Beware of too influential analysis departments

Knowledge is power and data is a foundation of knowledge. The people closest to the data, and with the best understanding of handling the data, can therefore get a disproportionate influence over decisions.

Any conclusion an analyst draws from data is an input to the decision making process in the company. Conclusions can sometimes, for very good reasons, also have the character of recommendations.

Experienced decision makers with long experience in their industry, and in their particular line of work, can usually determine the relevance and the shortcomings in the analysis and recommendations made. Inexperienced or insecure managers can not.

For the inexperienced decision maker, the recommendations can be seen as truths, or as something they can act upon with their backs covered.

Too influential analysts and analysis departments can occur in the following circumstances:

- The company has a very competent analysis department. For good reasons they are highly trusted within the company. Over time their recommendations have started to be considered facts. Less and less effort is being put into actually questioning the recommendations made.

- The company is starved for data that gives some concrete directions of where to go, what´s successful and what´s not, etc, and suddenly they get it. It can easily be an overreaction to this new input. Further down the road some actions based on this new information will prove to have been contra productive. This in turn can lead to a backlash for the use of data and analytics in the company and thus a real set back in becoming a more data driven organization.

In both cases the risk increases with more inexperienced decisions makers, especially if they lack a general healthy critical approach to data driven decision support.

A real danger to the business occurs if suggestions made by the analysis department is implemented without questioning in combination with a lack of follow up on actions taken. In practice this means that analysts replace even C-level executives as the true decision makers in the company, as these executives will lack necessary indicators when things go bad.

There is an increasing risk for disproportionate influence from analysts as the volume, velocity and variety of data increases. The 3 V´s are the prevailing definition of “Big Data”, and Big Data calls for more skilled analysts. Analysts with expertise that might be foreign to most people in the organization, and therefore making more and more managers unable to question what the data is actually “saying”. Even the more experienced ones.

Data can always be interpreted in different ways, and there are always other factors involved and affected by your actions that you miss out on in your analysis. Analysts have a great responsibility in recognizing this, and certainly the head of analysis (preferably a CAO) has. As CEO you should make sure to keep your analysis department as an important, influential part in the decision making process, providing input to the real decision makers. But don´t let them become the (informal) decision makers.

Andreas Franson, andreas[@], +46 733 56 41 51

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