One of the knock-on effects of digital technology is that like never before business leaders can draw on enriched information when making critical choices – but do they really let data rule, or are experience, intuition and gut feeling still the keys to successful management?
In recent weeks we’ve looked at several ways data gathered through digital sources is changing business. We’ve examined how supermarkets are using technology to revolutionise retail, how knowledge of data can help you get a job in both the editorial and commercial departments of a newspaper, we’ve even looked at growing data use in education and how the difficulties of understanding Big Data are, in some instances, restricting the development of personalised, one-on-one marketing.
In short, what we’ve seen is that analysis and data skills will be key to an array of future jobs.
What we’re yet to examine is how keenly executives accept that data will increasingly be used to shape future business. So step forward, PWC and The Economist.
Earlier this month, The Economist, in conjunction with PWC, published a report – called Gut and Gigabytes – looking at how data will change big decision-making by C-suite executives. The report examined the state of decision-making and asked if the availability of new, rich information had changed how decisions are made.
When asked about how they make major decisions, business leaders ranked data and analytics as the third most important factor (23%) behind their own intuition and experience (41%) and the experience of others (31%).
Most executives made big decisions on at least a quarterly basis, but half said decisions were still either made opportunistically or as the result of a delay. This showed, the report said, that executives were not in control over the precise timing of their agenda and that big decisions were still made on gut instinct and experience, in preference to data and analytics.
Widespread use of data and analysis to control or inform big decision-making was becoming the case in many businesses, the report said. It was also increasingly common, it added, for firms to use data to test several different approaches, or ‘scenarios’, prior to a decision being made.
However, management ‘experience and intuition’ would remain critical for interpreting results, the report added.
The trick, it seems, is how to effectively marry new data processes with the experience and intuition of senior members of staff. Or at least convince senior executives to have faith in what data can tell them.
This might not be as challenging as it seems. The report said 83% of senior executives in the UK believed the quality of their decision-making had improved in the last two years – presumably, as their decisions were either informed or backed-up by data.
In addition, more than 40% of businesses said use of ‘internal and external data and analytics’ was the single biggest aspect that had changed about their decision-making in that two-year period.
Consideration of large-scale collaboration was the most common big decision executives faced in the coming 12 months, the report said. Cost and margin pressures, it added, lead more than half of UK business leaders expect to make big decisions to collaborate with their competitors in the next year – compared with 36% as a global average.
But with those big decisions round the corner, the report questioned whether data would be at the heart of that decision-making.
‘Despite a generally positive attitude towards the use of data and analytics, many UK business leaders remain concerned about data quality and information overload,’ said PWC in a statement accompanying the report.
Of those UK business leaders, 41% admitted to concerns about data ‘quality, accuracy and completeness’, with a further 41% suggesting gaining access to data critical to the success of their business was difficult.
The influence of negative experience was telling, the report said, as British executives revealed a greater scepticism about the ability of data and analysis to inform their future decision-making than those working overseas.
Sixty-one per cent of British executives said relying on data and analysis had been detrimental to past business, compared to 34% in Western Europe and 46% globally.
Yet despite the reservations of executives, perhaps the most telling statistic from the whole report was that business leaders acknowledged that executives would need to be increasingly familiar with data analysis, with 81% claiming this would be ‘a prerequisite’ for senior management teams of the future.
Data knowledge and management skills might not currently be for all, but at least they’re agreed that their businesses will eventually need those skills.
So, if you’re a junior executive or senior manager, now might be a good time to make friends with your analytics department.
And if you don’t have an analytics department?
Well, you probably already know what to do about that.