many leaders do not choose a path based on solid analysis of data, but on pure intuition. Whether this is due to laziness, need for speed or scepticism as to how meaningful insights from data can be is another debate altogether. There are pros and cons to making use of the plethora of data available or relying on instinct, the art of making decisions has undoubtedly changed forever.
Dealing with dilemmas harnessing the data deluge
From improving the customer experience to reducing costs, organisations of all sizes are using data analytics to make smarter business decisions and plan for the future. IDC estimated that the big data technology and services market will grow at 23.1?per cent?per year between 2014 and 2019, with annual spending reaching $48.6bn in 2019. Whether through internal ?or external sources, what is clear is that businesses have the potential to utilise a vast amount of diverse information. And if properly used, firms can use data from customers to understand their mind-set and make the appropriate strategic decisions to benefit them.
Accrued data can show how customers respond to different touch-points across different parts of their buying journey, thus improving business understanding of the customer mind-set. An important factor is to ensure these decisions occur quickly and in real-time, so as to affect the customer journey while you still have their attention. Businesses are even appointing chief analytics officers to manage data-based initiatives and assess the return on investment of data.
In the words of Napoleon Bonaparte, ?War is 90?per cent information. Although the context has shifted somewhat, the level of competition across all sectors means that businesses surely need all the help they can get.
Data challenges clouding the picture
Despite the obvious insights businesses can glean using analytics, harnessing huge amounts of data is a big challenge, as the quantity grows exponentially 90?per cent?of the data currently in existence was created in the last two years. Therefore, it is vital for businesses to ensure data is high quality, by which we mean relevant and accurate. Without this, it is impossible to bring meaningful insights back to the business. Along with concerns over data privacy and a worrying skills shortage, obstacles remain before some businesses adopt an entirely data-driven strategy. But at the very heart of the motive for using data is that it removes all risk from decisions. We would argue though that not all decisions need big data and there are some contexts in which intuition may be the better option.
Going with your gut
Decision-making is sometimes described as a combination between logic and emotion. Avoiding the use of data doesn’t necessarily mean that a decision is bad and even the most data-savvy business leaders rely on estimates and averages occasionally. Furthermore, it would take a poor leader not to apply previous experience to decisions and be completely dictated to by facts and figures.
Regardless, it is undeniable that making gut decisions have the potential to be completely wrong, given that they are subject to natural bias and subjectivity. Personal perceptions of a specific customer or product has the potential to sway business choices one way or the other. In the data age, it is possible to quantify most criteria instinct, however, is not quantifiable. Therefore, to act on instinct alone is to ignore long-term patterns and gamble with your future.
Making smarter business decisions
Whether you prefers to make deliberate business decisions based on solid fact or making choices on a whim, the decision process is undoubtedly changing. Workforces around the globe are having to learn new skills and ways to cope with decisions (although many still don’t understand how to use analytics, despite the proven benefits). The ability to learn from real-time, actionable data is critical, as technological advances and increasing competition require innovation at speed.
While great leaders have always possessed both elevated levels of insight and the ability to see trends before they happen, the evolution of technology means that data must be central to business strategy, and to ignore it would be foolish.
Keshav MurugeshisCEO, WNS and chairman?of NASSCOM BPM Council.