Data is increasingly becoming the touchstone for business strategy. The insights that can be generated by gathering data on customers and performance can shed light on many things, from the popularity of products to the wants and needs of a target audience. However, data is not infallible as a source of information and there are many situations in which it has been shown to have delivered the wrong insights. So, how do you know if your data is providing you with the right information?
The data doesn’t lie?
Hard data is viewed as the ultimate objective way to assess whether a business is performing well and what is required to take it to the next level. However, it’s worth remembering that, while the data itself might be sound, it’s often easy to come away from a set of statistics with the wrong insights. For example, according to research there is a direct correlation between people who eat a lot of cheese and the number of deaths from strangulation by bed sheets. People who eat a lot of cheese are also more likely to get their civil engineering degree.
And did you know that, statistically speaking, no one has won the US Masters between the years of 1980 and 2010 with every single button done up on their polo shirt? These “insights” are prime examples of the way that data can be used to draw false conclusions. All that’s happening with the cheese fans and those who have died by bed sheet strangulation, for example, is that the two statistics are increasing at a similar rate. And does anyone really believe that the number of buttons done up on a polo shirt determines the winner of a major sporting event? The data potentially supports both – if read in the wrong way.
Important and irrelevant relationships
In the era of fake news there is plenty of evidence to show how objective data can be used to draw inaccurate or false conclusions. In a business context there is a need to focus on the important relationships and to disregard the irrelevant ones. For example, is a rise in sales the result of increased marketing spend or because of more engagement on social media? Being able to establish the cause of an outcome will enable business strategy to be refined and better decisions taken in the future as a result. Data is essential to doing this successfully – as long as you know what you’re looking for.
Getting the right information from your data
Crucially, it’s important to bring all your data together in one place if you’re going to avoid a situation in which you draw the wrong conclusions. It’s key to see the bigger picture and to avoid looking at isolated pieces of data that enable misguided ideas to form. The right analytics will enable a full set of data to be accurately analysed to produce a picture of pattern and performance that is true. And the end result will be data that provides reliable insight into how you can refine strategy and drive growth.
Data is crucial to business today but the way it is managed is key to how accurate the information it provides really is.