September 24, 2018
Executives understand the importance of big data but have little idea what to do with it
When board members in big firms make critical decisions about their organisations, it is almost always behind closed doors. So exactly how and if senior leaders draw on big data factors in their decision-making is largely unexplained. Researchers from Brunel University studied top-level decisions by board managers at 19 organisations in manufacturing, finance, consultancy, IT and air travel. The study, published in the Journal of Business Research looked at how board managers think and act and the mental models and skills they use to weigh up big data. Directors, it suggests, recognise big data’s potential to improve their decision-making. But many admit feeling ill-equipped to do this, whether through their own technical skills or the new type of non-linear thinking needed.
“Our study identified a shortfall in capabilities for dealing with the challenges of big data,” said Dr Ana Canhoto at Brunel Business School. “There is a gap in the knowledge and understanding organisations need, in order to avoid the cognitive biases and overloads big data can bring.”
The directors often found themselves reverting to old ways of thinking about their organisations or about how to use the information. This is hampered by sub-workers’ habit of only providing directors with simplified, ‘top level’ round-ups. Keeping pace with the constant flow of new information is another challenge directors face when trying to make sense of big data. While they need to rethink how they do business, they can’t ‘hit pause’ while they adjust their ways of working. That creates a delicate balance between modifying their processes and continuing to use them in order to keep functioning.
Besides the overwhelming volume of big data, most boards in the study struggle with its speed, lacking the ability to respond quickly. Some board managers said it was hard to decide when to stop consulting the data being generated and make a final decision. Board-level decision-making in the big data age still calls for intelligence, vision and being able to identify and interpret relevant signals. But board members also need to understand what is going on in the market and the changes to their business.
“Being typically middle to older aged, many board members are ill equipped to do that, given their background, training and technical skills,” said Dr Canhoto. “So many are set up sub-boards and rely on third parties to handle big data.”