How NOT To Collect Data For Business

Data is the new oil.

Clive Humby made this claim all the way back in 2006. Like oil, everybody wants data and is willing to pay whatever it costs to get it.

In response to massive data-based success stories like Amazon, Google, and Facebook, many organizations are tempted by the lures of data, such as:

Vanquishing a competitor, especially one who also seems to have a “robust data strategy.”
Looking and feeling like you’re moving the company forward
Gaining insight into your industry
Finding proof that a decision you made was the right one

Data collection often ends with a slick presentation of dashboards, graphs, and tables, with loads of information and tons of answers.

This is not how to collect data for business. Here’s why:

In The Hitchhikers Guide to Galaxy, an alien race develops a supercomputer Deep-Thought in order to answer the ambiguous questions regarding “life, the universe, and everything.” The answer it comes back with?

Forty-two.

When pressed for an explanation, Deep-Thought continues:

I think that the problem is that you have never really known what the question is…You have to know what the question actually is, in order to know what the answer means.

So many organizations are frantically collecting as much data as they can without any coherent understanding of the purpose behind it. When you don’t know how to collect data for business properly, the very thing you expected to save you will open expensive and time-consuming rabbit holes that might actually endanger the future of your company.

How Not To Collect Data For Business

Any statistician worth their salt will describe how information can be manipulated to tell the desired story. Moreover, poor collection of information will lead to unreliable outcomes.

When you’re considering how to collect data for your business, make sure you keep the following pitfalls in mind.

Inadequate Sample Size

If the pool of information is too small to accurately represent the demographics you’re researching, it will not be a reliable basis for your decision-making.

Too Short a Study

Not allowing enough time to capture your data might make acute environmental factors look more catastrophic than they are. For example, compare those who check the stock market every few hours or minutes to those who review their portfolios every month or so. The report you get from each person will likely be widely different. Moreover, temporary fluctuations do not tell an accurate story of the overall performance.

Errors in Scope

When the question you are trying to answer is poorly defined, you are likely to collect data that isn’t all that useful to you (such as “42”).

Improper Collection Method

There are countless different mechanisms for how to collect and analyze data for business. If the wrong method is chosen, it could distort the results.

Unreliable Sources

There is a saying in the data industry: “garbage in, garbage out.” If the information is obtained from dubious sources, then the validity of the findings cannot be trusted from the start.

How To Collect Data For Business The Right Way

Now that you know some of the mistakes you may encounter with how you collect data for your business, let’s take if from the top–the right way.

Have a Strategy

Your strategy should underpin everything that you do in your business. The link between operational efforts and strategic direction should be strong, coherent, and measurable.

As a minimum, our organizational strategies should include:

Vision. Where we are heading?
Mission. Why are we heading there and how do we know when we arrive?
Scope or Services. How do we want to fulfill our mission?

These strategies must be the basis of all our decision-making. Data, on the other hand, can help reinforce those decisions by:

Creating faster decision loops
Helping make the choice between viable courses of action
Disproving assumptions in favor of facts
Measuring the success and validity of our objectives
Identifying new opportunities that align with our goals
Linking our understanding of risks and opportunities

In order to achieve all this, how you collect data for your business must behave like a scalpel and not a shotgun.

Ask The Right Questions

Before determining how to collect data for your business, you must know why you are doing it in the first place. You need to ask the right questions. But what do the right questions look like? At a minimum, they must:

Address an overarching concern or opportunity
Link to our organizational strategy
Refine the scope in order to limit ambiguous answers

To get started, ask yourself:

What decisions need to be made?
How much information do we need before we can make that decision?
Can I further tighten the filters and variables to make the question even more specific?

Don’t Ignore the Human Factor

The list of human shortfalls that affect how you collect data for business is too lengthy to mention. But here are two very important factors that are often overlooked.

Bias

Bias comes in all different forms, including everything from confirmation bias (seeking out information that is guaranteed to align with our existing beliefs) to selection bias (acknowledging pleasing information while ignoring unpleasant information), and everything in between.

When collecting and reviewing data, our own personal biases will undermine our objectivity if not cross-referenced against other sources.

Examples of this occurring include:

Poorly worded or slanted questions
Handpicking people or demographics that will support our claim or stance
Breaking people into groups that will lead to the desired outcome
Measuring things incorrectly or lending undue weight to certain responses

Subjectivity

Everyone experiences the world differently. Moreover, the way we feel at a certain time in our life can have significant implications on the way that we collect information, engage with participants, and interpret information.

Unlike bias, which can be eliminated with a bit of conscious thought, subjectivity is inherent to the human condition. We can only truly experience the world as ourselves, not as another person or as a completely detached and objective entity.

While there is no way to eliminate subjectivity entirely, you can remove a large amount of it from your data collection with the following:

The right tool for the right job
Structured sequencing and staging
Multiple sources of data and quality checks
A commitment to keeping an open mind about the results, and not clinging to old assumptions regardless of the information presented.

If you do not have these things as a minimum, then all that time you spent figuring out how to collect data for business collection will amount to nothing more than a flashy and expensive waste of time.

In Conclusion

Is data the new oil? For companies that know how to collect data for business, it might be. For everyone else, it is simply a fad–shiny and cool, but ultimately meaningless.

If you are looking for data that prove to yourself that you are doing great work, then you are likely using it for the wrong reasons. If you are collecting data without knowing why, then now is the time to reassess your strategies and biases and align your collection methods accordingly.

Of course, even the best data collection strategy can’t take the place of strong, smart, and determined leaders. The Eighth Mile offers online leadership courses that provide one-on-one coaching, self-paced learning modules, and regular interactive virtual workshops for all learning styles. Visit the Course Details page to find out how you can take yourself and your team to the next level–with no data analysis required.

David Neal

David Neal Is a leader, strategist, founder, project and change manager, as well as a practical consultant for clients such as the ADA NSW, University of Sydney, Australian Defence Force, Prescare, RSL Queensland, MedReleaf, and KPMG. He is one of the authors of ‘Growing Good Leaders’ which focuses on developing high performing teams and running projects. He travels throughout Australia and overseas helping others to simplify the complex. His time serving in the military has provided him with vast experience in leadership, complex problem solving, project and risk management. He has chosen mateship, family and helping good people as his path.