Turning Data Into Wisdom

🚀 The Book in 3 Sentences

This book is about the way we use data to communicate. We are using data to tell stories and to get people to make the right decisions.

🎨 Impressions

Understanding that the people not the data is the lever is the most important lesson of this book.

✍️ My Top Quotes

• Investments in data strategy and analytics will be useless—and can even be harmful—unless individuals and organizations can leverage anthropological skills and understand behaviors and psychology to provide the right context for the data

• The data-informed decision-making process is iterative and not linear, and different types of decisions may require different parts of the steps or different tools within each step.

• Most decisions should probably be made with somewhere around 70 percent of the information you wish you had. If you wait for 90 percent, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions.

• *The six phases in the process are the following:

  • Formulate and ask a focused analytical question .
  • Acquire the best available data.
  • Critically appraise and analyze the data.
  • Apply the experiences and beliefs of yourself and others to the data to make a decision, being aware of any bias you or others may hold.
  • Announce and communicate the decision.
  • Assess the outcomes from the decision.

• According to management consultant W. Edwards Deming, 94 percent of problems in business are systems driven, and only 6 percent are people driven.

• *There are five key active-listening techniques:

  • Pay attention.
  • Let the speaker know you are listening.
  • Defer any judgment.
  • Respond appropriately.
  • Provide feedback.

• Data-informed decision-making should follow a systemic and systematic process,

• “The greatest enemy of knowledge is not ignorance; it is the illusion of knowledge.” —Daniel Boorstin

• Projection bias is the tendency to overpredict future preferences by trying to match them to current preferences.

• Availability bias is the tendency to remember and recall something that has happened recently, something you personally observed, or something more vivid and recognizable.

• Absence of evidence bias is the tendency to fail to consider the degree of completeness of the information.

• Confirmation bias is a type of bias that involves favoring information that confirms previously existing beliefs that someone holds.

• Clustering illusion is the tendency to see patterns where there are not any.

• Optimism bias is the tendency to believe that you are less likely to experience a negative event as a result of your decision, and thus you overestimate the probability of a positive outcome for your decision.

• Overconfidence bias is similar to optimism bias but relates more to overconfidence in your skills when compared to others.

• Competitor neglect is the tendency in business to focus on your own company’s capabilities, plans, and data, neglecting data from external forces and competitors.

• Ostrich bias is the tendency to ignore dangerous or negative information when making your decision.

• Anchoring bias is the tendency to be influenced by the first shown information. This causes tunnel vision and people failing to make adjustments to account for subsequent information.

• Ambiguity bias is the tendency to favor an outcome that is more knowable compared to alternatives that are not.

• “If you do not know how to ask the right question, you discover nothing. ” —W. Edwards Deming

• Type 1 decisions are irreversible decisions, like quitting a job or changing a product direction, and Type 2 decisions are decisions that you can always revert back from if they end up not being ideal, like executing a specific marketing campaign or changing a vendor in your supply chain.

• “What gets measured gets improved.” —Peter Drucker

• Very useful for dealing with qualitative data. For example,

• ANOVA. A statistical test called ANOVA , short for analysis of variance, is the best option when you have more than two levels of an independent variable. For example, if your independent variable is “average annual per capita sales” of your product and your data contains three regions (America, Europe, and Asia), with ANOVA, you can test to see if there is a statistically significant difference in average annual per capita sales between the regions.

• With nonparametric tests, there is no need for the distribution to be normally distributed. For independent samples, use the Mann-Whitney U test . For paired groups, use the Wilcoxon signed-rank test . For tests of more than two levels of independent variables, use the Kruskal-Wallis test rather than ANOVA.

• Markov analysis is a technique that determines the probability of future occurrences of an event by analyzing presently known probabilities of those events. The Markov analysis process involves defining the likelihood of a future action, given the current state of a variable. Once the probabilities of future actions at each state are defined, a decision tree can be drawn and the probability of a result can be calculated, given the current state of a variable. Markov analysis has a number of applications in business to help companies make data-informed decisions.

• However, there are certain triggers that increase the likelihood of bias being introduced. These include cognitive overload, ambiguous information, perceived threats, being short on time, emotional overload, and overconfidence.

• In their book Primal Leadership: Realizing the Power of Emotional Intelligence , Dr. Daniel Goleman, Richard Boyatzis, and Annie McKee state that the best leaders act according to one or more of six distinct approaches to leadership: visionary, coaching, affiliative, democratic, pace-setting, and commanding: *Visionary. Visionary leaders mobilize their teams toward a vision. Coaching. Coaching leaders develop employees for the future. Affiliative. Affiliative leaders create emotional bonds and harmony with their teams. Democratic. Democratic leaders build consensus with their teams through education and participation. Pace-setting. Pace-setting leaders expect their teams to be self-directed and to excel. Commanding. Commanding leaders demand immediate compliance from their teams. Their research concluded that the best results happened with leaders who practice more than one style on any given day.

• Double-loop learning, first modeled by business theorist Chris Argyris and organizational consultant Donald Schön, is a reflective process in which the decision-making team challenges the assumptions, norms, and objectives for the decision. Sometimes, feedback from a decision made is that the decision may not have been optimal because the underlying assumptions of the system behind the problem were inaccurate.

• Single-loop learning is when the lessons learned are on the actions and decisions taken themselves. Double-loop learning goes further to actually question and modify the system and mental model of the underlying assumptions tied to the problem statement.

• “Numbers have an important story to tell. They rely on you to give them a clear and convincing voice.” —Stephen Few

• Upstream stakeholders are individuals who are involved in the implementation of the program or offering the decision has set forth. Downstream stakeholders are individuals who will receive, use, or participate in the program or offering the decision has set forth. The downstream stakeholders can be directly or indirectly impacted. Direct impactees are typically employees within the program or offering for which the decision was made, while indirect impactees are typically external to the organization or group.

• A major part of properly communicating your story is to help stakeholders see what you want them to see while limiting anything that can distract them.

• Colin Ware, author of Information Visualization: Perception for Design , defined four categories of preattentive visual attributes: Iconic memory , a form of sensory memory, processes and stores visual information automatically, many times unconsciously, and in less than a second. Since this process is automatic and happens unconsciously before we are even paying attention, it is called preattentive processing . This process detects certain visual attributes. These visual attributes “pop out” at us without conscious effort.

• The Pyramid principle , first created by business consultant Barbara Minto, advocates that ideas should always form a pyramid under a single thought,

• The Pyramid principle is not designed to include the full story and communication. It focuses on the decision itself. Components of the story that come after the decision still need to be added