There are three very distinct ways that organizations can fall into the analysis-paralysis trap. One is a managerial tendency to “over-fit the curve”—a statistical term that refers to the diminishing value of additional data once a pattern (or curve, in the graphic sense) has been found. Data collection has a price, inaction has a price and an analytically literate organization will clearly understand the cost of over-fitting.
The second cause of analysis-paralysis is waiting for data that simply does not exist, which reflects an inability to design experiments to generate the needed data. As mentioned above, experimentation has a price and inaction has a price, so an analytically literate organization will be characterized by a clear understanding of data gaps and the value of experimentation to break the logjam.
The third cause of analysis-paralysis is the fact that most companies do not know or articulate their risk tolerance clearly and are much more likely to penalize failed action than inaction. As a result, many managers do not act unless there is enough data to assure them of successful outcomes. An analytically literate organization will have a firm grasp of its risk tolerance. With guidelines and models for action under uncertainty, it will restore the symmetry between how it treats failed action and inaction.
Author: Kishore S. Swaminathan
Source: Outlook Journal (Accenture)
Subjects: Decision Making, Organizational Behavior, Trends / Analysis
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