Hard Facts Vs. Gut Feelings: The Shift To Data-Driven Decisions While one's gut is a powerful compass, the data offers a true picture.
By Mark Sephton
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Not all decision-making is intuitive. Sometimes you have to look at the facts, data, and stats to reveal the truth about an opportunity, or the health of a business, or even the tracking of your own personal progress on a goal.
While many of my personal choices have been led by intuition and following my gut, I have also recognized when it's important to have tangible data to inform my circumstances. For example, I have become an avid runner over the last few years, and I have become obsessed with stats based on my performance. These stats show me my heart rate, the time it takes to cover a certain distance, and, of course, track how far I have run. It's one thing to feel that I am making progress, but it's far more validating to have the data behind this. These stats not only show me my progress, but they help me evaluate. I know where to focus to expand and grow.
In business, stats and data are essential. As a mentor to entrepreneurs, I often discuss the importance of mindset. However, there are also times when I ask people to "look at the fruit." This helps individuals gauge whether their actions and focus are actually leading towards success and growth. It also helps many to shift away from relying too heavily on intuitive decision-making. While one's gut is a powerful compass, the data offers a true picture.
Chirag Shah is the founder and CEO of Pulse, which provides business-critical stats and trends. Pulse's intuitive technology is designed for SMEs, accountants, and business advisors. Shah is an ideal person to talk to for a deeper look into achieving success, not based on intuition or gut feeling, but on the details—the nitty gritty data.
Chirag Shah, founder and CEO, Pulse. Source: Pulse
Why do you believe all decisions should be made by looking at the details and the data?
In business, as in all areas of life, we learn from experience. But we're lucky to live in a time where many business experiences are captured in data, meaning that we not only have the potential to learn from our own observations, but from objective data gathered from reliable sources.
When analyzed and presented properly, data can help create a framework for success, because it shows you the reality of any situation. With data, you're no longer hypothesizing about what might be, but building upon a foundation of what actually is, then using that foundation to produce informed predictions and decisions. So, while gut instincts do play an important part in that, it's when they're backed by data that the probability of success increases exponentially.
What might you say to someone who tends to lean more heavily into their intuition and gut feelings when making decisions? Does this still play a role for you?
Most of what I do starts with intuition–my intuition guides me to a starting point, but then, instead of relying on that gut feeling alone, I want to test my hypothesis. I use data to support my instincts and sometimes, that data proves me wrong or changes my trajectory. There's always a foundation of intuition at the start of every thought or business process, but it's the data that can tell us whether to take action and how to proceed. Intuition and data are the perfect companions. While you can rely on one or the other, the best results come when they're united.
Once a person looks at the data, is it possible to interpret the data incorrectly and come to the wrong decisions?
The first rule of using data for decision-making is to ensure that it is accurate, authentic, and truly representative. If you don't do that, then your conclusions are highly likely to be skewed and any decisions based upon those conclusions are unlikely to be beneficial–to you or anyone else. So, when using data for your business, you have to go in with the understanding that not all data is useful. If a data set is inaccurate, incomplete, or in any way biased, it should not be used, because it will inevitably lead you to the wrong decisions. So, that's where using your own understanding of your business or a situation comes in. If the results produced by the data feel wrong or aren't what you were expecting, go back and look at the data. It may be right, but it's always worth checking.
Many businesses may find themselves overwhelmed or even confused by the data-gathering process. How does Pulse help simplify data so that it's not misunderstood or interpreted incorrectly?
Pulse is designed to support businesses in two ways. Firstly, it assimilates business data, cross-checking data sets for inaccuracies or incompleteness, and highlighting potential issues. This helps to ensure that you're only ever working with the data sets that are viable and valuable to your business.
Then, once you know your data is correct, you can use Pulse to analyze available data over long periods of time. This can be used to identify trends across the business, but also provides the ability to drill down into details, review multiple data points simultaneously, and forecast business performance. So, you always have the data to support all decision-making and forecasting.
This is particularly useful for improving credit decisions, helping lenders make both safer and fairer decisions. So far, such a data-backed approach has led to a 40% reduction in credit delinquencies, without any reduction in approval rates. And when you use artificial intelligence and machine learning for data processing in this way, decision making is not only more accurate, but faster. The process has moved from days to minutes, because less data needs to be input and yet more data can be accessed.
In addition to simply using data to drive decisions, what are some other benefits of tracking your performance, whether that be your financial performance or even your personal goals?
Tracking performance can help businesses to identify areas of improvement and achieve small wins. That's important, because it's the small wins that add up to big successes in business, and data is at the heart of that process, providing the solid information around which you can build your future strategies.
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