It is axiomatic that we are now drowning in data. Google’s chairman Eric Schmidt famously said we now create as much data is two days as we did from the dawn of humanity to 2003. And there is now a big business in providing tools to help us deal with this avalanche.
But it turns out there is a big prize for companies that master their own data and put it at the heart of their decision-making. +Steve Lohr The New York Times recently reported on new research setting out to quantify the effect:
The data explosion is also an enormous opportunity. In a modern economy, information should be the prime asset — the raw material of new products and services, smarter decisions, competitive advantage for companies, and greater growth and productivity.
The central distinction, says the WSJ piece, is between decisions based mainly on “data and analysis” and on the traditional management arts of “experience and intuition.”
Those that adopted “data-driven decision making” achieved productivity that was 5 to 6 percent higher than could be explained by other factors, including how much the companies invested in technology.
But becoming a data-driven company is hard. Many organisations are built on the belief in the wisdom of the senior team and their “experts”. Experience and gut-instinct still hold a lot of sway. Take Apple – Steve Jobs’ profound intuition and almost supernatural sense of what makes a good product produced legendary results. Now he’s no longer there the risk is that the vacuum will be filled by people with less than superpowers and poor decisions will be taken (the maps fiasco may have been the first).
Contrast that with Google – the epitome of a data-driven company, perhaps. My favour supporting anecdote, which I have blogged about in the past, is the story that the company doesn’t put down any paths until the grass between new campus buildings is worn down, thus ensuring the tarmac gets laid where the Googlers actually do walk. A great example of data-driven decision making in action.