BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Big Data's New Power Quadrant For Executive Evidence-Based Decision Making

Following
This article is more than 9 years old.

Not all things worth doing are worth doing well. For many this is a heresy that violates the old maxim, “if it is worth doing it is worth doing well.” However, in today’s digitally disrupted world the pace of change is so fast that not all decisions can be given the amount of time to do them well.

The real challenge is not to avoid being wrong but to avoid being wrong on major decisions that matter. Mess up on a major decision and it could be near fatal for a company or a business in today’s fast changing world. One need only look at how change has impacted companies in industries such as newspaper, shopping mall, bookstore, video rental, brick and mortar retail, etc. Miss a key challenge or trend by clinging to old business as usual thinking and you may not have a business in a year.

Clearly decisions that need to be made right need to be major decisions focused on the dynamic continuation of the business. That’s why to deal with decision issues, our firm created a Power Quadrant for Decision Making to identify the choices which have the most impact on a business. Decisions companies make range from low risk (tactical) to high risk (strategic). When you compare the financial impact of a decision to the level of authority of a decision maker, the result illustrates where companies need to concentrate to reap the true value of big data.

The first quadrant (high risk-low authority) is where no company wants to be. This is where employees have gone “rogue” and make decisions beyond their authority (think the 2012 JPMorgan Chase trading loss). The second quadrant (low risk-high authority) signifies where executives are spending too much time on tactical decisions, resulting in dreaded “micro-managers” and a drain on company resources.

I wanted to spend a little more time discussing the third quadrant (low risk-low authority) because this is where the value of a right decision versus a less-than-right decision can be seen is in the application of “big data” as in the stream of digital data from the online world. Today there is a frenzy on the part of folks in the advertising communication world to adopt “big data” applications that will allow for a more targeted advertising approach. By using these “big data” services prospects may be served an ad for a pair of shoes while online as a result of the advertisers’ insight about the prospects’ past online behaviors. We’ve all experienced searching for a product or service online only to be followed for days, even weeks, by ads from purveyors of the same products or services when visiting online sites. Whether you really buy the product or service won’t make or break any given company.

These programmatic advertising applications tend to happen quickly, usually in real time and are void of human input as machines talk to machines to serve the ad. In addition, much of the digital data brokered for these advertising application is incorrect (some claim up to 50%) or even fraudulent.  This means advertisers basically have a coin flips chance for better targeting. No harm, no foul because the failure to either identify you or communicate with you won’t be a life or death decision for the advertiser. It’s the way advertising has always functioned going back to the late 1800’s when John Wanamaker said, “Half the money I spend on advertising is wasted.” So programmatic ad buying may be worth doing, just not doing well.

Major business decisions that have strategic consequences need to involve better insights to inform human expertise. The impact of a major decision not informed with evidence-based insights is usually life threatening for most businesses requiring significant investment and probably even a change of leadership in order to salvage the company.

So why all the clamor to invest in and implement programmatic ad serving under the banner of “big data” when the overall impact on an organization is quite small? Why at the same time, do senior level executives go without advanced, big data analytics that are must-haves for competing in today’s changing market? Perhaps the desire to cut expenses associated with media buying is a driver. Maybe the need to do something that has big data associated with it is another. Or possibly the limited risk of ad placement is easier to implement and a safer decision to make.

High level executives making big time financial decisions need insights that improve business performance. The fourth quadrant (high risk-high authority) is where relevant insights drawn from numerous data streams along with advanced analytics turns big data into smart data and uncovers “unknown unknowns” about customers, competitors, the economy, and the marketplace. We call this the smart data zone and is where companies should focus their data efforts. Smart data is critical to empower executives to make evidence-based decisions rather than relying on gut instincts.

These types of advanced analytics bring success by delivering only the data needed to make decisions that impact performance better and faster, making an organization stronger at its core.

----------------------------------------------------

Gary Drenik is CEO of Prosper Insights & Analytics, a company that prides itself on turning data into evidence-based solutions for the C-Suite. www.ProsperDiscovery.com