19 Oct The Two Biggest Problems With Data
Donât get me wrong: I love data. But, I have issues with the way businesses treat data.
There are two main problems with data: one is the way itâs collected and the other is the way itâs used.
The problem with the way itâs collected is that more is treated as better.
Many companies treat data as if answers will suddenly come from it after they collect enough.
The issue is that even though self-confidence in judgment increases with the amount of information available, judgmental accuracy does not also increase.[1. Hillel J. Einhorn and Robin M. Hogarth, âConfidence in Judgment: Persistence of the Illusion of Validity,â Psychological Review, 1978.] This surety without accuracy often translates into additional research that is designed to provide support for a biased, flawed view, instead of exploring alternative avenues.
The problem with the way itâs used is that itâs not: the majority of data that gets collected is wasted; itâs not turned into actionable strategies.
Nowhere is this more evident than the way companies track brand metrics. In academic journals, the current consensus on brand metrics is that there isnât any series of objective measures that are relevant across all companies. Instead, the best method is to determine what metrics are important to a companyâs specific brand and track them against how that specific company measures successâfinancial and otherwise.
But, most companies use the same, generic tracking metricsâsome of which like Net Promoter Score (NPS) have been shown to be flawedâand since these metrics arenât tied to goals of the company, they donât get used and just get observed and acknowledged,
If youâre collecting data, it should be collected with the purpose of understanding. And, what youâre collecting should be attuned to what matters to your business.
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