The Rational Company
In the past years many companies have claimed to be adopting processes that allows them to be more intensively driven by data. Although most of these companies focus on the technology and tools used, we could assume that what they are trying to do is to improve their decision making processes. We could say that they try to become rational.
Rationality is about more than just forming true beliefs – it’s also about making decisions that help you achieve your goals. Decision making is the ability to make sound, rational decisions based on the available information. This process begins with understanding what it is that the company wants to achieve – its north star goal. Once this is clear, the company can start collecting relevant data and expertise to inform its decisions. Finally, creating a culture of lifelong learning will ensure that the company continues to get better at making decisions over time.
Better decision making might require open minded profesionals, eager to adopt a bayesian-style culture where prior beliefs are constantly updated by new facts and evidence. Being willing to change our minds when new evidence arises is important for making smart decisions – after all, if we’re always sticking to our original ideas, chances are we won’t be taking advantage of all the potential options out there. All of these qualities together – being open-minded and thinking critically about information, as well as being willing to alter our beliefs in light of new data – make for better decision making overall.
In the absence of enough data, beliefs based on experience and expert knowledge can provide a competitive advantage. It is important for companies to have experts on their team who can rely on intuition and experience when making decisions based on insufficient information.
Human beings face ever more complex and urgent problems, and their effectiveness in dealing with these problems is a matter that is critical to the stability and continued progress of society.
- Cassie Kozyrkov, What is Decision Intelligence
Blindly trusting data and statistics without verifying their validity is also a risk, as it could lead to incorrect decisions being made. By using Bayesian reasoning techniques, businesses can mitigate these risks and optimise their operations accordingly.