Study Affirms Data, Analytics Benefit Executive Decision Making

By Christine Kern, contributing writer

Highly data-driven companies are three times more likely to report significant improvement in making big decisions. Only one in three executives, however, say their organization is highly data-driven, according to PwC’s recently issued Global Data & Analytics Survey 2014: Big Decisions, entitled “Gut & gigabytes: Capitalising on the art & science in decision making,” created in collaboration with The Economist Intelligence Unit.

The survey found that executives make big decisions frequently and review them often. More than three-fourths of executives make a big decision each quarter and 43 percent review them every month. According to the survey, the five most important decisions facing executives in the next 12 months are, in order: growing the existing business, collaborating with competitors, shrinking the existing business, entering a new industry or starting a new business, and corporate financing.

While 94 percent of global executives say that their company’s management is prepared to make significant strategic decisions about their businesses, only one-third relied primarily on data and analytics to make their last major decision, while 58 percent of executives utilized intuition or experience and the advice and experience of others. 

Dan DiFilippo, PwC’s global & U.S. data and analytics leader, says, “A company’s success today is tied to how good it is at making big decisions. While executives say they continue to rely on experience, advice, or their own gut instinct, they also see investment in data and analytics as critical to success. Experience and intuition and the use of data and analytics are not mutually exclusive. The challenge for business is how best to marry the two. Executives know the right questions to ask. Now they need to know how to get the right answers from external and internal data they’ve used over the last two years.”  

The study found:

• More big decisions are made opportunistically than deliberately, and big decisions have big impact on future profitability; nearly one in three executives value those decisions at $1 billion+.
• Many executives are skeptical or frustrated by the practical application of data and analytics for big decisions, especially in emerging markets.
• Executives from highly data-driven companies reported that, looking ahead to the next two years, the top priority is to invest in the quality of data analysis to make better decisions.

Despite executives’ comfort in relying on gut instinct, nearly two-thirds (64 percent) said the use of data has changed how their company makes decisions and they expect it to have more impact in the future.  The top three changes executives plan in decision making include the number of people involved in making a decision, greater use of specialized and enhanced analytics and data analysis, and the use of dedicated data teams to inform strategic decisions.

The survey findings affirm the benefits of using data and analytics to make speedy and sophisticated big decisions for competitive advantage, including mapping decisions to shareholder value, linking the strategic alternatives to business impacts, applying a value and results lens, and adopting a structured test-and-learn approach.