Does data-driven decision-making work?


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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.


Republished with author's permission from original post.

Mark Price
Mark Price is the managing partner and founder of LiftPoint Consulting (, 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. Mark is also a RetailWire Brain Trust Panelist, a blogger at and a monthly contributor to the blog of the Minnesota Chapter of the American Marketing Association.


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