Top business leaders constantly seek better business intelligence. They want more information, and more useful information, that will support more effective decisions, such as developing new products, marketing in new areas, improving internal efficiency, or facilitating greater innovation.
But does improved business intelligence always lead to better decision-making? Or is the nature of business intelligence much more subtle?
Defining “Better” Business Intelligence
It’s hard to argue against the basic premise that better business intelligence leads to better decision-making, similar to the notion that higher general intelligence leads to better decision-making. If a manager has an encyclopedic knowledge of every major car manufacturer, and every model currently on the market, he or she is probably going to make a better decision about the purchase of a new car than someone who has spotty vehicle knowledge.
However, a couple of problems may surface when we examine the dynamics of business intelligence and business decisions more closely. First, what constitutes “better” business intelligence precisely? And second, can all business decisions be treated the same?
When it comes to better business intelligence, many people picture the following, but there are problems associated with each:
- More data. If you have more numbers in front of you, you have more business intelligence, correct? Not necessarily. If the data is inaccurate, disorganized, or otherwise impractical, larger amounts of data can actually be more cumbersome than helpful. In addition, access to too many metrics can obfuscate the decision-making process; how do you know which metrics matter the most?
- Better organized data. You could make the argument that better-organized data leads to improved business intelligence, as the information narrows your focus and draws your attention to what’s crucial. But again, there are problems: Biases can change how data is organized and ultimately distort the big picture.
- Better reporting. What about better overall reporting? If expert analysts compensate for biases, organize the data, and present it effectively, does this lead to higher business intelligence? In some ways, it can. But here, “better” reporting may be somewhat subjective and difficult to define.
When it comes to management decisions, business intelligence is exceptionally good for improving your vision and options in some areas, but it can fall flat in others. For example, better knowledge of your target demographics, better insights into your competition, and effective predictions about future trends can help you set better prices, unilaterally.
But can more business intelligence really help you come up with more creative content? Or more innovative product ideas at the conceptual level?
Ultimately, we have to acknowledge some caveats to the idea that better business intelligence inexorably leads to better decisions:
- Data isn’t always accurate or useful. It’s possible to rely on data too heavily. If your data isn’t accurate or useful, it’s not going to support better decision-making. Inaccurate or misleading data will more likely guide you to an incorrect or problematic decision, while other data may seem meaningful without actually leading to an appropriate decision.
- More data isn’t necessarily better. Similarly, more data isn’t always better. You might be capable of tracking seemingly infinite points of data about how your users are engaging with your website; you can track every mouse movement, every click, and every meaningful choice a visitor makes. But how much of this data is meaningful, and how much might be little more than noise? If only 1 percent of your total data is meaningful, you’re going to have a hard time differentiating between the signal and the noise – and you could easily lose something in translation. It’s better to operate with more focus: quality over quantity.
- Objectivity leads to a decline in creativity. Next, there’s an element of truth to the idea that objectivity leads to a decline in creativity. Netflix may be able to use data to figure out the elements of a perfect new series, including who should be cast, how the plot should unfold, and over how many episodes. But simply following the dictates of the data isn’t inevitably going to render a better product.
- It’s possible to miss the forest for the trees. An exclusive focus on “business intelligence” can stifle your abstract and conceptual thinking, and ultimately encourage you to miss the forest for the trees. Business decision-making isn’t always perfectly objective and granular; sometimes it requires a more open mind and consideration of variables that aren’t easy to measure or readily visible.
- The world is constantly in flux. Though perceptions of shifts in public opinion can be distorted, there’s no denying the world is in flux. No matter how good your business intelligence is, it’s not going to be able to accurately predict what will happen in the next few weeks, let alone the next few years.
The Bottom Line
The bottom line is that improvements to your business intelligence may lead to better decision-making, but this isn’t a guarantee. There are problems with some of the conventional definitions of better business intelligence.
Even with more concrete systems in place, you’ll have no guarantee that more or objectively better data will always lead to a better business decision.