Since, earlier it was considered that it is the lack of data which resulted in poor decisions, it is now expected that more and more data would result in better and better decision making.
The cost of data acquisition and first level information processing has gone down drastically over the last few years. There are many fragmented IT initiatives across various functions in the organization resulting in information 'silos'. The combined effect is information overload. Most of us, individuals and organizations are actually drowning in data.
Several factors complicate data management. These include data scarcity, profusion, quality, relevance, limitations, accessibility, transparency and consistency. Experts estimate that 10-30% data flowing through corporate systems is bad i.e. inaccurate, inconsistent, incorrectly formatted, entered into wrong field out of value range.
To compound the fact that there is information overload and not all the data and information is accurate, is the way our mind deals with the available information to arrive at decisions and choices.
Paul Schoemaker, author of Profit from Uncertainty, describes what he calls "cognitive myopia" in terms of how we, as humans, deal with risk and uncertainty as characterized by the tendency to:
- Anchor on readily available information
- Let recent events that are vivid in our memory unduly influence our judgment
- Overweigh information that supports our point of view
- Fail to recognize implicit assumptions
- Suffer from high sensitivity to the way facts are framed and presented
- Underestimate rare events and their risks (being ill-prepared for their potential occurrence)
- Overestimate dramatic events and overpay to mitigate their risks
- Have extreme aversion toward risk
- Suffer from context effects when choosing among risk options
- Have excessive confidence in our ability to predict the future and fail to consider alternatives sufficiently
- Exhibit an undue dislike for ambiguity
To deal with information overload and create value one needs to convert a huge amount of data into useful information that can be acted upon.
What we can realize from above that exclusive dependence on Intelligence for our decision making would result in lot of erroneous choices which can be thought of as the root cause of many a crisis that we see around us.
Is there an antidote to the above affliction?
In the last post we discussed about the difference between 'Intelligence and Intellect'. Intelligence is the mechanism by which our MIND gains / gathers information and knowledge from external sources. Intellect is the faculty that helps us make sense of things around us by helping to establish effect-cause-effect relationship of our observations around us.
The three habits of effective thinker as described in Goldratt's latest book 'The Choice' could be the starting point to build our defenses against the above root cause of many of the problems that we see around us.