Data-Driven or Fact-Driven Decision Making

Data is, by its very definition, is a collection of facts.

It represents an objective reality that is true regardless of opinion and interpretation. Like data, however, that sentence does not tell the whole story.

As an example, imagine you are buying a new microwave open from Argos. You took the time to peruse the online reviews, and every single review for that model is full of glowing praise for the item (we shall assume for the sake of this hypothetical that all the reviews are legitimate). So you order the microwave brand and look forward to having it delivered in a few days. Then it arrives, and within minutes of being out of the box, it breaks down.

The data showed that the item was excellent. The fact however is that your item bought brand new, broke down almost straight out of the box.

A purely data-driven decision would lead you to buy the same brand and model in the future because the reviews are all positive, whereas a fact-based decision would lead you to shop elsewhere.

Data is Dynamic. Fact is Static

The critical difference between data and fact is that, for something to be fact, it has to be established. For something to be an established reality, it has to have already happened. The phrase "hindsight is 20/20" springs to mind.

With the benefit of hindsight, you can often be 100% sure what the right course of action would have been, but that's not much help when choosing a course of action in advance without the benefit of hindsight.

Data, on the other hand, present you with a picture of reality that can be used to predict what will happen, but it is never the whole picture. The data will almost always be incomplete as it is practically impossible for data to factor in all the variables of any real-world situation.

Data Never Really Describes the Whole Story

You've likely seen articles saying something like "70% of Australians believe..." or "the majority of Canadian prefer...", the data on which statements like those are based is not a comprehensive sample of the entire demographic. Instead, they are a "representative sample" of that larger group of people. This data is often useful, but anyone who has seen an election poll in the last few weeks would be well aware of how far from reality a survey can be.

The harsh reality of real-time data is that it is impossible to factor in enough of the necessary variables to make an accurate prediction of the future, and any decision based on a potentially incorrect prediction of the future is a risky one.

Data-Driven or Fact-Driven?

Practically speaking, neither of these methods is the best practical approach to decision-making. Data can help you understand the way things might happen, but it can be inaccurate. Facts stemming from direct experience or from the experience of others can only tell you; unequivocally, how things happened in the past. It gives no guarantees on how things will evolve in the future.

So what is the best course of action?

The most practical solution is to make data-informed decisions that consider both aspects. Data should be used to inform the direction of available choices, but as a leader, it is important not to disregard facts that you know to be valid, even if the data disagrees with them. Intuition; after all plays a huge role in decision making, particularly in businesses, and, while data is an essential tool in effective decision-making, it is not the only tool. Nor should it be.