What To Avoid When Using Data To Make Decisions
Data is taken and analyzed effectively in order to bring to light what a business is doing very well, not so well, and what can be improved. However, there are some issues that come with interpreting data to make decisions in a business. It is not always as straightforward as it may seem and there surely are some things to avoid.
Overconfidence in Data: Overconfidence can be bad when it comes to implementing actionable plans that result from collected data. Being familiar with a business decision, the abundance of information gathered, and the fact that we have already taken action by analyzing data can all create a scenario of overconfidence. Unfortunately, this scenario of overconfidence will most likely result in failure. The more familiar we are with a decision, the more confident we tend to feel about it. With that said, if the data results in a brand new campaign that we have never implemented before, it could feel as if it is something we can handle although it would be the more difficult option. But it is always wrong to assume. Data can give us the impression that we have a lot of information given to us, however not all of it may be meaningful enough to create the results we need. Data should result in new ideas outside of what we already know. If not, we may be suffering from overconfidence.
Causation vs. Correlation: One of the most important things to avoid in data collection and analysis is not taking into account the difference between causation and correlation. Causation states that X occurs because of Y. Correlation only points at a relationship between X and Y. For example, there can be a correlation between high revenue and social media engagement, but that doesn’t always mean that the social media engagement is the cause of high revenue. By not making decisions on false causations, the correct decisions and actionable plans can be made based on the data.
Data is collected for a reason and only provides a benefit if the analysis is done correctly. By taking into account the issues that could skew decision making, businesses can ensure that they are moving in the right direction.
Still not sure what to avoid while making decisions? Connect with SPIN and get all your clarity and answers.
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