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Why Today’s Effective Leaders Must Learn to Manage Data

By Melissa J. Anderson

Is data literacy the next critical leadership skill? According to the Corporate Executive Board it is. In a recent Harvard Business Review article, Shvetank Shah, Leader of the CEB IT Practice, and CEB Managing Directors Andrew Horne and Jaime Capellá, explained how most organizations have invested significantly in data management tools. Yet few people know how to manage it effectively.

They write, “At this very moment, there’s an odds-on chance that someone in your organization is making a poor decision on the basis of information that was enormously expensive to collect.”

The problem, they contend, comes down to a few factors. But it is mainly due to not enough training or experience analyzing data to formulate good decisions. As organizations become increasingly reliant on empirical evidence, today’s effective leaders will need to become more adept at sorting through facts and figures to come up with effective and workable decisions.

Underutilized Investment

Based on an analysis of over 5,000 employees at 22 global companies, Shah, Horne, and Capellá write that there are three types of groups when it comes to data analysis.

“’Unquestioning empiricists’ trust analysis over judgment, and ‘visceral decision makers’ go exclusively with their gut. ‘Informed skeptics’—the employees best equipped to make good decisions—effectively balance judgment and analysis, possess strong analytic skills, and listen to others’ opinions but are willing to dissent.”

Unfortunately, they write, finding that effective balance is difficult. “Informed skeptics” make up only 35% of employees and 50% of senior managers. They note, “Our analysis also showed that functions whose employees had the highest average scores performed about 24% better than other functions across a wide range of metrics, including effectiveness, productivity, employee engagement, and market-share growth.”

Employees working with data tend to be highly analytic, but they tend to lack an understanding of behavioral skills necessary to help other departments utilize data effectively. And unfortunately, the writers continue, most managers simply leave data up to the IT department. This all results in an underutilized investment in data and research. “Managers need to wake up to the fact that their data investments are providing limited returns because their organization is underinvested in understanding the information.”

Data Leadership

What is lacking when it comes to data analysis is insight, Shah, Horne, and Capellá believe.  They write:

“To create an environment in which employees get the help they need, companies must rethink the kinds of people they bring in as experts. Although hiring managers typically put a premium on analysts’ quantitative skills, outstanding coaching skills are more valuable. Instead of simply answering questions as they arise, people-oriented data experts can provide informal, ongoing training to employees in departments outside their own, increasing the organization’s overall Insight IQ.”

The technology is there, but training on how to use it effectively to run an organization and manage teams is not. Only 25% of knowledge workers receive effective training on managing data.

Most importantly, they believe, leadership that combines effective analysis skills with careful judgment is sorely needed in today’s business environment.

“Recent financial and business events show all too plainly what can happen when rich data and analytics collide with gaps in knowledge or lapses in judgment. Leaders need to ensure that their processes and human capabilities keep pace with the computing firepower and information they import. To overcome the insight deficit, Big Data—no matter how comprehensive or well analyzed—needs to be complemented by Big Judgment.”

Data management means more than knowing how to crunch numbers or analyze statistics. It requires an healthy dose of human insight as well – which the leaders of today and tomorrow will have to rely on in an increasingly complex business environment.

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