Gone are the days of an annual budgets, plans, and forecasts. Priorities can shift in…
Why are so many corporate decisions still made by “gut” feelings?
In the first quarter of the 21st century, there still exists a huge chasm between how decisions are made in most companies and the proven technologies and methodologies they could be using to achieve far more accurate and dependable results.
Perhaps this is partially due to traditional consensus building among experienced execs who at the same time don’t yet trust data from algorithmic driven systems.
Gartner recently spotlighted this chasm in their latest round of Data and Analytics summits when keynote analysts listed what companies need to make the best decisions possible. Beyond technologies alone, their list began with rethinking leadership and creating “a decision-making culture” within enterprises.
“We need to create a new culture that allows you to empirically tackle decision making, putting everyone on the same page, incorporating devil’s advocate positions by comparison,” said Gartner Research Vice President Kurt Schlegel at their US summit in Dallas.
Such a culture would overcome the scarcity of disciplined decision making in most companies where Gartner research shows most decisions are still made in closed conference rooms by “gut feelings,” or individual executive conclusions. While analytical data are often consulted in making decisions, most often they are only followed if they support those gut feelings about the matter, Schlegel told his Dallas audience. And while executives try to achieve consensus, their decisions are often hampered by longstanding social phenomena like group-think, anchoring, confirmation bias and loss aversion.
Today, as business managers increasingly look to BI and Analytics software to inform their best decisions, the same rules apply: they compare relative risks vs. benefits, costs vs. income, and so on. And the promise of analytics software is that we can make better decisions with far higher levels of accuracy than by relying only on gut feelings or consensus of advisors.
But not all BI and Analytics software is alike when it comes to assisting decision-making. In fact, most vendors emphasize how their analytics systems deliver insights. That, however, only provides a small part of the information executives and business managers need to support their decisions. What we see all too often are still a small group of execs relying on their collective gut to make final decisions. Moreover, automated insights alone will not foster the culture of decision-making that Gartner prescribes.
What’s needed is to use all the operational detail captured by a company’s BI system to create robust, forward-looking multidimensional models so decision-makers can evaluate the outcomes of alternative decisions. This reality has never been truer than in today’s world of real-time Big Data flows from arrays of structured and unstructured data sources that swamp traditional BI architectures.
Then business managers and executives alike need to develop trust in those models and analytics systems by comparing results with those from their traditional conference room decision-making processes. To the degree they come to trust predictive models and their results, they will achieve true decision-making cultures within their enterprises.
As the leading decision-making software provider in the world, BOARD International delivers the technical foundation for a decision-making culture within large enterprises with a robust platform that allows decision makers to quickly build their own forward-looking multidimensional models thru a unified modern BI architecture that will scale to support the most complex decisions.