We love to extol the virtues of data-driven decision making here at All Analytics, but new research tells us we'd be foolish to think business executives give as much credence to analytical insight as they might.
Now, before you get all huffy, let me point out that the research doesn't say business executives aren't appreciative of the depth of insight provided via advanced analytics -- because they are. It's just that they're giving intuition the edge over the rational -- i.e., the data analysis -- when the time comes to make business decisions.
This is the key finding of a survey conducted last month of 720 senior executives, 88% of whom are in director-level positions or higher, said the study's collaborators, Fortune Knowledge Group and global ad agency Gyro. The study's intent was to explore the role of emotions and other subjective factors in business decision making.
Gut Decision Making by the Numbers
65% of executives believe subjective factors that can't be quantified (including company culture and corporate values) increasingly make a difference when evaluating competing proposals; only 16% disagree
62% of executives say relying on gut feelings and soft factors is often necessary
61% of executives say human insights should come before hard analytics when making decisions
My own gut tells me that analytics professionals should be neither discouraged nor disquieted by these findings... yet. Let's not forget that, despite the incessant chatter about big data's pervasiveness, many companies are in but the earliest stages of their use of advanced analytics. We can't expect miracles to happen overnight and the C-suite or other top managers to wake up one morning and cast all their years of experience aside and call only for the data. What we should expect, however, is that the analytical insight proves of such high value that decision by decision the data takes on greater and greater weight… till one day the balance tips to its side.
The study, you might say, even validates the need for greater analytical depth. About one third of respondents indicated they believe a more analytical approach to decision making is hampered by insufficient analytical capacity (37%), excessive data volume (34%), and rapid growth in the types of information available (31%). The executive summary, "Only Human: The Emotional Logic of
Business Decisions," explained:
As a result, factors that can't be quantified -- such as a company's values, reputation, and corporate culture -- increasingly make a difference when executives choose among competing proposals. Many respondents (62%) believe that it's often necessary or even preferable to rely on "gut feelings." Respondents also indicate that unquantifiable factors should be given at least the same weight as quantifiable factors. Only a minority (38%) feel that executives and managers should disregard these factors in favor of a strictly analytical approach when making decisions.
I would argue, then, that as analytical expertise and experience deepens, the volume and variety of data will become less and less overwhelming to business executives. Big data will simply be data from which decision-influencing insights come, not some big, hairy monster hiding behind a server array.
And here's another noteworthy point from the study: Analytics cannot stand alone -- and certainly not sit above the business. "A solid majority of respondents (61 percent) say that in order to uncover the most effective, actionable insights, people who know the business should filter data to frame analysis before using predictive analytics." And only 39% said "advanced analytics should be used before human analysis. "
I don't find anything wrong with that. Analytics teams, we've long said, must work hand in hand with business users. Doing so brings them a necessary understanding of the challenges the business faces and helps them guide the types of questions the business should be asking of the data.
So today, given where we are in the evolving use of analytics, I reiterate: Don't be disheartened by this report's findings. But take heed from them and figure out ways to gain trust from the business. Little by little, the result will show in the shifting balance between gut and the data when it comes to business decision making. If you don't see this start to happen at your company over time, then -- yes -- start worrying.
What's your gut telling you? Am I giving business executives too much leeway here or is my logic flawed? Let's talk!
— Beth Schultz, , Editor in Chief, AllAnalytics.com