The Relevance of Data in Decision Making.
Being an efficient business manager in the world of today requires you to make meaningful and informed decisions at all levels. These decisions are not made by assumptions but rather by facts. The process of obtaining these facts requires you as a manager to be equipped with a certain set of skills as a business analyst. These extra skills as a manager will help you make informed decisions to manage available resources with efficiency and increase productivity for business growth.
The root of all decisions made is dependent on data available at your disposal coupled with experience over time. If the source of data is faulty, then the decision made based on that data collection will be wrong and in turn, affects the confidence level (level of accuracy of the report) or your level of significance (level of error you are willing to accept) of your data. The implication of a wrong decision could cost the whole organization dearly, to the tune of reduction in profit, reduction in sales, capital reduction in market share, misrepresentation of the brand itself, customers’ acceptance of product etc. This is to say that the source of data collection, the nature of data, the timing of data and the presentation of data is very essential to decision making as a manager.
In this episode, we will look at the two types of data sources; Primary and Secondary sources of data, which I also call Organic and Virtual data, as it, will be used side by side in this context. Primary data are data sourced through self-efforts and time, which makes it rich, robust and more reliable. An example of this source of data is data derived through interviews, questionnaires; focused groups; observation and many more, while secondary data are otherwise known as virtual as I termed it, is ready-made data available to the public for reference. An example of this source of data is population census through headcount accreditation, Companies’ annual reports etc. The nature of these data could be either quantitative or qualitative i.e. numerical or non-numerical (This concept will be discussed in details in the next episode)
Either of the sources of data can be used to make an informed decision as a manager if the confidence level is between the ranges of 90% to 95% while the level of significance is expected to be within the range of 1% to 5% at most. As business managers, the importance of organic data in our decision making process or business analysis cannot be over emphasized. From sales inventory to factory workers’ salary and welfare even to customers review.
In conclusion, the wealth of decisions made would be dependent on the accuracy of the sources of the data used. To this end, I say chose the best accurate source of data to help make an informed decision.
To be continued…………..