I saw an interesting post from Eric Petersen called “The Myth of Data-Driven Business” by way of KD Paine’s blog. It caught my eye because we’ve working on a chapter about how nonprofits can make the shift to a “data-driven culture.”
Holly Ross at NTEN and I chatted about the myth of data-driven nonprofits and how this is slightly different with mission-driven organizations. Some nonprofits consider themselves “data-driven” simply because they collect data (often at the request of funders), but they may not necessarily be collecting the right data! Collecting data does not equal being data-driven.
Eric Peterson calls out a discussion on “What the C-suite should know about analytics” from Kishore Swaminathan, Accenture’s chief scientist:
“Data is a double-edged sword. When properly used, it can lead to sound and well-informed decisions. When improperly used, the same data can lead not only to poor decisions but to poor decisions made with high confidence that, in turn, could lead to actions that could be erroneous and expensive.”
Eric Petersen says that it requires a balance, and leaders should not become slaves to the numbers, but leave room for business knowledge and experience to help them understand and learn. Eric says that the term being “driven” implies — “going out of your way to devalue experience, ignore process, and eschew established governance in favor of a new, entirely metrics-powered approach towards decision making. ”
He suggests a new term, “data informed.”
I suggested the phrase “curiosity-driven.” That an organization knows the questions to right ask, how to collect the right data to answer those questions. Above all the organization uses its collective wisdom to making decisions. That the nonprofit doesn’t just look at the pretty charts and graphics as if it they tea leaves, but brings multiple lens to understanding how to apply the data. And, it is part of a process of learning and continuous improvement. But, Eric’s “data informed” is much better.
What are the myths of being a “data-driven” nonprofit? Is there a better term to describe making decisions based on combining data with organizational experience to learn?
Update: Cross posted this on Google+ – Conversation Summary
Data-driven and data-informed are two different things and that it is better to be data-informed because you need knowledge to interpret the data. Being data-driven can lead to a/b testing 40 different shades of blue. Ian Thorpe from Unicef said:
“Decision makers to have better skills in using data before they are too driven by it. But I also have a theory (but no data to support it) that there are two ways to look at a problem – the first is to analyze data and draw conclusions – the job of an analyst or researcher, the second is to form your opinion by consulting with a diverse network of people whose judgement you trust (including but not limited to analysts) – the second is what most leaders do since they often don’t have the time or skills to do the data analysis themselves – and the social interactions are what helps make sense of the data. I think we actually need a bit of both sorts of decision making.”
Stephen Downes summary of the conversation here