Estimated read time: 3 minutes.
Anuj Bang, CIO, Stuba.
As CIO, I’m surrounded by and presented with data on a daily basis, and it has become the lifeblood of many industries and organisations in this digital age. From e-commerce giants to travel businesses, everyone is seeking to harness the power of data to gain insights, make informed decisions, and to improve efficiency and operations.
The mantra of “more data is better” is deeply ingrained in our data-driven culture. The rationale behind this belief is straightforward: the more data you have, the more accurate and insightful your analysis can be. More data can lead to better predictions, more targeted marketing, improved product development, and enhanced decision-making across the board.
But is that always the case?
“Which city has more inhabitants? San Diego or San Antonio?”
This is the question that Gerd Gigerenzer of the Max Planck Institute in Germany asked to students from Germany as well as from America. 62% of the American students got it right. San Diego has a higher population. 100% of the Germans got it right!
How did Germans perform better on a quiz about American cities? German students had heard of San Diego but not of San Antonio. And so, they guessed that a popular city would have a higher population. But for Americans, both San Diego and San Antonio are household names. Because the Germans had less information, they performed better.
Too much data leads to poor guesses and decisions. Research conducted in 2015 shows that when doctors are presented with excess information, their decision making is impacted negatively. Provide them with just a few core tests and they are better at predicting heart attacks than if you provide them with whole body reports.
Excess information overwhelms and paralyses you. It leads to slow decision making and second guessing. It leads to more errors. And it exhausts you much faster!
There are companies that track their employees’ mouse clicks and time taken for various tasks and when they clock in and clock out and a hundred other factors. And yet, with all this data that they collect, they end up having less productive employees than companies who don’t aggressively track their employees. Because when they go through all of the data, they try to optimise the wrong things. Instead of focusing on employee output, they focus on employee action.
So, should we not track data at all?
The answer is nuanced. While more data can be a valuable asset, it’s crucial to strike a balance between quantity and quality. It’s important to NOT pay attention to all of the data all the time. Instead focus on keeping things simple. Take action on fewer data points and key metrics.
Your goals should drive what data points are more important to you.
- Destination: You need to have a clear objective. A clear understanding of what you are trying to achieve. If you don’t know where you are going, then no data can help you.
- Starting point: You need to assess where you are at currently. You can’t use data others use if the starting points are not similar.
- Map the plan. Only when you know the destination and your current point, can you map what data is required to take you from here to success.
The common mistake is to choose the destination and starting point based on the data you have rather than the other way round.
In summary, spend less time trying to collect all the information and data available out there and trying to figure out how to use that data. Instead, spend more time defining the problem in the first place. Pay closer attention to the few data points that help you go from your starting point to your destination. It’s paid dividends for us at Stuba and has help us refocus on the data that we need rather than get bogged down in the data detail and lose focus.