Big decisions take data not gut instinct
Learn to trust what matters
Blog What’s the best way to make important decisions? Hunches? Intuition? Magic 8 Ball? Or relying on data analysis to reveal the best choice?
It’s kind of a stupid question; most anyone answering it seriously will say: “Yeah, of course you want to use data to figure out what to do, you dumbass.”
While everyone says that using data to make decisions is the only way to manage, I’d submit that very few organizations actually do it. I mostly see firms relying on hunches and intuition, and then using data - if forced to, they often don’t - to justify, adjust, and calibrate the course of action that they’ve already decided to pursue.
The problem is that humans have a number of innate cognitive traits that don’t let us easily choose non-intuitive alternatives – even when our intuition is demonstrably wrong. A couple of Deloitte consultants wrote an interesting article that talks about this unfortunate fact of life in a conversational way, via real-world examples. They also discuss how data-led decision making pays off.
What I - and a bunch of smarter, more articulate, and more successful people - see happening is real, data-led decision making coming to enterprises large and small. This trend will impact on IT shops in that they will see rapidly increasing demand from the business side for more data, more compute capacity, and results delivered in near-real time.
When you look at the workloads and requirements, they look a lot like typical HPC stuff. To me, this means that the trend of HPC technology crossing over into the business world is going to accelerate even faster. While we (sadly) can’t make ourselves smarter, maybe using vast amounts of data can stop us from doing so many outright stupid things.
It’s something to hope for, at least. ®
Many factors - none technical
When it comes to making the big decisions in industry the successful decision makers (i.e. the ones who still have jobs after the consequences of their decisions become known) tend to employ very similar techniques. From what I've seen, these include:
- Follow the herd. If everyone's making the same decisions, it's unlikely you'll get fired for making the same decision. It's the chickens that stick their necks out that get the chop.
- Take advice. A group decision with shared responsibility is much harder to attack. If it turns out to be wrong, then everyone's in it together (see above). If it's right, then it was your leadership and vision that caused the correct decision to be reached.
- Get a consultant in. The more expensive they are, the more likely their advice will be taken. After all if you spend £20 grand and ignore the advice, the money's been wasted. Right?
- Swing the same way as the boss (!) If it works out well, you're seen as being supportive. If it's wrong - well it was really their choice, you had no alternative but to acquiesce.
- Prevaricate. It's common knowledge that any yes/no decision has at least 4 more alternatives. Apart from the dull and boring yes and no, there's "get more options", "I don't know" (risky), "I'll decide later" and "what do you think?" While you're playing wait-and-see hopefully some more indications will come to light, or the whole question becomes moot when the budget gets canned.
- Finally, if the correct alternative is so unclear that you have to rely on data to see which response is best, it sounds like there's not a lot of difference between them. In which case it's best to employ any of the alternative decision making methods, than to rely on something as obscure, misunderstood and open to manipulation as mere facts.
Be Wary of "Talent Management"
Police forces world wide have used psychometric data to help them determine if a candidate is likely to make a good, honest police officer.
As we all know, relying on this psychobabble is an epic fail which has been demonstrated over and over again with each new revelation of a police officer who turns out to be a murderer, rapist or commit other hard core crimes. I am sure that just as many people who would have made good police officers are turned away as those who are hired turn out to be criminals.
Psychometric data is not perfect and I for one would not rely on it when it comes to managing or hiring employees.
Here - have a title
The Deloitte article is all well and good and perhaps better than I would expect from consultants but ignores one crucial element. You have to have absolute faith in the numbers you're using. Any lack of faith, whether from statistical skewing, improper weighting of relevance or a whole host of other problems, will kill the confidence the decision maker has in his numbers. And we're back to good ole human intuition.
Billy Beane's baseball scouting methods only worked because he had a crack number cruncher who gave him numbers he had the confidence to trust and act upon. The doctors in Blink (God I hate that book) got lucky that the tree worked the first few times around and gave them the confidence to rely on it more. That thing about the wine is just nonsense though - but then again most of the Vintner biz is just nonsense anyway so I'll give it props.
I'm afraid I just don't have the same faith in most of the numbers that cross my desk.