Data analytics programs have come a long way in a short period of time. Over the last several years, the number and sophistication of data points a business has access to has increased dramatically — and leaders know their success rates can skyrocket when data is put to work.
According to a 2013 study by Cisco, 60 percent of global businesses believe Big Data will improve their decision-making and competitiveness. But the same report also found that just 28 percent of businesses are generating strategic value from the data they collect, and nearly 40 percent said they need a plan to take advantage of Big Data.
If businesses know the potential of data-driven strategies, why do leaders struggle to actually implement them? As human beings, leaders tend to rely on their emotions and gut instincts when making strategic decisions. While this is the easiest way to make decisions, it may not be the best, especially when it comes to the ever-evolving world of data analytics. [3 Big Data Tips for Small Businesses]
"People in leadership positions often got there in the first place because they have great instincts," said Jake Stein, founder and COO of business intelligence firm RJ Metrics. "The problem is that once you're in a leadership role and you're encountering a greater number of less familiar situations, your instincts are less likely to serve you well. Your gut is going to tell you how to operate based on old situations, not based on where you are today."
To truly help their businesses benefit from Big Data, leaders themselves need to adopt a more rational, data-driven mindset themselves, instead of relying solely on largely irrational human instincts. Stein noted that one key characteristic of data-driven people is a desire for intellectual honesty. They are willing to ask questions, even about their own assumptions, because they genuinely care about finding the right answer. Data-driven people are also acutely aware of the way their brains tend to trip them up.
"Humans are irrational," Stein told Business News Daily. "Data-driven people are not less irrational, but they do cultivate habits and ways of thinking that help them override these natural tendencies toward irrationality."
Recognizing the power of cognitive biases, both within yourself and your company, are essential to developing a data-driven way of thinking, Stein said. It's natural to want to be right, but a data-driven leader and team needs to embrace being proved wrong by new and better information.
"A lot of times, when someone's ideas are attacked, he or she will feel like it's an attack against him or her personally," Stein said. "This is not the right way to think about it. If you can separate your personal identity from your ideas, you're free to change your mind when you have good evidence to support going in a new direction. This means you can take criticism positively, because it's not about you. It's just an opportunity to improve your idea."
Although changing your mindset to be more data-driven can certainly aid in strategic decision- making, it's important to remember that data may not always give you a perfect, concrete solution to a business problem.
"At the end of the day, you're never going to have all the evidence you need to make a perfect decision, and there may not be consensus," Stein said. "The important thing is that you create habits and a culture that make it easier for you and your team to get to the right answer."
Originally published on Business News Daily.