The 2020 Mid-Year Economic Update_long

The Danger with Data

Data-free decision-making is common everywhere, but perhaps more dangerous is using data selectively or haphazardly.
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Data-free decision-making is common everywhere, but perhaps more dangerous is using data selectively or haphazardly.

I live in a Colorado city that is pro-bicycle in every form. The city council recently embarked on an experiment to promote bicycle commuting by reducing several four-lane streets to two lanes, essentially creating a dedicated bike lane in each direction.

I’m all for biking, but the council created a firestorm of reaction – both pro and con, cyclist versus driver – with a decision that affects many in the community. It also serves as a case study in the use and abuse of data, with some lessons for businesses.

First, this was a “living lab” experiment, where data points of other successful projects were used to justify the goal. How many times has a company green-lighted a project because it worked for “X” – either a competitor, marketing group or some subject in a consulting firm case study?

Second, the metrics to measure this experiment were ill defined and skewed to provide answers the advocates were after. How often do we want to make a decision and desperately seek the data that will support it?

Third, the model for the study was flawed. The time period measured for usage was mid-summer in a major university town, at arguably the lowest traffic stress points with schools out and during peak vacation time. It was almost guaranteed to have poor predictive performance, and either exaggerate or minimize fluctuations in the data.

Part of management’s job description is to analyze and simplify complex problems into quantified solutions, but too often the quest for speed can short-circuit the quality of the outcome.

There’s a big difference between data mining and data mines. It's tough to be a contrarian voice of reason when it comes to team decision-making, but this is an increasingly important role for data champions.

For another view of the all-too-common disconnect between common sense, data, market research and competitive intelligence in company decision-making, see this good Harvard Business Review blog, Companies Collect Competitive Intelligence, but Don’t Use It.

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