I overheard a conversation between two young women the other day. One of them had asked the other, “Wow, he finally asked you. Did you say yes?” To which the other replied, “I told him that I needed more data.”
No. That conversation never happened. But imagine the look on the guy’s face if she had given him that reply.
One of the challenges we now face is that data is everywhere and we are often paralyzed by it. We even have a name for it – it’s called “big data.” Being the resourceful creatures that we are we assume because it is available, we should use it.
Beth and I have two high school seniors that are going through the process of deciding which colleges will win the lottery known as Mommy and Daddy’s savings account. The options available are amazing. What makes it even more complex is that like nearly all high school seniors they have no idea what they want to do when they grow up.
How can you possibly know what you want to be for the rest of your life when you are 17 and 18? More data, of course. Send them to the counselors – more data. Introduce them to friends in different professions – more data. Show them the unemployment rate for various jobs – more data. Give them the latest survey from Big Data Inc on happiness in various careers – more data.
They don’t need more data – they need to stop listening to everyone except me and trust their instincts. This becomes obvious when I ask the question “If I could have access to all of the data in the world, what one piece of information would help them decide?”
In his book How We Decide, Jonah Lehrer recalls a study at MIT in the 1980’s. Professor Paul Andreassen conducted a simple experiment to determine the value of data by dividing his class into 2 groups. Each group was given an equal bucket of money to buy and trade stocks. The first group was only allowed to see daily changes in the price of their stocks. The second group was given access to all of the information they wanted – daily feeds from CNBC, the Wall Street Journal, and even direct access to industry experts.
Without any more data you already know the outcome, right? The group with less data outperformed the other well armed group by 2:1. More information was detrimental because it created confusion. By the way, how did you know the result of the test before I gave you the answer?
Data can give us confidence that we really shouldn’t have. We often misuse the data or combine it with rumors or gossip or we allow our cognitive biases to take over.
Imagine you are at a roulette wheel for the first time and you are asked to place a bet. You know nothing about the game other than it looks like a marble spinning around a bunch of black and red numbers. You can pretty much guess the odds just by looking at the wheel. You have a $1000 in your pocket. How much would you bet?
Now imagine you go to Vegas and you see a bunch of people winning at the wheel. When they finish you ask each of them their strategy. Now it’s your turn. What’s your first bet? If you are like most, your bet will significantly increase. Experts are existential data.
This happens in reverse in the corporate world. You can always tell how poorly a company is doing based on how many metrics are on their executive dashboards. It is a part of executive genetics to demand more data when things start to go wrong. I call this the Surely It Wasn’t Because We Made Bad Decisions With The Information We Had – We Must Not Have Had Enough Information Fallacy. Yes, there needs to be a better name.
Data makes us comfortable because it takes us out of the equation. It’s almost a scapegoat. How could you possibly blame yourself if all of the data points to a single answer? It is very hard to defend a wrong decision based on instincts and a little data. Must have needed more data.
As we seek more data we make ourselves more irrelevant. Our cognitive biases (and there are a lot of them) really start to kick in with the excess information. Our mental faculties fail us. We do not play our best hand or make the best bet at the wheel.
To wrap this up, let me point to one undeniable condition that exists in our household. My wife, Beth, has incredible instincts. While I definitely rely on my instincts far more than others, I am far more likely to seek data to solve a problem than she is. If I look over the past 15 years of marriage, there is no doubt that in the friendly contest of who has made the better household decisions, she wins hands down.
No further data needed.