Data-Informed Decision Making: Back to Basics

It should be a given that decision makers in business use data to inform their decisions. After all, why wouldn’t you want to use data for decision making? Banks don’t offer people mortgages without looking at your finances to make sure you can afford repayments, do they? But it may (or may not) surprise you to know that it’s not as common as it should be. Big decisions with real impact and risk for a business are often made on intuition and opinion rather than on any tangible evidence.

Of course, I’m not suggesting that leaders ignore their experience and instincts. We’ve all seen what happens when decision-making is left purely to data and algorithms. I’m not the only one to have adverts for unexpected items pop up in my social media adverts because of an algorithm that clearly doesn’t know me well enough!

Decision-making should be all about triangulation. Taking information from different sources and perspectives and combining it to give a more rounded, nuanced view.

Example of data informed decision making

Imagine you’re the CEO of a big nationwide plumbing and heating company. You’re spending a day shadowing staff on the phone in your contact centre. During the day you hear lots of calls from customers complaining about how long it takes to get their boilers repaired. Do you react instantly and trigger a review of how your services are delivered? Or do you recognise that what you’ve heard is a cause for concern, but is only one data point on one day?

To understand the quality of your service you need to look at other data points before you jump to a conclusion. Have you had engineers off sick causing delays getting to customers? Have you had issues with your supply chain to get parts? Is the weather very cold so people need their heating more? There could be all sorts of reasons for a perceived drop in service.

A data-informed decision maker would be asking to see a variety of data to help make sense of what they’ve heard. This could be trends from customer satisfaction surveys over time. It could be the percentage of calls to the contact centre that are complaints. The average time to complete repairs. They’d also apply their experience and knowledge to recognise that people are more likely to take the time to phone up if they have a problem. There are potentially countless factors at work.

Data informed decision makers combine experience and expertise with insights from their data. The result is an evidenced decision, a decision more likely to prove the correct one than if it’s taken on instinct alone.

Advantages of data informed decision making

Greater transparency

We’ve all worked in a business where a decision comes down from higher up and we have no idea why that decision was made. Data informed decisions are easier for everyone to understand. You can explain them with a clear rationale that’s backed up with evidence. Here’s an example:

“We’re going to hire more gas engineers in our Wiltshire area. That area had an increase in complaints about servicing every month for the last year. 85% of complaints said it took too long to get an engineer to them. Recruiting more engineers will help us get to customers faster when they have a problem.”

There’s a clear logic so it’s much easier for people to buy in and accept the decision. That’s a massive cultural win in any change management process. People are more likely to resist change when they don’t understand why it’s happening.

Improved employee satisfaction

There’s nothing worse than putting all your time and effort into something when you don’t really know why you’re doing it. But there isn’t much more satisfying than knowing that your efforts contribute genuine value and serve a real purpose. In a culture of data informed decisions, you’ll know that projects you work on have a good reason for happening. That means more time feeling satisfied and less time trudging away to fulfil someone’s vanity project.

Be more profitable

It’s not just using data to support decisions you were going to make anyway. It’s about using data to show you things that lead you to unexpected opportunities or decisions. Data can help you find trends and patterns. It can show you things that aren’t immediately obvious. It can help you find products or services that cost more to deliver long term than they make. It can show you emerging trends that help you invest in the right products at the right time and corner a new market.

Greater consistency and predictability

If everyone in a business uses data to support all their big decisions you’ll quickly find that you operate more consistently as a whole. People may come and go but there will be an embedded culture around decision-making. It’ll be something new recruits have to adopt as the expected way to work. It’ll be one of the skills that you look for when you recruit. This helps improve staff satisfaction as it creates a level of predictability in how leaders behave and operate. It helps create a united culture.

Get decisions right first time more often

The more you use data in your decision making, the more you’ll understand how to get the best from it. It becomes a virtuous circle. You might even start collecting new data just to help with decision making. As a result you’ll start to make the right decisions far more often because you cut out so much of the guesswork.

Data informed decision making offers so much value to businesses. Best of all, you probably already have all the data you need to get started. Next time you need to make a decision try thinking about if you have any data you could look at to inform you. If you start using data for decision making you might be surprised what you end up find out about your business.

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