27th February 2019
We’re now in a data driven world and the focus is turning more and more towards finding out exactly what is going on around you and what you should do next. But my question is why do we question data as much as we do without questioning the assumptions and intuition of the users looking at it?
Despite the increasing investments that companies have made in analytics tools, many people still instinctively don’t want to rely too heavily on data. For some individuals, it can be unnerving to trust data that is difficult to fully understand or which doesn’t align with their intuition. What does that lead to? Questions.
- What is this showing?
- Are you sure this is right?
- Why is this different to what I ‘know’?
- Is this valid?
Understandably many business owners and managers are nervous that incorrect or incomplete data will lead to bad business decisions.
But why don’t we see an equally healthy distrust of business assumptions or intuition? Either of these can cause as much impact as bad data but they receive far less scrutiny. To say that you should never assume anything is unrealistic and often unproductive. But as we make these assumptions, knowingly or unknowingly, we should question them until they can eventually be substantiated with data. Too often underlying assumptions are left as unknown and never revisited or validated.
Data and assumptions are involved in good business decision making. While data and facts are often discussed in business meetings, assumptions receive much less attention or scrutiny. To better govern these, businesses should;
- Take stock of what’s true
- Weigh the impact of the assumptions made
- Challenge your key assumptions
Being data driven isn’t just about how effectively you use data but also how you manage your assumptions and biases. Interestingly your data can be 100% sound but it can still lead you astray if it’s based on faulty assumptions.
Does intuition combat this?
One of the main reasons that top business leaders are able to make tough decisions is because they have learned to trust their intuitive instincts. And their intuition is based on their considerable personal experience and professional expertise that has guided their business success to date.
But can you always trust intuition?
To best show you what I mean by this, I need to ask you a question;
- How many people do you think need to be in a room together before there is more than a 50% chance that 2 people in that room have the same birthday?
The answer – 23 people. In a room of just 23 people there’s a 50% chance of at least 2 people having the same birthday. In a room of 75 people there’s a 99.9% chance. Strange, counter-intuitive and completely true. Our brains aren’t used to handling the compounding power of exponents. We expect probabilities to be linear and only consider the scenarios we’re involved in (both faulty assumptions, by the way).
The fact of the matter (and by that of course I mean my version of the facts) is not all data is stored in a database. Some of the world’s, and potentially more importantly, your most valuable data is stored within the human mind.
Now don’t get me wrong, the lifecycle of this data is much harder to manage. There’s no audit trail to capture the point of creation, no structured storage facility to help locate data and it’s nearly impossible to share the raw data with someone else without some form of corruption. But every good decision has some data behind it. It might not be data that sits in a spreadsheet or an analysis performed by a computer but it is science much more than art.
Intuition has an important role to play. Personally, I’d say that developing the right mix of intuition and data driven analysis, whilst challenging the key assumptions throughout this, is the key to delivering a strategy with confidence and creating a successful businesses model.