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Lesson

Managing your information budget

Wanting more data on something can sometimes become an excuse to avoid making any decisions at all.

The demand for data at your organization will always exceed your ability to produce it, so you’ll need to set up an information budget. The choices people make at your organization should be backed by data, but the key is knowing when you’ve gathered enough to move forward.

Most companies aren’t in the business of collecting information, they ship products and make deals. A healthy BI strategy takes advantage of the fact that you have limited time and resources, encouraging people to collect only the data they really need to get things done.

Make efficient decision-making part of your data culture

In the face of a particularly daunting or business-altering decision, it may be tempting to want to do more research or gather additional data before moving forward.

Even if it makes you sound measured and thoughtful, “we need to get more data” is almost always a lazy answer; eventually, you’ll need to stake some claim about a new feature, ad campaign, or pricing model. Since you’re already weighing this choice based on some baseline amount of information — whether that’s customer feedback, industry trends, or input from colleagues — it’s helpful to ask yourself if and how additional data will actually affect the direction you take (as well as specifically what data you’d need). That additional collection step can be a huge time-waster; if the end result just supports what you were leaning toward anyway — what was the point?

A decision-making process that’s both efficient and backed by information is something that you can work into your organization’s data culture. Maybe you build in a threshold that dictates what kind of decisions require additional data, based on a metric like scope or cost. For example, an extended research phase may acceptable for a product launch, but a new feature can be introduced without one. This aspect of your data strategy is less about specific tools or their implementation, and more about building an organizational culture that encourages forward motion.

An opinionated guide to data-driven decision making

Here are some questions to ask as your organization develops its information budget and you learn how and when to move forward with data-driven decisions. Check out our guide to avoiding common analytics mistakes for more on the subject.

Before making a decision, ask:

  • What information do we already have?
  • What are we trying to accomplish?
  • Have we made a decision already?
  • What additional information do we need and when do we need it?
  • How much will it cost to get this information?
  • How much more accurate will the decision become with this additional data?
  • What has worked for us in the past? What hasn’t?
  • What time constraints are we facing?

While making a decision, ask:

  • Do we need to make this decision?
  • What is the cost of not making this decision?
  • What is the cost of making this decision incorrectly?
  • Do we have all the information we need to make a good decision?
  • If not, can we get additional data in time?
  • What will it look like if we are right or wrong?
  • When and how should we evaluate whether this was the correct call?

After making a decision, ask:

  • Were we right?
  • Are you sure we were wrong? It seemed like a really good idea…
  • Okay, so we weren’t completely right. What did we get wrong?
  • What should we have asked before we made this decision?
  • Was there anything about the process that went poorly that we can address?

This checklist will change as you figure out what your organization does well and what you need to stay on top of at each of these stages.

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