Gut Check vs. Fact Based Decision Making

Every two days now we create as much information as we did from the dawn of civilization up until 2003.

– Eric Schmidt, Google CEO, 2010

Information is being generated everyday online, within organizations, by customers and by suppliers. Some firms are building a competitive advantage in big data analytics and a company culture that relies on fact-based decision making with insightful multi-contextual reporting to drive business strategy and decisions. With the decline in the US economy since 2008 and unpredictable changes in demand, many companies are focusing on using fact-based decision making to improve their bottom line. According to the CEB study, “most employees are now knowledge workers, spending an average of 36% of their time collecting and analyzing information.” (CEB, 2011)

In extreme cases, leadership that may have relied on gut checks to make decisions are being replaced by information scientists that run potential scenarios through a series of algorithms to determine the right course of action. According to Andrew McAfee of MIT, data scientists are better at data prediction than industry experts. In data science competitions, rarely do the winners on predictions come from the industry. (McAfee, 2012)

Some believe that good data does not guarantee good decision making. MIT wrote a fantastic article on how firms are wrongly using facts to create evidence for bad decisions. They noted that evidence-based decisions are appropriate when the input and output of a process are consistent, such as location planning or supply-chain management. However, not all decisions fall elegantly into an algorithm. For these reasons using fact-based evidence for decisions requires due diligence from leadership. “Executives often provide analysts with subtle signals regarding the desired outcome of a formal, evidence based analysis. Senior decision makers are often unaware that evidence has been shaped by subordinates to conform to the perceptions of management.” (Tingling, P. 2010)

There are steps a leader can take to build fact-based decision making into the right processes within an organization. 

• Take time to understand and define how fact-based decisions are made in the organization. 

• Identify who relies on specific facts for decisions, and how those facts are retrieved and validated.  

• Coach your management team on techniques to avoid signaling anticipated results to analysts. 

These steps will help build a healthy use of fact-based decision making into the firm’s culture.

Sources:

Corporate Executive Board (2011) Overcoming the Insight Deficit: Big Judgement in an Era of Big Data

LaValle, S. (Dec 21, 2010) Big Data, Analytics and the Path From Insights to Value 

Tingling, P. (June 26, 2010) Is Decision-Based Evidence Making Necessarily Bad?

Live Webinar viewed on May 3, 2012: http://video.webcasts.com/events/pmny001/viewer/index.jsp?eventid=42430

This write up was originally created in Leadership in Organizations at Johns Hopkins University and republished on my MBA ah-ha moments blog.

Leadership Action Canvas

This is the Leadership Action Canvas! 

The Leadership Action Canvas was created during an amazing two minute brainstorm between Ali Ahmed and I one evening in our Leadership course at Johns Hopkins University.  Our task was to create a ten minute presentation describing how we would utilize the discussions and activities presented through our class. Ali and I wanted to create something that could be repeated, so we could measure our success and improvements over time.

You may be thinking that this template looks a lot like the business model canvas. This is not a coincidence. I love the quick repeatable one pager approach and believe that templates like this should be used more frequently.

Here are some thoughts on using the canvas.

Vision
What is your vision and how are you unique? Can you answer these questions with ease and would your peers and direct reports believe in your statement? This section can be used to evaluate how you see yourself now, who you want to be in the future, and the steps to bridge that gap. 

Communication
How do you tell your story? What is your communication style and is it effective? Communication is an area where everyone can improve. Is your team able to act on your emails or verbal queues? Are you able to be persuasive with your direct reports and management team? What can you do to become a better communicator?

Teamwork
How do you communicate during conflict? Where do you get stuck? Do you get quiet? loud? angry? Understanding and addressing our communication styles during stressful times will help us become better leaders. This section can also be used to strengthen how we interact and support our teams.

Skills & Competencies
What do you know? What can you develop? This little box is too small to identify everything you think you know and need to develop. The idea is to identify key areas where you lack knowledge that are causing setbacks in either your ability to lead and/or excel in your life. 

Decision Making
Is your decision making style gut based or information based? How do you collect information to make your decisions? How do you deal with people that question your decisions? Are you easily persuaded to change your mind? Do you examine all points of view and consider impacts before you communicate decisions?

Creativity
Do you have new ideas to share? Are you able to create new ways to view complex topics? Can you take an object and think of ten million things to use it for? Do you think outside the box? While many of us exercise physically, we also need to regularly flex our creative muscles!

Innovation
Are you good at identifying needs and new approaches to solve the need? How good are you at idea generation, evaluation and implementation? Have you cultivated a learning system as a leader when a venture or initiative flops? Do you set aside time to ideate with your team? 

