Data-driven decision-making

“Data-driven decision-making (DDD) refers to the practice of basing decisions on the analysis of data, rather than purely on intuition. Economist Erik Brynjolfsson and his colleagues from MIT and Penn’s Wharton School conducted a study of how DDD affects firm performance (Brynjolfsson, Hitt and Kim, 2011). They developed a measure of DDD that rates firms as to how strongly they use data to make decisions across the company. They show that statistically, the more data-driven a firm is, the more productive it is – even controlling for a wide range of possible confounding factors. And the differences are not small. One standard deviation higher on the DDD scale is associated with a 4-6% increase in productivity.” Foster Provost.

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