What decisions could you make if you had all the information you need?
Considerations on the new trend toward information provided by Big Data in private and public business sectors
Saying that “data driven decisions are better decisions” surely sounds to you like a trivial sentence.
Nowadays, considering that Big Data have rocketed to the top of the corporate agenda and are attracting serious investment from technology leaders, it seems that there is much more wisdom in that sentence.
The Big Data movement is not simply a question of managing analytics. We can say that because: first, the volume of data created each day is increasing every day; second, the speed of data creation is even more decisive – rapid insights, real time information can make much more agile decision making; third, the variety and new sources of data –messages, updates, images from social network, GPS sensors, signals from cell phones, instrumented machinery… all produce unstructured, huge amounts of data.
This trend has a lot in common with many CEO’s experiences in the mid- 1990s when CRM software products moved up their agenda promising impressive results on customer data. To maximize this tool’s results, managers had to make complex process changes and build employees’ skills. In those cases in which systems remained obstinately disconnected from decision making, CRM just added complexity to operations.
Two elements are fundamental to manage big data. First of all, a clear strategy of how to use data and analytics to compete and to understand the business outcomes and secondly, deploy the best and right technology architecture.
In fact, while technical challenges of using big data are very real, the most critical aspect is its impact on how decisions are made and who gets to make them. If the use of big data for companies is statistically significant and economically important as it reflects in measurable increases in stock market valuations, for public entities this sounds like a revolution in decision making.
When data are scarce, both because they are expensive to obtain or not available in digital form, decision makers build up their decisions on patterns and relationships they have already observed and internalized. That is what is generally called the HIPPO way to make decisions – the Highest Paid Person’s Opinion.
To move from this approach to a big data-driven approach is basically a managerial challenge. The access to a torrent of statistics would surely improve their performance only if used in the right way. As Andy Rooney said: “Computers make it easier to do a lot of things, but most of the things they make it easier to do don’t need to be done”.
Businesses and public sector are collecting more and more data, probably more than they know what to do with. To turn this torrent of new information “into gold”, requires new skill and leaders driven by a more “what if approach”.
Professor Micheal J. Mauboussin of Columbia Business School suggests four simple steps managers should get used to 1) define the governing objectives, 2) develop theories of cause and effect 3) identify the specific activities that employees can do to help achieve the governing objective and 4) evaluate statistics and regularly reevaluate them. Those who will be able to link qualitative elements and value creation would have better chance to improve results. Big data wouldn’t obliterate human vision, but increase the need for a vision.
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