Data-Driven Decisions vs. Gut Decisions

Data is almost as trendy as security these days. I mean, we’ve always kind of known that data is important, but most companies in the channel haven’t necessarily mastered the whole data thing. This means a lot of decisions are being made more on hunches, gut feelings and assumptions we hope are correct.

But the evidence is coming in loud and clear – data-driven decision-making outperforms. Consistently.

The Case for Data-Driven Decision Making

A McKinsey study showed that companies using data-driven decision-making outperform their competitors, and by a lot. Furthermore, in most industries, there's a lot of money still on the table as companies have often been slow to make the digital transformation and become true data-driven organizations. They are more than twice as likely to outperform on revenue and profit, and almost three times as likely to outperform on sales growth. Two companies that start at the same place today will diverse by an enormous amount five years from now.

The reason is simple – numbers are a lot less likely to lie than your gut. Your gut can sometimes help to interpret data, and occasionally you won’t have the data you need and therefore must use your gut. But otherwise, your hunches will often have biases and other pitfalls embedded in them.

Data cuts through the noise.

Superior Performance Compounds

I wrote an article using baseball’s batting average as an analogy for the compounding effects of consistent outperformance. The above graph shows outperformance over just a couple of years, and from the same starting point. But the reality is that MSPs that have taken a data-driven approach to management are better positioned today than ones that are still operating on instinct. The gap between the two groups will only widen going forward.

First, better performance leads to healthier margins. The MSPs that did the best through the pandemic were the more mature organizations – as shown in studies by Service Leadership, IT Glue, etc. Second, running an MSP is only going to get more expensive and complex as we go forward. Cyberattacks are becoming more common, with MSPs and their vendors both being targeted. These attacks require sophisticated defenses and responses, and they raise the cost of cyberinsurance going forward as well.

Maturity is a Must

In other words, you almost need to growth to a certain point of maturity and profitability in order to thrive in a far more complex, dangerous and competitive environment going forward.

Don’t let the good times the past several years fool you. If you’ve been skating through the years of double digit industry growth just making decisions willy-nilly, more power to you, but don’t expect that to be sustainable going forward.

Unless you’re a savant – and even then I’d bet Dunning & Kruger have something to say about that – you’re going to need a data-driven approach to your decision making. Gut it doesn't cut it. 

That means having the best possible data, and you can start by doing a little data cleaning with Gradient for free.

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