How to use Data to make decisions

Making decisions isn't always easy and the fear of making the wrong decision always lingers in people's minds. Understanding and evaluating why people make the decisions they do is important in any situation. It is important to evaluate all of your options before making any decision. Whether its for school work or for a personal hobby, I always use data to help me make decisions. In this blog, I will showcase the simple process of decision making through the use of Data in 5 steps.

1. Identifying Question you are trying to answer

   
   

The first step to identify what question are you trying to answer. . This guiding question frames every decision that follows and shapes the data you’ll need. It could be as simple and personal as "What kind of car should I buy?" or more strategic work oriented like "Should our organization open up a new branch in Phoenix?". Regardless of the context, defining the question helps the scope of your analysis.

2. Gathering Data

   Now that we’ve clearly defined the question we’re trying to answer, the next step is to gather the data that will help inform our decision. This step can feel daunting but defining our question helps us identify what data we will need. For example, if the question was "What kind of car should I buy?", it might seem reasonable to include data on the different prices of cars or data on accident rates of specific models. Typically, having a clear question helps us focus on the specific data we need to gather. Depending on what you’re trying to answer, there may be a lot of data you could analyze. This is where you have to decide whether the data you’re using will be relevant in helping you make your decision. The amount of data you use may vary. You might rely on many data points or only a few but the quality of your analysis will be important.

   
   

3. Analyzing the Data

Once we've collected that you want to use, you can finally start analyzing the data. This can be a complex step and one that people will easily overlook. It may seem simple but you have lots of different ways of analyzing data. Data can be analyzed through many different ways depending on what information you are trying to gather. Data can be analyzed in many ways. You might use a model like regression for predictive insights, or rely on averages and charts for general descriptive analytics. The type of analysis you choose will depend on the information you need to answer your question. There will generally be no wrong decision as long as you can utilize the data to support your reasoning as to how you came to the decision that you did. The different types of analysis will give you different kinds of information that will be useful in identifying the decision you want to make. We will continue to use the same example used in the previous steps. If you have data on different car models and their prices, predictive analytics may not be any use to you in helping you make your decision now in what car you might want to purchase. However, descriptive analytics may be more suited in helping you make that decision. This does not mean that predictive analytics is of no use but rather that there may be more optimal analysis that can be of more use. The key takeaway is that data is only as useful as your ability to interpret it and apply it to your decision. Think of the data as a tool that supports your judgment, but it doesn’t replace it.

4. Comparing Options

   Now that the analysis is complete, it’s time to review the different options available and determine which decision makes the most sense. The data will usually point to several actionable options. In some cases, the results may be straightforward and suggest one clearly superior choice. However, it’s still important to consider all of your options and understand why the alternatives are less viable than the leading one. You are able to understand why the other options are less viable and it will overall help you understand everything as a whole. In the case of the car example, your initial analysis might suggest that the best choice is simply the model that fits your budget and matches your preferred color and style. That may seem like the obvious answer. However, deeper analysis might reveal that another model is more efficient or offers better long term value, giving you new information that shifts your perspective. You may still choose your original option, but you’ll be doing so after thoughtfully reviewing all the alternatives. You will find that there were options you never considered that are just as viable. It's important to realize that there will be times where multiple options will seem equally viable but in different aspects. This is when you identify what data has more importance to you. The car model might not have a color you desire but it is the cheapest and most efficient model among the options. This is where you have to weigh your options and choose what traits/aspects of the data are more important/ have greater weight. You will also need to consider the trade-offs you’re willing to make. In many cases, choosing one option may mean giving up certain features or benefits. However that is part of the decision process in deciding which compromises you’re comfortable with making.

   
   

5. Making the Decision

   The final step is to make the decision based on the data that you have collected and analyzed. The decision may be easy or it may be difficult, but it will be a choice grounded in the information you’ve collected. In some cases, the process doesn’t end once you make a decision. You may need to keep monitoring the outcomes to determine whether any adjustments are necessary. Circumstances can change and new information can appear. Using data to make decisions allows you base your choices on clear evidence and measurable insights. In some very rare instances, you may find yourself making an option that seems to go against the data. However still in those cases you are only able to make that decision because you recognize that from the research you have done.