Why Are Business Analytics Important? Because You Think You’re a Better Than Average Driver
[Cross-posted from my Forbes post]
You’re probably worse at analyzing data than you think. That’s the conclusion of wide-ranging “illusory superiority” research carried out by psychologists. Just as in Garrison Keillor‘s fictional town Lake Wobegon, “all the children are above average”, we all think we’re better than everybody else:
- 93% of Americans think they have above-average driving skills
- 87% of MBA students at Stanford University rated their academic performance as above the median
- 68% of teachers In a survey of faculty at the University of Nebraska rated themselves in the top 25% for teaching ability
When it comes to business analytics – using information to better-run your business – many successful executives have similarly high opinions of their skills.
This cognitive bias means that we tend to be overconfident in our decisions — and hence under-invest in fact-based systems and processes that could help us correct our misperception.
One key part of the solution is to share information and decision-making as widely as possible throughout the organization — using the “wisdom of the crowd” to overcome any individual biases. The latest generation of “business intelligence” software can help provide a strategic framework for such information use throughout the organization.
However, technology can only take you so far — to become a better-run business, leaders of organizations have to instill an “information culture” that rewards the systematic use of data in decision-making.