Analytics

Big Data won't solve your company's problems

March 19, 2012: 11:26 AM ET

The reams of data available to companies are only as useful as the people working with them.

By Ethan Rouen, contributor

FORTUNE -- "Oh, people can come up with statistics to prove anything. Fourteen percent of people know that." – Homer Simpson

The era of big data is here, the nerds proclaim.

Computers are powerful enough to gather and synthesize terabytes of information to answer questions ranging from how best to compensate employees to how risky is that mortgage-backed security.

But while the numbers don't lie, how people use them is extremely subjective. Quantitative analysis played a part in the financial crisis of 2007, after all, and companies that think a room full of analysts crunching numbers can solve their problems can do damage to not only their profits and losses but also to their corporate culture and employee well-being.

"Making the decision at the end of the day can be aided by data, but the thought that computers will make all the important decisions is just not true," says Shvetank Shah, executive director of the Corporate Executive Board (CEB), which recently published a study titled Overcoming the Insight Deficit: Big Judgment in an Era of Big Data. "Saying that I've got 10 quant jocks who are going to solve all my data problems is the wrong way to go about it."

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There is little argument that many competitive advantages in the future will go to those who most effectively use analytics to guide decisions. Having the data, though, is not enough, Shah says. According to the CEB, only 38% of employees in a 4,941-person study were considered "informed skeptics" who rely on data but not so much that they are afraid to question the results and solicit feedback from others. The rest of the workforce either trust data without question (43% of the study participants) or rarely trust analysis and prefer to go with their gut (19%). More

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