How Data Savvy is your Board?

The following graph shows that the place for a board to collectively be Data Savvy is in the middle of Data Devoid and Data Drunk. Data Savvy boards understand how to interpret data or evidence that’s presented to them. They know the difference between correlation and causation and think a lot about what might be missing, the so- called “Dark Data” referred to in David Hand’s excellent book on the topic. 

During this lesson, we will look at what we might mean by “Data Savvy”, then why it matters and what it means for Chairs, Nominations Committees, Board Reviewers and those running Board Development Programmes before ending with a few book tips for those who want more.

What do we mean by “Data Savvy”?

Somewhat ironically, measuring data savviness hasn’t become a precise science yet. According to the dictionary “Savvy” means “shrewdness and practical knowledge; the ability to make good judgements.”

The implicit assumption in the chart above is that boards that are either devoid of the use of data or evidence in decision making or those that are overwhelmed by their data are far from being “Data Savvy” and are likely to make poor judgements.

Whereas boards that can understand the following are probably reasonably data savvy:

• What data you need to make the best decision with the best available information.
• What the data presented to them actually means.
• How to put that data into context and proportion.
• How to distinguish between facts and interpretations.
• How to understand the data’s real relevance to a decision.

If they can also combine this with the following then they are likely to be a truly “Data Savvy” board:

• Being able to interrogate the data, assess its reliability and relevance to the decision being taken, and recognise the “Noise” in the data.
• Understanding the differences between causation and correlation, margins for error and significance.
• Having the degree of self-awareness to recognize their own inherent biases.
• Being able to effectively communicate the analysis of the data that underpins their decisions.
• Providing a balanced level of oversight and support to help the executive in determining the right data strategy and then ensuring that it is being achieved.

Why does it matter?

We live in a world where more data is available than ever before and where the analytical and presentational tools to understand and communicate that data are ever more sophisticated. Having a board that understands what data and evidence will be most helpful in making a decision and who then have the ability to understand it as well as challenge it and any underlying assumptions made in its presentation and can then add their own experience, insight and instinct to form a judgement must help.

Fundamentally, assuming that the purpose of the organisation is clear and that the board’s role is essentially to ensure that there is the right strategy, the right resources and the right governance, then the ability to be “Data Savvy” in all of these areas is critical to performance.  

The development of new analytical tools for better understanding of organisational culture, stakeholders and other key success factors also means that boards not only have more data and evidence to drive decisions at their disposal but that they need to be able to understand them.

Boards and Executive teams that can respond to signals in the key data that are most relevant for their business are also, other things being equal, likely be more agile and to adapt and seize opportunities more quickly and intelligently than their Data Devoid or Drunk colleagues who will tend to rely more on luck than judgement.

It also matters from a risk management perspective. All too often we hear the cry “Why didn’t the board spot the signals”. In the worst cases, the failure reports tend to point to Boards being at either end of the “Devoid to Drunk” spectrum.

For some boards, one of the reasons that they get data drunk is that the executive get tempted to dump all of the data on them in an effort to shift responsibility to the board and cover themselves. The statement “Well the info was in the board pack” may be accurate but if it is buried and lost in a sea of numbers or charts and not given the prominence it deserves then that’s disingenuous.   

It’s a real challenge for management to know where to draw the line in terms of which data to give to the board and how to present it. Too much and the risk of getting a little tipsy is high. Too little and they may be accused of hiding things from the board.

One area that is increasingly coming up on board agendas is “Data strategy”. This is not simply about GDPR, Data Protection, Cyber Crime or the Risk Management aspects of data, but more about value creation through thinking about the use of data to drive better decisions and in the commercial value of the data itself.

Although there is limited data to support this, it seems logical that being “Data Savvy” should also mean that we are more likely to understand the business. We will still have to use our judgement and take note of our collective instincts and experience and remember that the data is an important input but one not to be followed blindly. Yet failing to make the best use of the data is like flying in fog without knowing where the ground, hills or other planes might be.

Finally, on why it matters, if you feel that three defining characteristics of good board members are judgement, interpersonal skills and antennae then the ability to be “Data Savvy” boosts two of these significantly. Your judgements are likely to be better informed, your antennae sharper and asking really good clarifying questions enhances respect and increases your influence.  So you need the interpersonal skills to go with your “Data Savvy” so that you can increase the impact of your questions.

A few book tips:

If you are looking for a straightforward introduction to the topic then you may wish to read Professor David Spiegelhalter’s “The Art of Statistics”. This is a very accessible book written by one of the best communicators on stats around. Not only is it informative and thought provoking but it is also enjoyable.

Another fun read is the late great Hans Rosling’s “Factfulness” . During one of Hans’ last public appearances, there was a twinkle in his eye driven by his mission to “fight devastating ignorance with a fact-based world view” comes over superbly in the book. It is a short book crammed full of wonderful examples of how our instincts can lead us to either not seek, understand or ignore the facts.

On the subject of ignoring the facts, or more precisely overlooking them, Professor David Hand’s “Dark Data” is another good read. This is a very thought-provoking book about the gap between the data that we have at our disposal but don’t use and why we don’t use it. Boards need to think about the data they need to be able to make the best decision in advance of taking the decision. This book illustrates many powerful reasons as to why this is a good idea.

Matthew Syed’s brilliant “Black Box Thinking” picks up an important aspect of dark data. The main theme of the book is best described as how come so few sectors and organisations adopt the principle of Black Box thinking used so successfully in the aviation sector to drive down failure rates. The principles of recording, transparency, learning from error and rapidly communicating causes of failure to bring about system change are so evidently valuable. Yet as humans we are instinctively embarrassed by failure, rooted to hierarchy and have a high need to avoid short term discomfort.

Probably the most famous book on the subject of decision making these days is “Thinking Fast and Slow” by Daniel Kahneman. It’s almost compulsory reading for board members and executive leaders and explores how we take decisions as well as the many biases we are susceptible to and other decision traps. The first section is a bit heavy going but it well worth persisting with. It’s a book  that I have found myself reading many times and going back to.

Daniel’s latest book which he wrote in collaboration with Olivier Sibony and Cass R Sunstein looks at another aspect of being “Data Savvy”. It’s called “Noise” and essentially looks at how our judgement can be impaired by the noise that is going on when we make decisions, including noise in the data.

Finally, if you aren’t a booky person you might like to listen to Tim Harford’s excellent “More or Less” show on BBC Radio 4 which is a very good show which tries to make sense of the numbers which are in the news.

Patrick Dunne, the Author of this lesson, is an experienced Chair and author of the award-winning book Boards