Analytics for creating more choices

Choice covers both the capacity to control people and events, and an underlying belief in the possibility of such control. Being able to rule your environment gives power to self-determination, even for babies. In a study, researchers attached strings to the arms of infants “as young as four months.” When they moved their arms, music played. The babies grew “sad and angry” when researchers removed the strings and they could no longer make music play, though music continued sporadically.

Wanting to choose comes naturally, though it isn’t linked to any distinct biological advantage. Without choice, as zoo animals show, even if someone else’s decisions set you up in luxury, you won’t be happy. Having influence on control makes people happiest. A nursing home let some patients decide when to watch movies and which plants they wanted. After six months, those who had more perceived choice “were happier and more alert” and, it turned out, “were less likely to have died.”

People define themselves through their choices

The studies just described come from the book The Art of Choices written by Sheena Iyengar, a professor at Columbia University. In her book, Iyengar makes these observations. The way that people make choices as individual consumers of products and services has changed with industrialization. Buying was once very matter-of-fact due to limited options, but it has been transformed into collecting markers of personal identity. As “an ethos of independence” took over, getting noticed as an individual replaced blending in, and choice became an exercise of personal definition. Think Starbucks, automobiles, or clothing fashion. Now, people everywhere face substantial new alternatives. Options for family structure, political affiliation, and even eye color (with “tinted contact lenses”) let people express themselves in countless ways.

Iyengar continues by stating that along with freedom, these decisions carry the burden of defining a person’s self-image. She describes three challenges make this hard: People believe they are more unique than they are, they want a consistent vision of themselves, and they want it to mesh with others’ views of them. With each potentially immobilizing choice, people define themselves privately and socially. Iyengar’s solution: Try to see your identity as ever changing, so that choosing helps you discover yourself.

If we replace organizations with people there are similarities.

The role of analytics to make choices for organizations

Analytics’ goal should be to gain insights and solve problems, to make better and quicker decisions with more accurate and fact-based data, and to take actions. “Big data” with high performance computing is allowing organizations to deploy business analytics to have more choices and make better decisions. But the three challenges that Iyengar describes also apply to organizations. For commercial companies they seek a competitive edge typically through differentiated products and services increasingly targeting differentiated customers.

Since customer preferences are not static – they are making individual choices on what to purchase – business analytics are essential to detect what is changing. They are also needed for organizations to uniquely define themselves. Ultimately the best source to gain a competitive edge is to grow competencies in employees with analytics – creating a culture for analytics.