How to Make Informed Decisions with Today's Tools

 

Relying only on gut feelings or opinions when making decisions is no longer wise. With all kinds of tools to mine the massive data available, anyone can make better decisions. Informed decision-making has always been challenging but has become much more manageable today.

There are five steps to data-driven decision-making: 1) gathering relevant data, 2) organizing, cleaning, and formatting the collected data, 3) using statistical methods to analyze the data, 4) presenting the analysis in a clear and understandable format, and 5) using the insights gained to make informed decisions and take appropriate action.

What Tools I Use

Excel has been helping me make decisions, even at home. My children fondly call me Ms. Matrix. Here is an example of how my family uses it to decide where to go for a family reunion.

Each family nominates a destination and presents a description. With a simple matrix, we compare variables like sights to see, food options available, activities for children, weather, and travel costs.

Each variable is given an importance ranking (the rankings should total 100%), higher for the more important ones and lower for others. Then, each family rates each destination’s variable on a scale of 0 to 100. The average of the families’ ratings is the final rating.

	Importance	New York City	San Diego	Orlando
Sights for Adults	20	90	70	70
Food Options	30	95	85	80
Activities for Kids	30	70	90	95
Weather	10	70	90	65
Travel Costs	10	70	75	65
TOTAL	100

                 

Each variable’s score is computed by multiplying its importance by its final rating. The variable scores for each destination are summed up. The highest total score wins!

		New York City	San Diego	Orlando
Sights for Adults		90x0.2=18	70x0.2=14	70x0.2=14
Food Options		95x0.3=28.5	85x0.3=25.5	80x0.3=24
Activities for Kids		70x0.3=21	90x0.3=27	95x0.3=28.5
Weather		70x0.1=7	90x0,1=9	65x0.1=6.5
Flights		70x0.1=7	75x0.1=7.5	65x0.1=6.5
	TOTAL	81.5	83	79.5
	RANK	2	1	3

 

They used to wait for me to lead the discussion. Today, any of my daughters can build matrices. They caught the bug and retired me.

I use two other tools for discussion and visualization. Mind mapping is great for brainstorming and exploring different possibilities. I branch out as far from the center as possible.

Decision Trees are diagrams that display different consequences at each fork or decision point. It helps present various scenarios for comparison and visualize all the possible outcomes.

More Tools and AI

Aside from simple spreadsheets, you can also use statistical software like SPSS for statistical analysis, platforms to help manage and analyze large datasets, and data mining tools to discover hidden patterns in the data.

Artificial intelligence (AI) is increasingly becoming crucial since it can be used for all these steps. It can:

1. Automatically collect data from various sources and clean it to remove inconsistencies and errors,

2. Use advanced statistical techniques and machine learning algorithms to identify patterns, trends, and correlations within large datasets that would be difficult or impossible for humans to spot.

3. Predict future outcomes based on historical data, helping businesses make informed decisions about marketing campaigns, product development, and more.

4. Analyze text data, such as customer reviews or social media posts, to gain insights into customer sentiment and preferences.

Using intelligent generative prompting, you can iterate until you are satisfied that all aspects have been covered. This allows you to invoke AI in the entire decision-making process!

In the past month, for example, it has helped me decide to shift my writing to another platform (more on this in a future post). I used 36 iterations, driving down details of why, how, where, what, and when to do it.

However, human judgment and expertise are still essential to use in conjunction with it. Review what AI did and verify that the data is correct, there are no gaps, and decisions are ethical. And, if you like, follow AI’s example and take a second opinion: your own.