Businesses thrive on data. Data helps them create new strategies to increase revenue and improve efficiency. Companies use data to predict who will buy, how to get products delivered cost-effectively, how to anticipate and plan for risk, and which strategies will pay off in future growth. These days, the amount of data that can be collected has increased exponentially, and the field of data analytics has grown rapidly. But in order to get the most out of data, leaders need to encourage curiosity and questioning skills.
Worldwide revenues for big data and business analytics will reach $150.8 billion in 2017, an increase of 12.4% since 2016, according to a recent forecast. And experts predict a 4300% increase in annual data generation by 2020. But having more data doesn’t necessarily translate into better decision-making. What are the challenges for decision-makers with this mountain of available information? How can we use data effectively?
Research by Dr. Angelika Dimoka, Director of the Center for Neural Decision Making at Temple University, has shown that as decision-makers deal with more and more information, their ability to make sound decisions actually erodes. Cognitive overload plus emotional frustration combine to compromise smart decision-making. In an experiment measuring cognitive response to information overload in a bidding simulation, Dimoka and her team found that “with too much information, people’s decisions make less and less sense.”
As humans, we are mesmerized by data points but can easily let them distract us from the issue at hand. Anyone who has found themselves surfing the web aimlessly can attest to that fact. Oftentimes, part of the problem is that we’re not clear on our goals. When we can’t explain what it is, precisely, that we’re looking for, information can be a trap. A good way to control our search through the data deluge is by being clear on what the goals are, and knowing which questions we need answered. By focusing on asking the right questions, we can target useful information. Starting out with the right question can make all the difference to the success of a business initiative.
A classic case that illustrates the importance of the right question is Coca Cola’s failed product launch for a replacement for “original Coke.” In the eighties, the company spent millions developing a “new Coke” product that was ultimately not accepted by the market. They gathered lots of research and information from the marketplace, so they had plenty of data points. However, according to many observers, the research focused too much on “whether the drink tasted nice or not,” rather than “would you accept this new drink as an alternative to the old Coke.” That was the important question for consumers. The brand’s loyal customers had an emotional attachment to the original product.
While it might appear obvious that questions matter when conducting research, I believe that targeted questioning is more complicated than it seems, and organizations are responsible for getting it right. Data collection and analysis is, after all, an investment of an organization’s time and money. Whenever we ask questions of our data, we need to consider the strategic goal. Why do we want the data, and what is the business case for pursuing it? Do we have a clear purpose statement? And what is the specific outcome we seek? “How can we increase sales?” is not as specific as “How can we reduce our production time to capitalize on this market opportunity?”
To get the most out of information, business leaders need to foster a culture of curiosity within their companies, one in which employees feel free to ask questions and explore how questions can be handled with data. Tom O’Toole, a senior fellow and clinical professor of marketing at Northwestern University’s Kellogg School, notes that “After working with a range of companies, particularly this year, I’ve seen that connecting analytics to business outcomes is at its foundation a cultural problem.” It is up to leaders to help encourage curiosity and make it part of the culture.
When we’re presented with data, we must be inquisitive. How was it collected? What kind of information was collected? From which sources? How reliable are those sources? What types of bias do we have to worry about? Are there different ways to look at this data, other than what is being presented? Our ability to question the data will not only make us smarter consumers of information, but can help us gain business insights.
Today’s technology has made it possible to amass incredible amounts of information. But to find business value, we must be curious enough to ask questions, and let technology augment our efforts, not the other way around.