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How Analytics and Data Can Undermine Leaders Four things to avoid to make sure you're using big data effectively.

By Patti Johnson Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

For business leaders, data can be a best friend and a worst enemy.

Our current data revolution is producing more insightful information than ever before. The revolution's downfall, however, is that it's also producing a plethora of business leaders unprepared to effectively separate the essential from the interesting.

Related: How Data Science Is Fueling Social Entrepreneurship

If this sounds like you, know that the misuse of data may hinder your ability to make timely decisions that define your future. So, strive to avoid the mistakes that will turn data into your nemesis -- rather than the trusted ally it potentially can be.

Today's most successful business leaders understand how to pinpoint meaningful data, then utilize it to influence future decisions. They know what can be set aside. On the other hand, leaders who can't discriminate or interpret fall behind -- and even fail -- when they look to data to give them the perfect answer. They miss the bus by reacting or waiting too long.

Case in point: A leader shared with me how the European division of his company had a big strategy decision to make, yet remained at a standstill. Each time strategy was discussed, the conclusion was to do "more analysis" to answer additional questions. Key leaders couldn't collaborate and reach a decision, and the data being used did not provide a clear answer. Meanwhile, a competitor changed the conversation, affecting the bottom line. While searching for the "right answer," the company missed its opportunity.

So, don't suffer the same fate. Determine when data is needed, what matters most and when it will give insights -- not the "right answer." Here are four data-related mistakes that may be affecting your business success:

1. Overly trusting (or distrusting) data

It's important to be aware of both the usefulness and the limitations of data. Some leaders believe that data will provide concrete answers to any and all business problems, while others rely too much on gut feelings without realizing the power of meaningful data as a business tool. Wise leaders know how to strike the right balance.

Understanding how to use data and when not to will help you make better decisions, anticipate the future and pinpoint problems that need your attention. More data won't always give you more information to make a better decision, but the act of analyzing data on a companywide level will shed more light on the true issues.

Related: You Need Big Data Now: 5 Professions That Can Benefit

2. Looking to data to reveal the future

Despite what many leaders think, data isn't a crystal ball that knows exactly what the future holds. Data is a merely a collection of current and past trends that, paired with intuition, helps leaders make future-minded decisions. It's easy to get caught up in analysis, but research shows that analytical thinking reveals only part of the picture. Pairing informed intuition with data analysis results in better decisions that balance facts with insights.

3. Believing that "more data" must be better data

Data collection is an activity that can easily get out of hand. Sifting through boatloads of analytics is a time-consuming activity that can slow or completely halt decision-making.

Smart leaders know when analytics can unlock the answer rather than just provide input. When planning for a substantive change, recognize that using past or current data may not reveal the right clues. Know when to stop and rely on sound judgment.

4. Treating all data equally

When you ask companies for the key metrics that matter, the answer is often a workbook. The best leaders know how to focus. They understand the essential data that drives their bottom line, employee engagement or customer commitment.

The leaders who use data and analytics most effectively have found simplicity and clarity in how they use it. Not all data should be given equal attention or consideration. Focus your time and attention on those that drive business results.

Data and analytics play a critical role in today's business world. It's easy to become overly dependent upon these things, collect too much or give it all the same attention.

Recognizing and correcting these pitfalls is crucial to capitalizing on data that matters, ensuring the longevity of your business and cementing your role as a leader who relies on both information and intuition.

Related: 4 Marketing Analytics Tools That Are Shaping the Industry

Patti Johnson

CEO of PeopleResults

Patti Johnson is a career and workplace expert and the CEO of PeopleResults, a change and organizational development-consulting firm in Irving, Texas. She is the author of Make Waves: Be the One to Start Change at Work and in Life. Previously Johnson was a senior executive at Accenture.

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