Is data-driven decision-making a dumb term?
This post will explore fixed decisions vs event-driven decisions
The term “data-driven decisions” is thrown around a lot - including by Tableau’s marketing. I was told anecdotally (no quote or source so could be hearsay), the founders of Tableau did not like this term. They believed humans drive decisions, not data. They believed the role of data should be to inform1.
I do not love the term myself, but I think it’s important to separate out two modes of decision-making.
Fixed decisions
There are certain known decisions you need to make — such as, where should I open this new store or how should I allocate budget across departments?
These decisions occur when we choose to make them — we can talk to people, we can collect and analyze data, and we draw upon experience and gut instinct.
I like to contrast this mode of decision making with another type.
Event-driven decisions
These are the decisions in which the timing of the decision is not fixed. What I mean is something happens that prompts us to make a decision that we didn’t know we needed to make.
A human example would be in medicine: a doctor notices a patient’s blood pressure rises and the doctor needs to decide whether to intervene with a treatment or make no changes but monitor the patient’s condition.
A machine example would be automated trading: a stock price drops below a threshold and triggers the algorithm to take a buying action on behalf of the trader.
I think this mode of decision-making can afford to be “data-driven” in instances when an action needs to be taken instantaneously — either because agility is an advantage or because delays are too costly.
I don’t have a quote handy to back this up, but I’ve heard this anecdotally a few times