Decision Making: “In God we trust; all others must bring data” – Should They?

Is data needed for decision making?

“In God we trust; all others must bring data.” – Though this statement is attributed to the great quality guru, Edward Deming, ironically there is no data to that effect. No matter, who the author is, it is fashionable to emphasize that what matters is data – you need data to make decisions. Do you?

Does data help us to make decisions?

Decision making isn't entirely data

Data have two facets. Like the weather which serves us best only when it is optimum, data serve us best when they are right. If you are flooded with data your mind chokes, your instinct which has totally surrendered to data fails, and you are not able to decide. On the other hand, if you do not have data you panic – you do not know where to start and how to proceed. In other words it is not only data that others (whom we do not trust as we do God) bring to the table that you need for decision making but a few invisibles as well. But before that, let us look at what data provide us. Data is about the past (or present, which just happened). It is historic. ‘This is how we did, this is how much we sold, these are the new techniques we adopted, these are the resources we have – and so if we have to do better this is the new things we have to do’. The conclusion is based on what is or had been. Here is the contradiction – management pundits insist on the primacy of data (all others must bring data), and they talk of paradigm shift. However much the pundits talk about paradigm shift, data does not give us the clue for paradigm shift. Reposing trust in Him either does not help much!

   

Decision making is not entirely data. This writer’s management teacher used to say, “If you wait for all data to be available before making a decision either you end up not making the decision or as a file pushing clerk” There is life beyond data.

Decision making has essentially three ingredients:

Decision making involves
three ingredients

1. Data: It is evidential or empirical. Its source is past happenings. But we need to remember that in empirical world, more so in the legerdemain of management, what happened in the past need not necessarily happen in the future. Data need to be taken with a fistful of salt.
2. Assumptions: This is your hunch as to how the data will unfold the future, how events may or may not happen as in past, what way it may be different.  
3. Intuition: The raw gut-feeling. Its source is a lifetime’s accumulated response to challenges faced at different times and situations. It is the stored data in the subconscious which surfaces spontaneously.

Assumptions and intuition
do matter in decision making 

A word about assumptions. We have to look at our assumptions from a combination of two factors: certainty
and importance. How certain you are about your assumption and how important is the decision that flows from this assumption. If you are highly certain and the decision is very important, it is a right place to be in. If you are too uncertain and the decision that flows is unimportant you are wasting time thinking about it. When the decision to be made is not important, but you are very certain of the assumption, you are wasting more time. The challenge arises when the decision needed to be taken is important, but your assumption’s certainty is not high. It is here that you need to marshal all the three ingredients mentioned above to make the decision. 

The mute point is that it is not data per se which is important. You need data to take decision. But data does not tell you what will be the consequences of your decision. C.P. Snow said that facts speak for themselves, but he qualified the statement that they do so only when they are given the floor. And, that decision about giving the floor to any particular fact is what you do through your assumptions and intuition.

By V.K.Talithaya (vktalithaya@managementmasala.com)

On 4/30/2014