Data-driven decision making: HIPPO behaviour or well-founded decisions?

Inclusion of junior managers increases the chances of innovation projects reaching success compared to when senior managers are engaged, according to a study of Rotterdam School of Management (RSM). Experienced managers with a track record of success enjoy the trust of the organization, and are widely regarded as the go-to people for quality ideas. This leads to the HIPPO (Highest Paid Person’s Opinion) effect, which signifies the ignorance of facts; HIPPO’s present opinions as facts, but do so without staying objective, which can lead to faulty decision making with negative consequences in terms of cost, time loss, and loss of team trust. However, the issue can be circumvented utilizing data-driven decision-making.

What is required for a data-driven decision-making culture?

Data eliminates emotion from the decision-making process. The classic 2011 film Moneyball shows that, in an emotion-driven sport – like baseball in the USA – smart choices, and high scores can be achieved by solely looking at data. Nevertheless, soccer clubs in the Netherlands have only recently initiated data collection and data-driven decision making. Perhaps, because this sport is – to an exceptionally high degree – driven by emotion and HIPPO-behavior.

Besides patience and persistence, a report structure based on relevant and quality data is paramount in creating a supported data-driven decision-making culture. A sound justification of the data structure, quality of the data, and sources of algorithms should be available to parry skeptics.

Holistic view of data

At Anderson MacGyver, we see that many of our clients struggle with this challenge. Even if everyone agrees that decisions ought to be taken based on data, it remains difficult to get to, or retain a high quality of data-driven insights. We enjoy aiding our clients in achieving a data-driven decision-making culture by developing a data vision, data strategy, and from there, data-based products or services. We also see that organizations that – with an ostensibly paralyzing perfection – primarily focus on the completeness and correctness of the fundamentals but lose track of the business focus. A balanced analysis and setting the right priorities are the crucial success factors. Only through a holistic view on data, can you ensure that the value of it can be (temporarily) disclosed and the deployed methods maximally contribute to business value.

Maximally equipping HIPPO’s

Are you questioning whether you are extracting the maximum potential from your data? Or how you could transition your decision-making towards a more data-driven process? Do you recognize the HIPPO’s of your organization, and do you wonder how to better inform them? Have a look at our ‘Data to Value’ approach, or visit us during the Big Data Expo on the 14^th and 15^th September 2022 at the Jaarbeurs in Utrecht.