From over-confidence to indecision to burnout, there are a lot of problems that can pop up during the decision-making process. This makes sense when you understand that, throughout the day, the average adult is tasked with making over 35,000 decisions. No wonder making decisions can be so daunting! When these problems arise and slow your business’ forward progress down to a crawl, it’s important to have some analytical strategies in your back pocket.
It can be tempting to just go with your gut or take the first solution and run with it—especially in a time crunch. However, you also want to make sure that you are giving each decision the right amount of careful consideration to avoid potential mistakes. There’s no precise sweet spot for how long each business decision should take but you can eliminate common problems and break through the barriers of indecision by utilizing effective data. Here’s how data can help solve a ton of decision-making issues in your business:
What decision making problems can data solve?
Too many options:
Yes, there can in fact be too many options and data can help narrow them down. According to psychologist Barry Schwartz, the Paradox of Choice happens when there are more than 4 options available to choose from when you’re making a decision. While humans crave options, we can only assess so many choices at once before the problem becomes too complicated to solve. This complexity could be costing your business excess time and money as you attempt to whittle down your options. Data makes it a lot easier to narrow down your choices to a more manageable range. You can utilize what you’ve captured and evaluate your data to determine the best solution or pair of options and eliminate all others with ease.
A reluctance to consult the data when making decisions:
According to a PwC study surveying more than 1,000 senior executives, organizations that rely less on data are three times less likely to report significant improvements in decision making than highly data-driven organizations. These improvements can range from profitability to productivity. For example, when growing your business’ cash flow, having predictable expenses and knowing what those are is crucial. A lack of reliance on data is literally costing businesses time and money. Implementing data analysis in the decision-making process is worth the effort to become a more efficient, profitable company.
Who’s Right and Who’s Wrong?:
Sometimes the decision-making process isn’t slowed down by the lack of an answer but, instead, too many potentially correct answers. In a collaborative team, there might be multiple people presenting solutions to address the same problem. Instead of letting this create unnecessary conflict, you can allow team members to build a case for each option and present it with confidence. Everyone, even with access to the same data, may still see things differently. But hearing data-backed arguments from multiple angles ensures you’ve thoroughly evaluated the options before making the final call. With data to back it up, the decision you go with should be more widely supported by everyone involved because all sides will feel like their positions were at least considered rather than ignored.
Correlation, Causation, or Coincidence?:
Psychologists recognize the human tendency to see relationships where none exist as Illusory Correlation. For example, a business that observes that X and Y both happened in Q2 last year and assumes that X must be the cause of Y could be basing decisions on a false assumption. This can often happen when attempting to recall how the business fared in specific scenarios in recent history. You can determine whether these occurrences were intrinsically linked or whether they just happened to take place at the same time by evaluating the data. When else have these things happened simultaneously? Has one ever happened without the other? Is it just a coincidence that they both occurred around the same time? If you need to shatter the illusion or prove a solid relational link between two business outcomes, data is an essential tool.
While data can eliminate a wide variety of decision-making problems, it does depend on the data set you’re using. There’s a difference between effective data and incomplete or inaccurate data. Don’t let the latter two weigh you down and make sure your data is effective.
How can you gather and utilize effective data?
Create a culture of data integrity:
For your data to be effective, it needs to be thoroughly documented by established processes and captured consistently. This starts from the top. Creating a culture of data integrity is an essential process for any business hoping to rely on data for decision-making. Otherwise, your data might be incomplete and inconsistent, which can lead to costly mistakes in the decision-making process.
Make sure your data is customer focused:
Most companies have a handle on their financial data, but they sometimes forget to capture and focus on customer-focused data as well. For data to be effective, it needs to include more information than the basics like how much people were willing to pay for X product or service in each quarter of the previous year. What issues are customers frequently reporting in that product or service? What features are they regularly purchasing the product or service for, compelling them to choose it over any potential competitors? Who are your customers, how are they finding you, and what problems are they looking to solve that you can help with? Are there any identifiable reasons your customers are leaving? These are just a few of the questions your data can answer if it’s captured and stored effectively.
What is lost cannot be found:
Within a lot of companies “data is often hidden away and isolated within data islands”. It’s not a lack of data that is hindering their decision-making process but a lack of a centralized hub where it’s easy to gather and evaluate data from every area of their business. When your data is spread far and wide across multiple systems, it’s easy to lose essential information or have employees who don’t know where to find the answers they’re looking for. With no single source of truth to guide them, your company’s data can become a cavernous pit that feels impossible to explore. This is why businesses that utilize an end-to-end software solution like Tigerpaw have a leg up in the decision-making process. It’s easy to capture, analyze, update, and utilize your data when it’s all located in the same place.
Back up instincts with data:
Gut feelings alone might not be the best decision makers in business, but they don’t need to be shuffled aside entirely. Instead, if you have a feeling a certain solution might be the best fit for the problem at hand, see if you can find the data to back it up. If effective data is backing up your gut feeling, chances are you’re making the right move for your business. Sometimes it proves us wrong and sometimes it validates our instincts—either way it’s a win. Plus, you won’t need to rely so heavily on your gut when you’re utilizing the right tools. When you have a centralized system collecting all the information you need, it’s easy to determine if you’re maintaining healthy cashflow or if your contracts are profitable because all the essential info is a breeze to find, easy to evaluate, and in the same spot.
With so many decisions needing to be made on any given business day, it’s important to strike a balance between thorough analysis and time-saving methods. Let effective data be your business’ secret weapon in the decision-making process. It can help eliminate common decision-making problems that have far-reaching consequences for your organization and help your business be more efficient and profitable year-round.
Learn more about our end-to-end solution that puts all the effective data you need to make informed decisions at your fingertips. With Tigerpaw, you can eliminate decision-making problems, run a better business, and sleep better at night.