MAD Perspectives Blog

 Are We Too Dependent On Data?

Peggy Dau - Monday, December 01, 2014

I'm a fan of the rise of data analytics and am enthusiastic about it's potential to deliver greater insight that subsequently allows individuals and companies to better serve others. However, I wonder if we are becoming too dependent on that data, or perhaps on the promise of the data.

Regardless of industry, every business thrives on data - whether it is in the form of sales revenue, expenses, headcount, volume of customer service calls, mean time between equipment failures, number of Twitter followers, crop yields, or trading volumes. Publicly traded companies provide Wall Street analysts with lots of data every quarter. Said analysts then pontificate on the virtues or shortcomings resulting from the announcement.

Companies talk about making data driven decisions. Netflix has been the poster-child for this way of thinking, in the media space, as exemplified by their investment in original content creation and choices in what content is promoted subscribers. Fortune 1000 companies make decisions about new products, pricing, go-to-market strategies, customer service, supply chain, hiring, firing, and just about every element of their business, based on data. In many cases, managers and individual contributors are penalized if they do not have the right data at their fingertips.

The challenge is, that some decisions have to be made in the absence of data. The ability to make those decisions is typically born from past experience. But, what happens if a generation of workers has been wholly subjected to data-driven decision making? What if they have not been allowed the autonomy to pursue a strategy that makes practical sense, but is not 100% supported by the data? And, what if that same strategy has minimal cost impact on the organization, but could provide a significant return? Many would say, yes, pursue the strategy for a period of time but measure the results carefully. Yes, that means find the data to support the activity. Others would say, no, there is not enough data to support the limited investment. There are better ways to spend the money.

The billions of dollars being spent on big data are pointless if the data cannot be analyzed and used to support innovation. The challenge remains, how to use the data to drive some type of action. The data is useless without understanding the impetus for acquiring the data. The desire for data should acknowledge that hard earned experience, market awareness and gut instinct are part of discovering the right data and the subsequent analysis of the data. Data taken out of context can lead to misunderstanding and potentially unintentional actions.

Let's be aware of the data, but add in a healthy dose of common sense and human assessment of the data. Let's use data to test our instincts, not replace them.

What's your perspective?