Reprint: R1312F
Why do companies have so little to show for their investments in big data? The biggest reason is that they aren’t doing a good job using the data they already have. They don’t know how to manage the information embedded in their operating systems, analyze it in ways that enhance their understanding, and then make changes in response to new evidence and insights.
The few companies that have adopted evidence-based decision making ensure that all decision makers have performance data at their fingertips every day. They also follow four practices:
Using performance data from just one source yields a more accurate view of costs and profitability.
Perhaps the best way to teach people how to use data to create business benefits is to provide them with data about their own performance.
Little data can have a big effect on performance when managers use the data to assess and improve the business rules that govern their operations.
Adopting evidence-based decision making is a big cultural shift. Employees need help learning how to base their decisions on data instead of on instinct.
Fortunately, companies that make the shift don’t usually go back, and they improve their operations in ways that rivals can’t easily replicate.
Companies are investing like crazy in data scientists, data warehouses, and data analytics software. But many of them don’t have much to show for their efforts. It’s possible they never will.
HBR Learning
