Data-Driven Decisions Can Aid Companies' Productivity - Steve Lohr
Is there any real evidence of a “data payoff” across the corporate world? It has taken a while, but new research led by Erik Brynjolfsson, an economist at the Sloan School of Management at the Massachusetts Institute of Technology, suggests that the beginnings are now visible.
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.
The companies that are guided by data analysis, Mr. Brynjolfsson says, are “harbingers of a trend in how managers make decisions.”
“And it has huge implications for competitiveness and growth,” he adds.
An alternative viewpoint is that companies that shift to reality-based management techniques also change how they manage in many other ways. It many not be the data that drives new styles of decision making, but leaving behind folklore and whimsy.
(Source: underpaidgenius)
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