Timo Elliott, November 10, 2010
Why Are Business Analytics Important? Because You Think You're a Better Than Average Driver
You're probably worse at analyzing data than you think. That's the conclusion of wide-ranging "illusory superiority" research carried out by psychologists. Just as in Garrison Keillor's fictional town Lake Wobegon, "all the children are above average", we all think we're better than everybody else:
- 93% of Americans think they have above-average driving skills
- 87% of MBA students at Stanford University rated their academic performance as above the median
- 68% of teachers In a survey of faculty at the University of Nebraska rated themselves in the top 25% for teaching ability
This cognitive bias means that we tend to be overconfident in our decisions - and hence under-invest in fact-based systems and processes that could help us correct our misperception.
One key part of the solution is to share information and decision-making as widely as possible throughout the organization - using the "wisdom of the crowd" to overcome any individual biases. The latest generation of "business intelligence" software can help provide a strategic framework for such information use throughout the organization.