Business leaders are taking major strategic decisions about the future of their businesses based on their gut instinct and experience in preference to the use of data and analytics, according to a new report published by PwC and written by the Economist Intelligence Unit.
The report, ‘Guts & Gigabytes’, explores the changing nature of corporate decision-making and the use of data by companies across the globe. It shows that senior business leaders in the UK are using their intuition and experience, as well as the advice and experience of others in their companies, over and above data and analytics. When asked about how they make major decisions, they ranked data and analytics as the third most important factor (23%) behind their own intuition and experience (41%) and the experience of others (31%).
The report is based on a survey of over 1,100 senior executives worldwide, across a range of industries and public, private and family-owned businesses.
83% of senior executives from the UK report that their big decision-making has improved in the past two years – with 32% of this group saying there has been a significant improvement. For 40% of businesses, the use of internal and external data and analytics is the aspect of big decision-making that has changed the most.
Yann Bonduelle, PwC consulting data analytics partner, said:
“Business leaders have long used their own tried and trusted intuition alongside more scientific and financial factors to make decisions and this has served them well in the past. As data become more pervasive, algorithms become more accurate and visualisation more intuitive, business leaders are realising they can make better decisions through using data and analytics more systematically.”
Growth is top priority but costs will be shared by working with competitors
British executives are feeling positive about the future of their businesses, with 24% choosing growing the existing business as the most important decision they expect to make in the next year and an additional 21% picking entering a new industry or starting a brand new business.
However, because costs and margin pressure are identified as the main strategic motivations for big decisions, the most common big decisions involve competitive collaboration and corporate restructuring. Indeed, more than half (52%) of UK business leaders expect to make big decisions to collaborate with their competitors in the next year – compared with 36% as a global average.
Is data at the heart of decision-making?
Despite a generally positive attitude towards the use of data and analytics, many UK business leaders remain concerned about data quality and information overload. 41% say they are concerned about quality, accuracy and completeness of data and 41% find it difficult to access useful data.
Most telling, however, is the influence of negative past experiences. British executives reveal greater scepticism about the value of data analysis, compared with their overseas counterparts. 61% say that relying on data analysis has been detrimental to their business in the past, compared with 34% in Western Europe and 46% globally.
By contrast, there are few concerns about whether their organisations have the right people and the right skills to make the most of data and analytics. 87% say they have a sufficient pipeline of people to analyse the data collected. Our own experience suggests that many organisations are currently rising to the challenges of recruiting and developing technical modelling and data science skills, but shortages are rapidly emerging. However, the more senior leadership roles that understand business decision-making and are able to bridge the gap with analytics and technology have always been a bottleneck and will increasingly become so – especially in data-hungry industries such as retail, financial services and telecommunications.
Finally, business leaders share a recognition that the leaders of the future need to be familiar with data analysis, with 81% of UK executives calling it a prerequisite for senior management.
Tom Lewis, PwC head of data analytics, said:
“The role of data and analytics in our corporate enterprises continues to grow in importance, with 81% of executives recognising a familiarity with data-driven decision making as a prerequisite for senior management roles. It is clear that data quality and data overload have been historical issues for some companies but this will reduce as the level of data awareness grows in the senior levels of an organisation.
“In the digital age, as business becomes ever more complex and data becomes ever more available, business leaders need to ensure they know how to quickly make decisions based on their analysis of data.”
Full press release on pwc.blogs.com