Wednesday, May 2, 2012

Be careful of data you rely on

As a graduate student in the Northwestern IMC program, which puts much emphasis on data analysis, I suggest be careful of data you use, analyze and sit on. Most industries use data-driven strategy to dig consumer needs, innovate, compete and capture value from information, according to 2011 McKinsey&Co. Report. Data is now everywhere. Industries from startups to established companies are looking for latest software to collect, store and analyze customer data. But the problem is, do hard numbers from data reliable enough to drive a decision? Data analysts strongly believe data talks. Qualitative researchers put emphasis on emotion and rationales behind consumers’ behaviors. These two focuses seem paradox, but they do complement each other if used properly. I would suggest be mindful of data you depend on.

Data can be helpful in a decision making and can be a disaster as well. In a digital era where most analysts advocate the importance of data, here comes a blind spot. In U.K., firms wasted million dollars because of inaccurate data, which had negative impacts on a business. Using data without understanding consumer sentiment is dangerous. According to Harvard Business Review, “[enterprises] will not yield to data alone. [Therefore] the deeper, the broader, the more pervasive your data-driven culture, the better your chances”, Thomas C. Redman and David Walker said.

In order to avoid being trapped by data, here are three things you should do.
  • First, seek qualitative research-if you find anything unusual in your hard numbers, make sure you look into economic conditions or industry dynamics. Important information will be revealed in your qualitative search to justify, or sometimes refute your findings from data.
  • Second, data is not an answer-correct judgment is as crucial as the output of data. The author of the article “Good Data Won't Guarantee Good Decisions” on HBR mentioned “[i]nformed skeptics effectively balance judgment and analysis. They’re the kind of data-savvy workers every company should try to cultivate”.
  • Third, look at the whole picture-remember to also analyze the situations in competitors, sales force, business partners and other parties involved in the business when you try to generate a conclusion based on data.
In a nutshell, make sure you look into qualitative research, not rely solely on hard number, and always look the whole picture. In this way, a business could really benefit from the use of data and these recommendations can help you make a sound business decision.

About the author
Patty Leu is a graduate student in the Northwestern Medill Integrated Marketing Communication program and is concentrating on data analytics and direct marketing. Patty will be graduating in January 2012. She can be reached on twitter using the handle @pattyleu

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