The informed leader: Decision-making in a data-driven world

  • February 27, 2023
  • By WashU Olin Business School
  • 3 minute read

As a society driven by information, the data available for us to collect has amassed at breakneck speeds. More data is within our reach to analyze than ever before, and organizations have to learn to collect and analyze much more data than they have previously. Informed leaders of organizations are learning to value data to make data-driven decisions for their customers, clients or students.

In previous generations, managers led employees by gut instinct and industry wisdom. A lot can be said for the value of this approach, but with the analysis of data, industry leaders are realizing the benefits of data-driven decision-making instead of ruling by gut and wisdom alone.

Becoming data-driven as an organization takes a bit of elbow grease. While you can start by running a few reports and using those to educate your decisions, you’ll need to fold the idea of data-driven decision-making into your business to receive the full benefits. As the strategic IT advisor for InterVision Jeffrey Ton put it, “Strong data governance, data literacy throughout the entire organization, an understanding of your biases and your willingness to shift your culture create the pillars of a data-driven organization.”

Industry exemplars leading by example

Leading your business through any transformation can come with growing pains. The shift in culture doesn’t always come easily, and, with so much information, you can be overwhelmed just wondering where to begin. The first bump in the road often comes from getting leadership on board, as any decision can lead to a large financial endeavor to purchase equipment, train employees, etc. Once leaders get on board, they must recruit their employees to understand data-driven decision-making and begin speaking its common language.

United Parcel Service stands out as a prime example of a company that relies heavily on data-driven decisions. On a typical day, UPS handles 25.2 million packages. Their interactive bot can answer customer requests and take steps to respond to them, and their ORION system creates optimal routes for deliveries. If weather, accidents or other factors alter the best route, ORION alerts everyone involved, from air traffic controllers to drivers. 

An example more local to Olin’s community is Schnucks, the St. Louis grocery chain where 1.4 million shoppers have a loyalty ID. That allows Schnucks to analyze customer shopping habits. This data then governs what kind of customized promotions they send customers.

Olin’s data-driven decision-making is a central focus for students

Since its introduction, Olin’s Values-Based, Data-Driven Decision-Making course has become one of our most successful. The core idea is that future leaders will always need to consider the values of their company, what’s best for their employees and what the data indicates is best to find their answers.

As a modern leader, you’ll have to find the balance between making decisions that best support stakeholders, society, the community your business operates in, your employees and more. This course assists students in learning how to evaluate values and data so they can become successful leaders who make decisions that address everyone depending on them.

The faculty at Olin Business School demonstrated the principles of data-driven decision-making at the Brookings Institution in Washington, DC, on April 27, 2022. Six faculty members created a predictive system that uses machine learning to advise pharmaceutical distributors about potentially misdirected opioid orders using data provided and maintained by the US Drug Enforcement Administration (DEA).

With the data from this highly-accurate prediction tool, the Olin Brookings Commission designed 14 policy recommendations that would allow near-real-time detection of opioid shipments being diverted through supply-chain blind spots. The faculty, who demonstrated leadership in a global environment, hope to continue to improve the AI-powered detection system to even flag nonprescription opioid shipments and save even more lives from overdose with the help of the DEA.

The techniques of leaders have largely remained the same in recent decades. But with the advent of technology capable of processing data that can deliver in-depth insights about customers, employees and company partners, new studies show the majority of leadership and employee interactions are projected to be powered by data by 2025. If you’re ready to be a leader who can embrace the new changes in technology and leverage them to the benefit of your employees, then an MBA might be the perfect stepping stone for you.

About the Author

Washington University in Saint Louis

WashU Olin Business School

Firmly established at the Gateway to the West, Olin Business School at Washington University in St. Louis stands as the gateway to something far grander in scale. The education we deliver prepares our students to thoughtfully make difficult decisions—the kind that can change the world.

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