It's the Data, Stupid

The Great Recession is hopefully now behind us, but its effects will be with us for eternity. That's because the recession fundamentally changed how people think about the world, in two ways.

First, it focused a harsh spotlight on the quality of decision-making in the modern enterprise. Second, and probably more significantly, it called into question the legitimacy of the leaders making those decisions. Martin Wolf, associate editor at the Financial Times, summed up the whole tragic scenario when he said that most people "no longer believe that [executives] know what they are doing."

The only way we can win back the trust of those we would lead, those who would buy from us and those who would invest in us is to become data-based leaders. Organizations that do not embrace the realities of big data, employ the services of data scientists and banish data-challenged CEOs will fail, and fail quickly.

An important potential first step on the path to resuscitating trust in leadership is to ascertain where your CEO stands vis-à-vis data-based leadership. I was very surprised to discover on the blog of Ben Horowitz, who with Marc Andreessen is co-founder and general partner of the venture capital firm Andreessen Horowitz, the following evaluation of CEO decision-making:

"Every decision that a CEO makes is based on incomplete information. In fact, at the time of the decision, the CEO will generally have less than 10% of the information typically present in the ensuing Harvard Business School case study."

As a student of management, I will be the first to agree that it is a rare occurrence for a decision to be made with full certainty and 100% of the information required. But I differ violently with Horowitz when he celebrates the courage of CEOs who make decisions under circumstances of 90% ignorance. That is not leadership. That is sloth. These are CEOs who are too lazy or too self-reverential to do the hard work required to gather the data that would inform a prudent decision.

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