Work-Life Relationship
We purposely did not chose the word "balance" in this statement. Do you understand the trade-offs you are making in your work-life relationship? Are you being challenged? Are you consciously choosing how much time you spend on work vs. your home life and hobbies? Do you feel in control of this choice? What can you do to create the relationship between work and life to be the type of leader you admire?

Humanity in Mind
How are you giving back? Have you found opportunities to mentor others? We can donate money to causes, but those of us in leadership positions have an opportunity to give back in the form of time to help others craft their impact on the world we live in. During the leadership course at Johns Hopkins, classmates interviewed over 40 leaders throughout the country, and one common theme that surprised us was the focus on giving back. If you have a skill to share or a cause that makes your heart beat faster, make time for it!

If we all take the time once or twice a year to complete the Leadership Action Canvas, it can be a powerful tool to evaluate our leadership goals and growth! 

Comment with your email address if you would like a pdf copy!

Start-up Lessons from Married Life

Today I realized that falling in-love with a person or a business venture is easy; staying in love is hard work! This is illustrated in the charts below. 

My Entrepreneurial Ventures lecture at Johns Hopkins University began with a chart showing small business failure rates. Hands shot up around the room to eagerly describe the data - the competition for the most profound takeaway was building.  I am in my mid-thirties and have been married for thirteen years. I knew exactly what this chart looks like - it mirrors marriage failure rates!

Source: http://smallbiztrends.com/

Source: http://dalrock.wordpress.com/2012/04/28/are-young-marriages-doomed-to-divorce/

This made me wonder - can we apply marriage advice to the start-up world?

You can't change people. Pick partners for your start-up that are in it for the long haul and that you can tolerate. Whatever small annoyances you have in the beginning will be amplified over time. Do a values check to ensure that you and your partners have the same agreement about what is important in life.

Don't argue about money because when the argument is over, you are still broke. When you get married, you want to nest in the most beautiful plush house you can afford. Similarly, in start-ups, you want the hip office to meet and greet your customers and the talented employees to help you grow your venture. Spending beyond your means in both marriage and start-ups will cause fights. Who is going to pay the bills when there is not enough money coming in? The lesson for both worlds is the same: early in your relationship, keep your fixed costs low. 

Decide if it is really important to do things your way - because it may just mean that you end up doing the task forever. There are only so many hours in a day, and if your precious time is spent doing something because it had to be done your way, you may be spending your time on the wrong stuff. Choose your battles and decide if having  your vision carried out in every facet of the business is truly important to reach your long term objectives.

Ask for what you want - nicely and timely. In my marriage, the hardest thing is to admit that I need help. I am an independent spirit - I want to do it all myself. But sometimes, my plate is too full, and I have to ask for help. Asking for what we want in both the workplace and at home takes courage and trust. Don't wait until there is a catastrophe to ask for help - communicate your needs nicely. These traits go a long way in both marriage and start-ups.

You get what you give. When you give better, you get better. You have to remember why you are in the business. Recount those first days or weeks when the idea for your business came to be, and bring that passion to your work every day. In marriage and work, when I feel unappreciated  I ask what I have done. Oftentimes, I am the one that is tuned out, disconnected or not doing enough of my part. Take your business partners out to lunch or ask what you can do to make their lives easier. It is not all about "What's in it for me?"

Know your Partner's buttons and choose not to push them. Mutual respect is so important in all areas of our lives. When you work closely with someone, you learn all their strengths and weaknesses. That does not give you the right to manipulate them to get what you want.

Make sure you set aside time to just talk. Date nights are such an important part of my married life. If all we do is make dinner, fold laundry and taxi kids to soccer, we never have any real together time. All our memories of our time together become task oriented. It is our duty to make memories together. In business, if you spend every day together working towards a specific goal, make time to really connect. The work must be balanced with rewards - the more you play together, the less work will feel like work.

Laugh. If you are not having a good time, and the people you surround yourself with cannot bring a smile to your face, you might want to reevaluate your current surroundings. Smile more. Have fun. My marriage is strong because we are able to laugh together. Sure - we can be serious when we have to, but laughter is the best medicine. Follow Ralph Waldo Emerson's advice, "Laugh often and much."

My hunch is that businesses fail for the same reasons that marriages fail. You need to keep a shared vision of what the future looks like, so all your hard work is for a common goal. You need to have fun along the way. And when the relationship is new, you need to keep your fixed costs low. 

Sources: 
The list of marriage ideas were inspired by the following lists:

• http://www.happywivesclub.com/top-10-marriage-advice-that-really-works/
• http://www.drphil.com/articles/article/53
• http://www.webmd.com/sex-relationships/features/5-secrets-to-living-happily-ever-after?page=2