Data Dilemma: Breaking the Restraints of Analysis Paralysis and Avoiding Death by Data

Data matters!

It’s a cutthroat world out there for businesses. 90% of all startups fail! The survivors are constantly threatened by disruptive innovation emerging from obscure corners of the world — something that’s true for large, established enterprises too. They take it if businesses can find even a sliver of an advantage over the competition. And data can give them a substantial competitive edge. So, data collection has become the latest trend among businesses of all sizes. At the same time, information and misinformation are published and pushed through all channels (traditional and nontraditional) faster than ever before.

With an estimated 14.4 billion IoT devices active worldwide, businesses have access to unprecedented sources for harvesting data. They play an indispensable role in creating 120 zettabytes of data by the end of 2023 — an explosion of data. But what are businesses doing with so much data? In today’s environment — it is only being multiplied by the world of AI — where everyone is working with the latest information and insights to make the next decision. Whether it is writing an email, building out product requirements or test cases, or working with an AI-powered tool to revise an academic assignment, the list and opportunities will only continue.

How Businesses Use Data

Businesses use data to make more intelligent and effective decisions. Some of the purposes for which companies use data include:

• Understanding their customers better, finding new ones, and retaining existing customers better
• Identifying inefficiencies in the operations — from payments flow to supply chain
• Designing and executing more effective marketing campaigns and engagement
• Predicting the trends of customers, channels, and competitors

In short, data helps businesses do new things that can open up new sources of revenue and do whatever they’re already doing more effectively, from the basics like cost management and profitability to identifying unmet needs and insights.

The Unraveling Nightmare of Data Paralysis

Data collection is the new gold rush. However, it’s not without its pitfalls. For instance, the cost of data collection and storage continues to be enormous, regardless of the many advancements in cloud computing, data storage, and more. I realize that is the core of existence for many tech companies. So, the business usefulness of data-driven decision-making should exceed its costs. But is it?

There is mounting evidence that unfettered data collection is leading to analysis paralysis rather than fueling business profitability and leading to better decisions. Here are some signs of this development:

• Plummeting Business Productivity

According to a Forrester study, data analysts spend a worrying 40% of their time cleaning and preparing data for use in their organizations instead of analyzing the data. Another study found that 49% of the employees had difficulty finding relevant data when they needed it.

• Slower Decision-making

Businesses that collect vast amounts of data are finding it progressively more challenging to unearth relevant insights — therefore missing an opportunity to catch emerging threats or competitors in the industry. If you spend days/weeks/months analyzing a trend, creating a new query, or finding where it is stored — -who knows how many other developments — both scrappy startups and established enterprises are underway already (yet likely not public).

• Increasing Cost of Bad and Corrupt Data

Systems fail — that’s true for IT systems too. When they do, they corrupt or permanently lose data stored on them — this can happen anytime, and from personal experience — it might be a bug in the latest build for the overall solution or, more drastic, via a system failure. Gartner estimates that bad data costs the average organization about $15 million annually.

• Increasing Cost of Data Loss, Protection and Compliance

When Equifax was hacked, the lives of 143 million were permanently thrown into jeopardy — and we all realize how this will impact us as end users, as well as business leaders –and this will only increase in our AI-generated outlook with more and more data being created, whether it is accurate or not. Since then, data protection legislation like GDPR and CCPA has penalized organizations more severely for losing their customers’ data.

The EU reportedly fined Amazon roughly $888 million for violating GDPR’s provisions in managing its cookies. Likewise, Meta’s (Facebook) fines have long exceeded $1 billion in the EU alone, including a recent record $1.3B Fine. Worldwide, the average cost of data breaches stood at an unnerving $4.35 million. Such costs can be a death sentence for SMEs, so they cannot be ignored.

Unchecked data collection can lead to loss of productivity, higher costs, and slower decision-making. Firms are battling a worsening perpetual state of paralysis resulting from obsessive data analysis while tackling increased exposure to legislative action under new data protection laws worldwide. The question is: how to get out of this state of analysis paralysis while avoiding hefty data protection penalties?

Getting Out of Analysis Paralysis

Every industry, market, and context has unique challenges and demands equally impressive solutions. Often, these solutions can be found in the customer data amassed by enterprises. Since it’s not always possible to know where new opportunities and challenges arise, there’s no way for businesses to know what kind of data would be useful. So, they collect everything that they can get their hands on. This leads to analysis paralysis. And here’s how it can be avoided:

• Delete Data

That’s right! Sometimes, it makes sense to delete the data that your organization has painstakingly collected. One such case is when the data is too old. Website analytics data, for instance, from several years ago is obsolete for all practical purposes, while first-party data on your actual customers and transactions might still have value. We also should consider if we have collected personally identifiable information, which increases your exposure to data protection liabilities in case there’s a breach. So, why keep it when all it does is put you at risk?

• Focus and Move Forward

In the old wild days of the internet, businesses collected enormous quantities of customer data, hoping to use it when the time was right. “Better to have and not need than to need and not have,” went the popular thinking. With data compliance regulations growing more stringent, that thinking is changing.

Fortunately, most businesses do not need so much data anyway. For instance, multichannel customer journeys do not require extensive tracking. Only a handful of customer journeys matter since they are responsible for the lion’s share of the business. Narrowing the focus to them prevents firms from falling into the trappings of data paralysis.

• Perfection is not the only way to evaluate choices

Obsessing over data analysis and data-driven insights is the favorite pastime of new-generation executives, who love showing beautiful graphics, plots, animations, etc., in presentations. This leads to a familiar situation where executives wait for the latest, most accurate, and most detailed data.

However, in most cases, organizations already have sufficient data to identify opportunities and challenges. It’s generally scattered and buried across different departments. To tackle this, organizations often create cross-functional superstar teams that piece together data from other sources into usable formats for analysis. Instead of waiting for fresh, perfect data, analysts can use existing data to extract insights, and the leaders should then do their best with what is available and move forward.

The Bottom Line

Data can help businesses make better decisions. There are no two ways about it. However, the trappings of data paralysis are all too real to ignore. It’s up to the leaders to take appropriate steps to avoid these traps and circular behaviors that waste time, talent, and resources and instead enjoy the benefits valuable data can give them to test, try, and revise regularly. After all, that’s what agile leadership and learning are all about. You should move fast and test whatever statement or belief you follow.

How are you and your organization conquering this opportunity today and in the future? Share your thoughts in the comments.

— Christina shares candid insights and ideas based on her work, network and passion for mobile, payments and commerce. She focuses on the latest innovations from products and growth to people during the day while teaching students and mentoring entrepreneurs at night. Connect with her on LinkedIn or Twitter. All views are my own. —