This is a summary from a Harvard Business Review – The Evolution of Decision Making: How Leading Organisations Are Adopting a Data-Driven Culture.
IN A RAPIDLY CHANGING global business environment, the pressure on organisations to make accurate and timely decisions has never been greater.
The ability to identify challenges, spot opportunities, and adapt with agility is not just a competitive advantage but also a requirement for survival.
People have long preached the benefits of relying on data and insights from business intelligence (BI) and analytics to help make better and timelier decisions.
A reliance on data from these tools was expected to deliver better financial performance.
A global survey of 646 executives, managers, and professionals across all industries and geographies reveals a significant, albeit subtle, change in decision-making processes and their use of these analytics/BI tools.
This evolution is marked by users:
- Enhancing skills. With the ever-quickening pace of business, executives and business users are enhancing their skill sets so they can integrate analytics tools into their normal way of working to uncover strategic insights.
- Balancing data with instincts. These business users are not going on autopilot in using data; they are learning how to strike the precise balance between using analytics and their managerial instincts as well as how to manage business rules in tandem with analytics.
- Forging new relationships. As the use of analytics becomes critical for decision making, leading business users are forging new—and deeper—relationships with analytics professionals. Leading analytics users embrace a host of strategies, which evolve into best practices to create an “analytics ecosystem” in their department or organization over time.
These leaders constitute a small group of cutting-edge companies in the survey—about 11 percent of respondents. They are creating decision-making processes inside their organizations with an emphasis on data and transparency by widely distributing data and tools to analyse the data.
Some of the key survey findings indicate the current practices of decision making, including some frustration as well as enthusiasm over how the process is changing:
- Compressed time frames: 74 percent of the respondents felt pressure to achieve results in less time.
- Decisions lack transparency: Almost three-quarters of companies have no formal corporate-wide decision-making process; therefore, nearly half of respondents say there is no transparency in how their organizations make decisions.
- Data drives decisions: 80 percent say they are reliant on data in their roles, and 73 percent say their areas rely on data to make decisions.
- Skills being enhanced: 52 percent of the respondents say the use of analytics at their organizations required them to enhance their skills, and 43 percent say the use of analytics increased the importance of their function.
- Wider use of analytics pays: More than 70 percent of the organizations that had deployed analytics throughout their organizations reported improved finnancial performance, increased productivity, reduced risks, and faster decision making. Organizations with less widespread distribution of analytics access were typically 20 percentage points less likely to report such beneifits.
As timely decision making becomes more important, analytics is improving—and changing—the way those decisions get made.
“In any industry—from consumer electronics to fashion design—the speed of product innovation to the market is increasing,” P&G’s Passerini explains. “In consumer products, you might think there isn’t much reason to invest in another new laundry detergent, but consumers respond strongly to innovation. What’s different now is the tools allow me to see what was important last year, last quarter, and last week so that I can understand what will happen tomorrow, next month, and next year. That is a huge conceptual shift in thinking. We’ve used data analysis for 50 years, but we’re just beginning to develop predictive ability through business models to anticipate what’s coming.”
As Passerini and others have noted and as the survey data shows, analytics is not just a tool or a technology as much as a driver of a decision-making discipline that ushers in an era of cultural change—and improved performance.
Read the full report here (PDF) https://hbr.org/resources/pdfs/tools/17568_HBR_SAS%20Report_webview.pdf