How Facts Threaten Data-Driven Decisions

Steve WunkerJune 7, 20233 min

Beware of “facts.” In our pursuit of data-driven decisions, we tend not to question facts, and rather focus on their implications. This is when big mistakes can happen. Consider the words of Peter Drucker, arguably the greatest management scholar of the past century:

“Most books on decision-making tell the reader: First find the facts. But executives who make effective decisions know that one does not start with facts. One starts with opinions…The understanding that underlies the right decision grows out of the clash and conflict of divergent opinions and out of serious consideration of competing alternatives. To get the facts first is impossible. There are no facts unless one has a criterion of relevance.”

Drucker states five reasons why:

  1. If we do not make opinions clear, we will simply find confirmatory facts. “No one has ever failed to find the facts they are looking for.”
  2. An opinion provides an untested hypothesis. Once we have clarified the hypothesis, we can test it rather than argue it.
  3. Decisions are often judgments, not a choice between right and wrong. So we must understand the alternatives fully.
  4. Big decisions may require new criteria. “The effective decision-maker assumes that the traditional measurement is not the right measurement…The traditional measurement reflects yesterday’s decision.”
  5. Ironically, opinions break executives free of pre-conceptions and poor imagination. Disagreement is a safeguard against that. Drucker quotes the famed General Motors boss Alfred P. Sloan, who after hearing executives unanimously support a decision reportedly said, “I propose we postpone further discussion of this matter until our next meeting to give us time to develop disagreement and perhaps gain some understanding of what the decision is all about.”

Consider how Drucker’s view contrasts with the typical corporate process. Decision makers may have a general sense of stakeholders’ opinions, but in their eagerness to act and to avoid controversy they do not probe to understand these perspectives fully. Rather, they quickly make a decision and then marshal facts to support it.

There are no facts unless one has a criterion of relevance.

A company channeling Drucker would tackle matters quite differently. It would:

  •  Surface opinions very clearly
  •  Push executives to state the measure of a good decision, pushing them to think about criteria for future success rather than historical metrics
  •  Insist that opinions be linked to fact-based tests that would validate or disprove the view
  •  Frame a decision as a true choice between well-elaborated and mutually exclusive alternatives. Rather than focus the process on getting the right answer, it would anchor on asking the right questions.

Clearly, this approach is more valuable in some situations than others. If a decision is an operational one much like judgments the company has made effectively many times before, and there is little change in the external environment, then there is no reason to tinker with a successful process.

However, if the company is encountering rapid industry change, poorly understood competitors, or new types of customers, Drucker’s view becomes invaluable. The right questions provide a clear compass heading, even if the right answers seem devilishly complex.

Contributed to Branding Strategy Insider by: Stephen Wunker, Managing Director of New Markets Advisors and author of Jobs to be Done: A Roadmap for Customer-Centered Innovation.

The Blake Project Can Help: Discover Your Competitive Advantage With Brand Equity Measurement

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth and Brand Education

FREE Publications And Resources For Marketers

Connect With Us