Is running a company easier than picking a cereal?

NPR’s Fresh Air interviewed Jonah Lehrer today who has a new book out about how humans make decisions.  A couple of topics dominated the interview:

  • An overload of choices make decision-making much more difficult since our pre-frontal cortex can only handle a small number of choices at a time (somewhere between 5 and 12)
  • Several experiments suggest that emotion is a critical ingredient to enable fast decision making and prevent analysis paralysis.

Of course, Jonah Lehrer is not the first person to cover this topic. I remember reading Barry Schwartz’s Paradox of Choice a couple of years ago, and it included references to similar ideas.

What intrigues and concerns me is the implication of this research for business intelligence.  It would suggest that:

  • Additional data / information can lead people (and hence companies) astray while they assume that more data is always better.  A lot of work has been done in this area.  I vaguely remember reading about such research in a Malcolm Gladwell-genre book.
  • If people are making decisions based on data that may not be relevant, then we are, yet again, underestimating the role of randomness in the success or failure of companies (and CEO’s).  Someone else recently wrote about this, but I do not recall who.
  • Emotion is a critical ingredient of important decision making; however, emotion can be significantly influenced by many other factors than data.  This suggestion in turn begs the question: just how important / relevant is the data?  Is it more often used for rationalizing emotional decisions than it is used for arriving at rational decisions?

While businesses will continue to move towards being run more and more by data, research like this heightens the importance of the non-technical parts of a good business intelligence implementation – understanding the data that you have available, truly understanding what you’re measuring, how it may impact the business and of course good data  visualization in the final implementation.

PS. The title of this blog post refers to the difficulty the author, Jonah Lehrer, has in picking cereal due to the vast number of choices available.

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