Digital Transformation

Why data set amalgamation is key to superior decision making

Confirmation bias affects output

Fake news, the term used to describe both misinformation presented in a way that makes it appear officious or to dismiss facts that do not fit a narrative a figure or organisation is trying to promote, has gained substantial traction in recent years – and with good reason.

Digital environments are rife with unregulated platforms able to present even the most erroneous of claims as accurate. Additionally, complex situations are, by virtue of their contentiousness, capable of provoking emotive responses – disbelief that authority figures can leverage to dismiss reports offhand and with little effort.

All of this is capable because of a phenomenon known as confirmation bias: the tendency people have to interpret evidence in ways that supports their existing beliefs and theories. People who are passionate about the environment are likely to continue to believe that climate change is entirely attributable to human behaviour even if compelling evidence that suggested otherwise was presented to them, for example. Alternatively, those who fervently support various figures or causes are unlikely to believe anything that casts them in a negative light.

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Author:

Laura Steele
Laura Steele Chief Financial Officer

Whilst a business’s stakeholders are likely to pride themselves on their objective decisions – their ability to remain free from bias whilst analysing metrics, case studies etc. – there is a wealth of evidence that suggests all of our decisions are driven by more than mere logic irrespective of context.

A study, conducted by the American Finance Association in 20031, for example, found that something as seemingly inconsequential as the weather someone experienced at the start of a day could affect their outlook and decision-making. Having reviewed figures collected from 26 city’s leading stock exchanges from 1982 to 1997, researchers noted a clear correlation between what would typically be viewed as favourable conditions (i.e. sunny weather) and higher stock market prices. The inference: that sunshine created upbeat moods that brought about more positive outlooks and increased valuations.

In 2007, physician and staff writer for the New Yorker Jerome Groopman2, discussed his observations concerning doctors and how their perceptions regularly inform diagnoses. Interestingly, he observed that for all of the training a physician receives, for all of the promotion afforded to objective and scientific thinking that they’re issued, perceptions of doctors as wholly rational – as dispassionate actors reliant entirely on fact – is wholly misguided. Even within a profession where objectivity and logic are so strongly enshrined, assumption still regularly informs decisions.

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For businesses and their decision-makers, avoiding subjectivity in its entirety is simply not possible. Psychologists have long since concluded that we, as a species, are not wired to think objectively. We are, however, capable of making concerted efforts that can largely overcome our in-built desire to support initial assumptions.
 
Key to this is the accumulation, refinement of and coherent presentation of evidence. Much like the way a jury is presented with facts and then analyse them before arriving at a conclusion, the more information that is available to nourish the human mind, the more likely the emergence of informed, objective and beneficial decisions become. 
 
The modern era, with its vast array of connected devices, records of user behaviour and more generates significant amounts of data that can inform decisions. A survey undertaken by Domo Inc has revealed that 25 billion gigabytes of data is created every day.3 A significant portion of this can be used to glean valuable insight and generate various metrics that will afford decision-makers greater understanding of emerging trends, their organisation’s performance and, vitally, means of improving it.
 

With such enormous quantities of data to sift through, however, simply moving from one platform to another can generate highly inefficient practices. Identifying and combining various data sets in order to create meaningful metrics is an equally problematic and time-consuming task. With making the right decisions so often being key to success and supposition being in no way conducive to this, however, you may be left assuming you have little choice but to bite the bullet and accept these laborious tasks will need to be fulfilled manually. Fortunately, this is not the case.

Firstly, the data that any organisation needs to analyse will be present across a variety of platforms that can, via APIs, be amalgamated into a single source. This will facilitate more expeditious analysis and the identification of data points that can be combined to create aforementioned metrics. These can then be fed into customised applications to provide vital information in real-time.

By drilling down into the valuable data that is continuously being created, organisations can – whilst not freeing themselves from subjectivity entirely – harness the most information possible and give themselves the best possible chance of basing their decisions on fact rather than supposition.

ROCK can assist with the creation of dashboards amalgamating several data sets, the identification of sets that can glean important metrics, real-time reporting solutions and more. Click here to find out more about our Big Data and Analytics offerings.

References:
  1. Hirshleifer, D. & Shumway, T. (2003).  Good Day Sunshine: Stock Returns and the Weather, Journal of Finance, 58(3), pp. 1009-1032  
  2. Groopman, J. (2007). How doctors think, The New Yorker. Available at: https://www.newyorker.com/magazine/2007/01/29/whats-the-trouble
  3. Domo Inc (2017) Domo Releases Annual “Data Never Sleeps” Infographic. Available at: https://www.domo.com/news/press/domo-releases-annual-data-never-sleeps-infographic

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