How to Make Good Decisions While Swamped With Data
In this age of information overload, it's more critical than ever to be selective
By Rodger Dean Duncan
The world seems to be awash with pithy advice on how to make good decisions:
“Unsuccessful people make decisions based on their current situation; successful people make decisions based on where they want to be.”
“Don’t base your decisions on the advice of those who don’t have to deal with the results.”
“Good decisions come from experience, and experience comes from bad decisions.”
“Unnecessary fear of a bad decision is a major stumbling block to good decisions.”
“Indecision is a decision.”
One might think that with so much data available on nearly every conceivable issue, decision-making today would be easier than ever. But then there’s that pesky thing called information overload.
An excellent guide in navigating this challenge can be found in Decisions Over Decimals: Striking the Balance Between Intuition and Information by Christopher Frank, Paul Magnone, and Oded Netzer.
The authors have credentials that seem tailor-made for such a book. Frank is vice president of Global Marketplace Insights at American Express where he leads the communications and brand research analytics group. He’s also an adjunct professor at Columbia University. Magnone is head of the Global Strategic Alliances group at Google. As a systems thinker and business builder, he previously worked at Deloitte and IBM. Netzer is vice dean of research and a professor at Columbia Business School. He’s a world-renowned expert in data-driven decision-making and extracting meaningful insights from data.
So, what do these smart guys have to say about making smart decisions? Listen in on our conversation.
Rodger Dean Duncan: Quantitative Intuition (QI)TM, you say, can produce more effective and more efficient decisions. In a nutshell, how does it work?
Christopher Frank: Simply put, Quantitative Intuition, or QI, is the ability to make decisions with incomplete information via a three-prong approach. First, ask powerful questions. Second, put the data into context. Finally, synthesize (as opposed to summarizing) the information by combining the information with judgment.
With the abundance of data, there is the erroneous belief that we can achieve the perfect decision. However, the perfect decision does not exist. We still need to use intuition and judgment in decision-making. But it’s a different type of intuition—one that combines information with human judgment, which we call QI.
Oded Netzer: For many years at Columbia University we’ve been teaching classes on QI to executives. As part of the programs, we’ve asked executives to identify the aspect of decision-making they think represents the biggest gap in their organizations when it comes to making smarter data-driven decisions. Across thousands of executives, we’ve found that the biggest gap is not in having more data or a better analysis tool to crunch the numbers. The gaps lie in defining the essential question, generating meaningful insights, and converting these insights into action. The problem in today’s data-rich environment is not information, but rather the judgment to use it.
Duncan: What mindset adjustments are required of someone who wants to employ QI?
Paul Magnone: A decision represents change, and humans are not wired for change. Most of us retreat to comfort zones—some to data and others to gut instinct.
Great decision-makers judiciously explore opportunities with probing curiosity. They’re open to alternatives while being focused on essential outcomes. You also must get past the belief that you need to be a math expert to make sound, fact-based decisions. People avoid using quantitative analysis because they believe they won’t have the ability to navigate the data. The data is the means and not the end.
The QI decision-maker uses the combination of precision questioning, contextual analysis and synthesis to see the whole situation to move forward despite incomplete information.
Duncan: What kind of biases affect people’s decision-making—for good or for ill?
Netzer: The beauty of the human race is that individuals are not robots. We all have opinions shaped by factors we’re unaware of, preconceptions we don’t know we have, and beliefs we don’t know we hold. The decisions we make will always be affected by bias. There are biases related to relying primarily on intuition and not using data, such as overconfidence and availability bias.
Overconfidence prevents leaders from turning to data to question their intuition, and availability bias directs decision-makers to the most easily accessible data. On the other hand, confirmation bias occurs when people look primarily for information that confirms their intuitive view.
To be able to foster and develop our quantitative intuition, we must be aware of our biases and the impact they have on us. Contrasting your intuition with data and paying careful attention to the cases in which the two disagree is a key to identifying potential biases. Creating diverse teams can help mitigate the effect of biases because while the data is factual, different people will see the same data from different perspectives.
Duncan: What role does skill in asking questions play in a person’s ability to make sound decisions?
Netzer: The smartest person in the room is not the one with an answer, but the person asking the powerful questions. If you seek bolder decisions, ask better questions.
Questioning is analogous to pulling threads on a sweater. Some loose threads will just come out; others can unravel the whole sweater. Questioning enables you to quickly pull threads to see which are superfluous, integral, or consequential. Questioning helps your team make inferences and connections about data and open up viewpoints or analysis that’s not apparent. This exploration mindset encourages trial and iteration. As a leader, you should strive to create a learning environment that fosters the question-learning loop. Building a team of questioners is the path to winning, to achieving the robust growth many companies seek.
Duncan: You write about a sequence of statements you refer to as IWIK—“I wish I knew.” You say IWIKs enable people to focus quickly on the most essential questions so they can prioritize their efforts to make efficient and effective decisions. Please give us an example of how this approach works.
