Our topic for this month’s newsletter and blogs is “Data analysis has become vital for all executives.” Being able to separate the truth from the rumor and speculation currently running rampant is vital for continuing success in business—not to mention continuing success in life.
A vital part of data analysis is the elimination of bias and rumor from the data itself and from a person’s own thinking.
Supporting One’s Own Opinion
It often happens that a person will only seek out the data that supports what they’ve already decided—their formed opinions. For example, some media networks exclusively support the political Right or Left. People of either group listen to these because they agree with the opinions they already have.
Despite such people endlessly pointing at their sources as providers of facts and claims of deep analysis by the groups themselves, this isn’t data analysis. Data analysis must be conducted without bias.
Seeking out and acting upon only information that agrees with one’s opinions can significantly harm your business. When top company executives and leaders operate in this fashion, they can lead their organizations to ruin and worse.
Decisions Based on Wrong Information
An example in recent history of a company acting on disastrous assumptions was the global financial services firm Lehman Brothers. Beginning in 1997, the firm invested in subprime mortgages—home loans given to under-qualified borrowers. Lehman continued to invest heavily in this high-risk market, eventually leading to their bankruptcy, the largest in U.S. history, at the peak of the 2007-2008 financial crisis in 2008. The crisis itself was caused by these types of loans and a lack of safeguarding regulations. At the bottom of it, people in authority were deciding that investments in these types of loans were worthwhile when they clearly weren’t. Many others were listening and similarly invested heavily in this high-risk market.
Another example earlier was that of Digital Equipment Corporation, at one time a leader in corporate computing technology. The company steadfastly refused to change with advancing technology and, in the end, disappeared.
Both of these are stellar examples of acting on bias and rumor and the resulting destruction caused by doing so. If financial leaders in 2007 had firmly put aside their biases and truly examined these high-risk investments, the most explosive economic recession in history could have been prevented. If Digital Equipment Corporation had put aside its leaders’ opinions and assumptions and realized they had to change as technology changed—and lead the way in doing so—the technology landscape would look very different today.
In Uncertain Times
Having just emerged from the very murky two-year period of the pandemic, and now in a turbulent economic environment, opinions, bias and rumor are incredibly prevalent. Company leaders must be very careful to put aside obvious bias and rumor from any source, including their own.
This is also true of anyone within a company, for rumors can spread rapidly through company staff. Leaders should strongly advise all employees to only operate on information they can verify as true and not to allow bias (including their own) and rumor to interfere.
Only through eliminating bias and rumor can organizations survive these times and move on to progressively higher levels of success.
For more information, sign up at SELLability.com.
Recent Comments