Uninformed Decision Making

The Economist Intelligence Unit (EIU) surveyed 154 global C-level executives (the survey was commissioned by Business Objects) and found that we have a long way to go for evidence-based decision making.

Key findings of the survey:
1. Less than 1% of executives believe they have the necessary information to make critical business decisions.
2. More than 25% believe that management “frequently or always” makes the wrong decisions.
3. More than 50% said decision-making is mostly informal and ad hoc.
4. 80% believe data is more important than intuition.

We need processes and technology now to arm managers with the tools they need to make informed decisions. 

Connecting Business Intelligence and Analytics tools will help with the “what happened and why” background necessary to a make decision.  Connecting Budgeting, Planning, and Modeling tools (financial and operational) will help with the “what do we want to do and how” foreground necessary to make the right decision.  Putting both of those domains together and allowing us to manage assumptions, rules, and causes & effects, will give us an organizational “management operating system” to deliver what managers need to make fast, actionable, “right” decisions.  This is the promise of eXtended Performance Management (xPM).

Comments

[Howard Dresner]

It's fascinating to read about studies like this one. However, they often leave me wanting more.

I agree that management lacks needed information and often doesn't have essential facts to frame decisions. However, this analysis doesn't tell the entire story.

If 80% of executives believe that data is more important than intuition then why is decision-making mostly an intuition-based activity? How much more important is data vs. intuition to them? Are the 99% outraged that they don't have needed information? Or, is it merely an inconvenience.

On the surface it would suggest buying more tools and building more data warehouses is the right response. But is that really what's standing in the way of more fact-based decision-making?

That's the trouble with surveys. We often don't get the complete story. We can't ask those important follow-up questions which will tell us "why", and not simply "what". No doubt this will require the chartering of yet another study.

-Howard