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Data Driven Decision Making

There’s a lot of discussion around “data-driven decision making,” but what does that look like in reality? Ideally, we’d like to use data to make decisions that are objectively “correct”, but unfortunately humans aren’t objective creatures. Despite the fact that data may point to one conclusion, if our brains come to another -informed or not – we’re likely to favor our brains. But why is this? And how do our brains make decisions, anyways?

Dan Young of Corporate CMK gave a presentation at the 2011 Statistics Symposium titled, Human Based Visual Communication that suggested the following reasons:

  •  Humans prefer action over accuracy
  • Humans are adverse to ambiguity as ambiguity ~ risk, yet ambiguity is inherent in life
  • Humans are motivated to pursue gains but avoid losses
  • Humans would rather avoid losses than pursue gains

 The result? We often make decisions based on feeling instead of knowledge.

While the human brain does a relatively good job in guiding our business decisions, it’s not always accurate. But what if it could be? What if there was a way to improve our decision making capacity so that we would be more willing to make decisions based on data than on emotion? Well, there might be, and data itself may be the answer.

The Cognitive Science behind Decision Making

Cognitive Psychology might feel inaccessible and overly complicated, but it starts to make a lot more sense when you break it down. For the sake of this blog post, we’re going to focus on three key aspects of cognition, and how data visualization can help to improve them:

  • Memory
  • Attention
  • Learning

We’ll identify the truths and challenges of each and discuss opportunities to combat those challenges with data visualization. Who knows: data may be the very key to enlightenment we’ve all been searching for.

Memory and Data Visualization

Memory and Data Visualization

Until recently, it was common to distinguish between three types of memory: sensory, short-term, and long-term. This multistore model of memory, proposed in the mid 1960’s, proposed that information is moved between different cognitive structures, transforming it along the way as such:

Incoming information is held in the sensory registers…. and then is transferred to short-term memory by means of attention…. which is maintained there by means of rehearsal…. and is eventually copied to long-term memory by means of encoding.

In accordance with this model, one cannot have short-term memory without long-term memory and vice versa. However, in 1974, researchers Baddeley and Hitch described a patient with brain damage who had no short-term memory to speak of, but who demonstrated normal performance on long-term learning tasks. This lead the researchers to believe that short-term memory is not the “central bottleneck in information processing” as previously believed, but rather its own separate and complex system.

Read next: Unpacking the Laws of Visual Perception

Working Memory and Attention

Attention and Learning Data Decision Making

This separate system is comprised of three components: Auditory (phonological loop), Visual (visuospatial sketchpad), and a central executive. The auditory and visual components are responsible for temporary storage and maintenance of information while the central executive is responsible for key control processes such as reasoning, planning, and decision making. According to Baddeley, each of these components is connected via an episodic buffer, allowing them to interact with one another to create the “Working Memory,” which is crucial to decision making.

A key function of the working memory is “Attention,” which is the result of whatever trace remains of a stimulus that has disappeared, after 30 seconds of distraction. According to theories, human thought is categorized by information processing, with storage centers that store information, and channels that move that information from one storage structure to the next. Attention is thought to be one of these processes, and it determines which information will become conscious and which will not.

Learning Something New

Both memory and attention are crucial to learning and understanding. Working memory allows individuals to follow directions, guidelines, or set standards in order to achieve a specific outcome. It allows us to hold onto new information as we receive it and to apply it as necessary to obtain a successful outcome.

In terms of reading, our working memory aids in comprehension by facilitating the organization and summarization of text so that we are able to make connections.

In terms of writing, our memory allows us to keep the bigger picture in mind while playing with the thoughts we want to translate into words.

And in terms of numbers, working memory enables us to keep track of numbers, equations, and operations so we can better solve equations or understand what those numbers are trying to tell us.

That ability to retrieve all the information we learn and store circles back to our long-term memory, which is crucial to our ability to learn new material.

Using Data Visualization to Impact Learning & DecisionsData Visualization Decisions

You may be wondering, at this point, what all this information has to do with data visualization. We’re getting there, we promise.

For one, decision making in the business sense is highly complex and involves a number of internal steps. There is abstract reasoning, recall, and the incorporation of new information, each of which relies on the working memory. Then throw in all the biases and preformed hypotheses, and making an objectively “correct” business decision goes from complicated to near impossible.

Fortunately, the human brain responds favorably to visuals. Human attention span is drastically decreasing, with studies revealing that our attention span (8 seconds) is now actually shorter than that of a goldfish (9 seconds). However, as our attention spans decrease, available data increases. This means we need a way in which we can visualize that information and perform all of the steps above—reasoning, recall, and incorporation—in as little as 8 seconds in order to come up with an informed decision. Graphics such as charts, graphs, and other dashboard elements make that possible.

Graphics provide for fluent processing of complex information in an easily accessible way and turn seemingly random number sets and letters into aesthetically pleasing visuals with context. Data visualization tools like dashboards make it easy to recognize patterns, find exceptions, and identify insights. Data viz also allows us to quickly interpret data sets and adjust different variables to determine different outcomes.

Moreover, data visualization tools allow us to tell a story and to integrate already learned information for quicker and more concrete connections. This connects our long term memory with our working, or short term, memory. It also aids in learning, because information that has already been processed can more easily be tied to the new information being presented. Most important of all, they help create relevancy so that the message conveyed is more memorable and therefore more likely to make a positive impact on the intended audience.

#DataViz allows us to tell a story and integrate information for quicker connections. Click To Tweet

The way in which people learn and retain information poses a whole new challenge, namely that most people learn by exploration rather than dictation. The old methods of communicating data relied on telling rather than discovering, causing pertinent information to get stuck in the phonological loop. Data visualization helps people to move that information past that loop by means of attention—or by encouraging them to visually explore data in order to come to their own conclusions. This is not only more rewarding for them, but it also encourages more informed decision making.

In the end, decisions should be made from a position of strength. If your organization is serious about making data driven decisions, it’s vital to communicate that data effectively and understand how your audience will process and integrate the information. Data visualization is uniquely effective because it uses the brain’s natural processes to help it come to informed conclusions and therefore, allow it to make informed decisions.

Want to turn your data into decisions? Try iDashboards data visualization software for 30 days, absolutely free.

Post Series: The Psychology of Data
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Jennifer Horne Sr. Digital Marketing Coordinator @iDashboards

Jennifer Horne handles SEO, PPC, content and digital marketing for iDashboards. She has won multiple 30 Rock trivia competitions, makes a mean green curry, and loves living in Detroit.


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