From Data to Decisions: How Do You Make Decisions?

What was the best decision you ever made? Was it when you chose the University you’d study at? Was it the time you decided to change your career? Was it when you threw caution to wind and took that month long vacation?

The decisions we take can change our lives. Of course, not every decision will have an enormous impact on your long term happiness or success (Indian takeaway or Chinese takeaway?). However, the way we actually make decisions – whether it’s in our personal lives or at work – is largely similar. The thing you’re deciding on could be enormous or insignificant, but the process of reaching a decision can often be almost identical.

The issue is that our decision making process excels for certain types of choices – the kinds of things that kept our ancestors alive and kicking. However, the modern world, and especially the world of work, asks us to make a lot of complex decisions which require rational thinking and to leave our ‘gut instinct’ aside. While ‘intuition’ still has a lot of currency in the world of work, it’s also important to consider a wide range of facts – especially when large sums of money and other peoples’ livelihoods are involved.

Business Intelligence is key to forming the best decisions and in today’s post we’ll look at how you can tap into your organization’s data to make the best decisions.

How do you arrive at decisions?

The vast majority of our decisions are made using heuristics. Heur-what-stics? Heuristics is, basically, a hard to pronounce word which describes how we make decisions by reducing complexity in the world around us.

Your mind is very good at making associations between things in the world around us, combining these with our experience, and helping us make decisions on the back of this. Heuristics is useful because it saves us a lot of time. We can think of the brain as a filter, constantly cutting out the noise and helping us focus on what’s important. If we didn’t have this capability, we’d basically never make any decisions about anything. Let’s illustrate this with a quick example.

You need some new pants and are walking through a mall in the city center on your lunch break. On arriving at the mall you look at the floor plan. You find a department store; once there you follow the sign to the men’s clothing department (assuming you’re a dude). Although there are lots of jeans available, you haven’t got a lot of time, so instantly pick a pair made by a well-known brand.

Heuristics helps you navigate this situation quickly and effectively. There were probably plenty of pants-selling stores you could have visited in the mall, but you chose the department store unconsciously because you knew you’d find what you were looking for there easily. When you chose the well-known jeans brand, heuristics came into play again. You associated it with quality, paying more on trust that the designers know what they’re doing.

In both these situations, you could have spent a long time analyzing every single option. You could have visited every store in the mall trying out their stock. You could have compared all the jeans in the department store, examining how they were stitched, testing the strength of the rivets on the pockets. But, you would get nowhere in life if you took this approach to everything. Heuristics helps you make decisions fast.

However, not all decisions are made heuristically. Daniel Kahnemann, Nobel Prize winning  cognitive psychologist and author of Thinking, Fast and Slow describes two different types of thought. One is our quick, heuristic thinking. The other is slow, deliberate and logical.

So, what’s this got to do with Business Intelligence?

The decisions we make in the workplace should combine the two kinds of thinking humans are capable of. In high pressure situations, you can’t spend hours dithering about which course to follow. Nonetheless, this isn’t always the most appropriate method. Heuristics is, inevitably, based on past experience, prejudice and unconscious ‘instinct’. This can be useful in some case, yet in others it will hold you back. 

For example, if you’re deciding to expand operations into a new market, this isn’t the kind of thing that should be done on a whim. You need to be sure there’s actually a market for your product, that you have the resources to set up new offices and hire new people. If this kind of decision isn’t made with solid facts backing it up, you risk making major blunders. Yet, as the graph below shows, a lot of decision makers keep making choices based on heuristic methods:

Research: Which of the following best describes your personal approach to making significant management decisions?

Source: Economist Insights

Business Intelligence can help decision makers avoid making major decisions ‘on a whim’. Tools like ReportPlus from Infragistics allow any decision maker to draw their organization’s data into easy to use, interactive dashboards on a touchscreen device. This allows rapid access to hard facts and means fewer decisions are based on instinct and more decisions are based on logical and deliberate thinking.

ReportPlus is available on iOS, Android and will soon be released for desktop. Try ReportPlus free on iOS today. It might be the best decision you ever make.