Throughout my career working with companies of different sizes, I’ve come across a lot of resistance when it comes to data. Yet, I’ve also seen that companies that truly embrace their data are way more successful than those that don’t.
It’s not data – it’s “decision insurance”
The true value of data isn’t around what it can show you, it’s about what it can protect companies from. At any given time, a decision made by a company is almost a 50/50% split on whether or not it is going to lead to success. We tend to give ourselves much more credit, but in reality we tend to overestimate our ability to make the correct call.
The simplest demonstration is this:
Explained in pictures…
Imagine for a second, that we are in the Now.
From here, we have a few decisions to make. Decision A or decision B. And each of those decisions then also leads to another decision, called A-1, A-2 or B-1, B-2.
Each of these decisions has a different result. We started off with a business performance of 35%, and each decision either has a positive or a negative impact.
We can now quickly see that, decision B-2 has the biggest improvement, from 35% to 45%. But here is where the biggest challenge comes in! How could the business have known whether B-2 was going to be the best decision to take?
In real life, these are often not small decisions. They involve hundreds of thousands of dollars and can’t be turned back easily once they’ve been made, and this is where data and testing comes in.
If the business decides to test each decision, it will have a 72% chance of arriving at B-2. The confidence of the first decision is 90%, and the confidence of the second decision is 80%.
- 90% * 80% = 72%.
If the business doesn’t decide to test each decision, the business has a 50% * 50% = 25% chance of arriving at B-2.
There is never 100% certainty, but at 80% you’re already way ahead
There is no absolute certainty in life, and definitely not in business. However, if you compound the impact of decision making, the numbers add up pretty quickly.
- If you make 10 decisions at 75% chance of making the right decision, you’ll end up at a 10% chance of having made the best possible decision.
- If you make 10 decisions at 25% chance of making the right decision, you’ll end up with a 0.00001% chance of making the right decision.
That’s a 100,000 times more chances to succeed. Seems worth it to me!
Struggling with becoming data driven? Send me a message – I’m pretty good at this stuff.