Decades ago, most people believed that a good manager only needed two things: experience and intuition.

But this belief has changed drastically over time and, nowadays, especially in business, the “follow-your-gut approach” seems to have taken a back seat.

Today, managers need more than experience and intuition; they need to understand the relationship between the data they collect and industry statistics;this is what decreases the chances of making wrong decisions.

What is data-driven decision making?

Data-driven decision making (DDDM) is the process of making decisions by taking a data-based approach. This gives statistics top priority over experience, intuition and any other factors.

The biggest companies around the world have all started to use this approach as it maximises their chances of success.

What are the pros and cons of data-based decision making?

Making decisions based on data is currently an approach used by many companies due to all the benefits it provides:

• By analysing data, you can see which decisions are smarter, which helps you avoid being influenced by any prejudices and unreliable gut feelings.
• You are more likely to make good decisions. This is why Starbucks uses this approach when searching for good locations to open new shops.
• When you have numbers and facts on your side, it becomes much easier to gain the support of any skeptical board members.
• This strategy is believed to increase transparency: the decision-making process becomes understandable to all team members resulting in better teamwork.

However, some drawbacks of DDDM should also be mentioned in order to give you a full view into this approach:

• Intuition is not always a “third wheel” in the decision-making process. Tim Cook believes managers should still listen to their intuition alongside the data.
• Since data is the main factor behind the decisions being made, the decision makers themselves may start to bear less responsibility.
• To use the DDDM approach, you should have a designated team to work on analyzing the data or find a company that can support your organisation with data analysis.

What are the main barriers of using data to make decisions - and how can you break past them?

The necessity of leveraging data and becoming a data-driven company is obvious; however, implementing a data-based approach may be challenging.

This is due to more than just technological issues. The Harvard Business Review’s survey shows that the biggest barrier facing many companies is their organisational culture.

Hesitation towards trying any new approach is nothing new for most companies. That’s why it’s a good idea to try to prepare your employees for these changes beforehand.

Start by using data in the most critical areas where this approach is urgently needed. This can help everyone become accustomed to the new process.

Talk to your team about these changes. Ask them what challenges and threats they see in adapting the DDDM approach.

And do not forget about preparing yourself. Remember that you cannot rush a change like this. You should be patient and ready to deal with and learn from any mistakes that are made along the way. Implementing the data-driven decision making process is a lot more like a marathon than a sprint.

Gathering and analysing data is a complex process that requires time and skill. It is not a good idea to delegate this to anyone who doesn’t feel capable enough. In this case, you should find a company that specialises in analyzing data to help you gain useful insights and save valuable time for key people in the company.