The perpetual Peter Drucker “insight-lag effect” has occurred again.
As the business world tries to get its head around the explosion of Big Data, Drucker’s words from more than 25 years ago ring louder than ever: “Information is data endowed with relevance and purpose,” he wrote. “Converting data into information thus requires knowledge.”
In other words, Big Data is meaningless in and of itself. The trick is to turn the reams of facts and figures now available in our hyper-connected world into truly useful information—information that can help your company decide what to stop doing, what areas of strength to build upon and expand, and what to start doing.
The businesses that have figured out how to do this clearly have an advantage. The management consultancy Bain recently found that companies with the most advanced analytics capabilities are twice as likely to be in the top quartile of their industry in terms of financial performance and five times more likely to make faster decisions.
But how do companies develop such capabilities? From what we’ve seen with our clients, two important factors are at play.
First, executives need to embrace that “data-driven” does not mean letting go of one’s intuition. Instead, an individual manager’s views on business and the world should drive the process of formulating hypotheses that, in turn, should be confirmed or invalidated by data analysis.
Second, executives need to interact directly with data. To keep up with the surge of business information, corporations have increased the complexity of the tools used to process it. As a result, decision makers are being left out from interacting with the data themselves.
To succeed, IT and analytics experts must provide decision makers with simpler tools that enable these executives to wrestle with the numbers, allowing them to get answers to key business questions and test their assumptions.
More of a Drucker-like approach will produce three advantages. First, it will encourage leaders to trust their intuition, something they have relied on for decades to get them to the executive suite. Second, building on Drucker’s call to “engage in analysis and diagnosis,” decision makers will themselves be placed behind the data wheel.
Finally, capitalizing on intuition and a simplified interface will allow companies to fail and succeed more quickly—a key for winning in the 21st Century.