How Businesses Make Decisions Today
A single decision can make or break a business. Case in point: Blockbuster Video passed on Netflix in the early 2000s. Not all business decisions have such a cut-and-dry outcome, of course. Many of them end up being routine — just part of a typical workday. But over time, these decisions end up shaping bigger patterns like profitability and efficiency.
How businesses make decisions also affects their corporate culture. Does everyone have a say, or do employees find out about decisions after the fact through a “by the way” email from executives? Typically, companies that have found a way to actively incorporate employees into decision-making have better outcomes because they foster a culture of innovation and questioning norms.
Here’s more on decision-making in the enterprise today, and how data is changing it rapidly.
Top-Down Hierarchies: A Thing of the Past?
In the old days, the boss said jump and the employees had to ask how high. But traditional models of decision-making are changing. No longer do commands exclusively come from the top down. But this style of management comes with pitfalls, namely that only a small percentage of upper-level employees get to have a say in operations.
Bottom-up management, on the other hand, means companies gather ideas, suggestions and insights from everyone. As Bizfluent points out, this encourages employees to play an active role in strategic planning, decision-making and problem solving.
And when employees have direct access to self-service BI analytics tools, the effect of bottom-up management is amplified even further, empowering users to ask questions of data and get answers they need to make informed recommendations. In years past, the average employee would have had to wait on data teams to supply them with reports — a very top-down approach to information management. But platforms like ThoughtSpot offer search-driven analytics accessible to any business user who has permission, from a marketing manager to an intern.
When employees are able to query data on their own rather than having to wait to see it secondhand, they can empower themselves to participate in decision-making.
Why Data-Driven Decisions Trump Intuition
Despite the fact business intelligence and data analytics are becoming more accessible to end users — and more streamlined to deploy on an enterprise level than legacy tools — many businesses still rely primarily on intuition when it comes to decision-making.
One survey of 3,200 executives from MIT Sloan Management Review found 38 percent of respondents still describe their organization as intuitive in its decision-making. Fewer executives, 27 percent, describe their organizations as data-driven.
Intuition, particularly when it’s based on experience, can be a handy tool. For instance, people often understand each other in an inherent way that it’d be hard to quantify in data. But problems arise when leaders end up making decisions based on “gut feelings” that have unconsciously incorporated cognitive biases.
Sometimes cognitive biases cloud decision-making even when people have plentiful access to data. Employees may seek out data that corroborates their viewpoint rather than looking at all the data objectively — or they may misinterpret the result they’re seeing thanks to a predisposition they have.
Something that’s helping organizations iron out this kink is artificial intelligence-driven data analytics — technology capable of diving into data and extracting valuable insights that are free of preconceptions or errors in analysis. Stakeholders can then use these insights to impartially examine a situation based on the numbers rather than acting based on hunches or information lacking proper context.
Bottom-up management is the wave of the present and future, but particularly when stakeholders are armed with the data-driven insights they need to fuel great outcomes.