Does data-driven decision-making work?

Posted by Mark Price on April 24, 2011

0 comments | 1293 reads

You bet.

Recently, a study at the Wharton School demonstrated that companies that adopt “data-driven decision-making” average 5-6% high productivity than those that did not.

The academics studied 179 large companies and found that data-driven decision making was often the difference between success and poor performance in their industries.

Here is what the study does not tell us:
* how long it took the companies to embrace data-driven decision-making
* the differences in how data is used in those adopting companies
* range of time of their superior performance (did it last)

But what they did find was that decisons, not the data by itself, made all the difference. Whether in new product development, market expansion, evaluation of performance, etc., companies that leverage data heavily performed better.

As a CEO, can you afford to ignore these results, when your Board Members may be shortly asking if you are beating industry standards for leveraging data? How will you answer?

For CMOs, when your CEO comes asking, you had better be ready with an answer.

How will you quantify “data-driven decision-making”? Is it time to make this business practice standard in your company?

When There’s No Such Thing as Too Much Information

Is there any real evidence of a “data payoff” across the corporate world?

Mr. Brynjolfsson and his colleagues, Lorin Hitt, a professor at the Wharton School of the University of Pennsylvania, and Heekyung Kim, a graduate student at M.I.T., studied 179 large companies. Those that adopted “data-driven decision making” achieved productivity that was 5 to 6 percent higher than could be explained by other factors, including how much the companies invested in technology, the researchers said.

In the study, based on a survey and follow-up interviews, data-driven decision making was defined not only by collecting data, but also by how it is used — or not — in making crucial decisions, like whether to create a new product or service. The central distinction, according to Mr. Brynjolfsson, is between decisions based mainly on “data and analysis” and on the traditional management arts of “experience and intuition.”

A 5 percent increase in output and productivity, he says, is significant enough to separate winners from losers in most industries.

Read more at www.nytimes.com

Republished with author's permission from original post by Mark Price.

Mark Price

Mark Price is the managing partner and founder of M Squared Group, a consulting firm that specializes in customer analysis and relationship marketing. He is responsible for leading client engagements, e-commerce and database marketing, and talent acquisition at M Squared Group. Mark is also a RetailWire Brain Trust Panelist, a blogger at “Cultivating Your Customers” and a monthly contributor to the blog of the Minnesota Chapter of the American Marketing Association.

About Mark Price |
Connect:

Categories:

1293 reads
Print
Email

0 comments »

Post new comment

Your name: *

E-mail: *

The content of this field is kept private and will not be shown publicly.

Homepage:

Subject:

Comment: *

Input format

Filtered HTML

Allowed HTML tags: <a> <img> <hr> <table> <tr> <td> <th><ul> <ol> <li> </li><blockquote> <colspan> <rowspan><object>
Lines and paragraphs break automatically.
Web page addresses and e-mail addresses turn into links automatically.
Images can be added to this post.

Post

Lines and paragraphs break automatically.
Web page addresses and e-mail addresses turn into links automatically.
Images can be added to this post.

More information about formatting options

Notify me when new comments are posted

All comments

Replies to my comment

CAPTCHA

This question is for testing whether you are a human visitor and to prevent automated spam submissions.

What code is in the image?: *

Enter the characters shown in the image.

MarketPlace

Global Customer Experience Management (CEM) Certification Program

[May 30-31, Frankfurt; July 25-26, Hong Kong] An internationally recognized program with proven track record of success - being run for 34 times in 13 cities with attendees from 50 countries, the program is developed based on the U.S. patent-pending Branded CEM Method which aims to drive customer loyalty and brand differentiation with quantifiable business results. Limited offer: USD300 early bird discount.

Join us on May 29th in New York City. Stuart Ryder, SVP, Mobile Research Lead for Ipsos IOTX & Roxana Strohmenger, a leading Forrester analyst, will be in attendance to share best practices and new trends in mobile market research.

[June 12, Sir Francis Drake Hotel] Gregson Siu, Vice President, Ariba Business Operations, Ariba and Bob Thompson, CustomerThink, will be in attendance to share best practices, new trends and latest research to help you develop your customer experience program.

Social Networking and sCRM International Congress in Colombia

[June 25-26, Bogota] Thirteen international thought leaders will present, from different perspectives, the trends, the uses, and the magic - as well as the reality - of Social Networking and how it impacts the way customers are doing/will do business.

Driving ROI With VoC

Walker has identified multiple ways to measure ROI – there is not a one-size-fits-all solution. This paper will address each and conclude with some recommendations to help B-to-B practitioners evaluate which ROI approach will work best for their particular business need.