New Zealand’s Massey University recently conducted a study that aims to examine the impact of data analytics on managerial decision-making.
According to a recent press release, the University’s School of Management surveyed 116 managers from predominantly large and medium-sized New Zealand businesses.
Findings of the study
They discovered that many top executives are failing to capitalise on the benefits of big data. Instead, they prefer to rely on their intuition.
While there is growing awareness of big data, most managers are cautious about using analytics for making decisions due to concerns about data reliability
According to Dr Taskin, one of the researchers, nearly two-thirds of the managers they interviewed said that they had no confidence or trust in big data.
The managers prefer to rely instead on their intuition and experience when making decisions.
In addition, 25% of the participants have confessed that they had only a modest knowledge of what big data is, or what it can do.
Moreover, the study had learned that the responders who favoured analytics over intuition were more often mid-level managers, who were not in a position to use big data insights for strategic company decisions.
Their research revealed that top executives are generally not as competent as they could be in using analytic tools and techniques.
It seems that top executives rely on managers within the organisation to generate the big data insights.
After which, the insights would serve as a confirmation of their own intuition. If the insights conflict with their gut feeling, then the insights end up being ignored.
Big Data’s role in decision-making
The researcher clarified that this is not to say using intuition is wrong. Data analytics should complement, not replace, intuition.
However, in order to make wise decisions, top level executives need to be able to judge the relevance, value and ethical implications of big data insights.
There seems to be conflicting notions of the value of big data between top-level and mid-level managers, according to the study.
On one hand, mid-level managers tended to seek insights to improve business processes, while top-level executives, on the other hand, sought insights to improve the company’s bottom line.
Developing the technical understanding of analytics within the top tiers of management will guarantee that organisations receive the most value from the data they collect.
Simply collecting data without the skills to analyse it is costly, and analysis without direction can be deadly.
On a positive note, it is clear that once a manager experiences good outcomes with big data, it builds confidence in applying analytics tools more regularly.
Further research is being undertaken by the researcher in order to better understand the impact of intuition and data analytics on decision-making among senior managers.
Hopefully, further investigation will allow them to identify the factors inhibiting the effective use of big data and how these might be remedied.