Half of Britain’s CFOs make major decisions based on instinct rather than empirical data, risking their companies’ profits and reputations, new research has revealed.
79% of the 1,135 executives polled, in the new survey from the Economic Intelligence Unit and PricewaterhouseCoopers, say they make a “big” decision each financial quarter. How big? One in three puts the value of those decisions at $1 billion or more.
And many are eschewing data in favour of gut checks when making those decisions. Only 32% of study participants said their decision-making process is “highly” data-driven. That’s partly due to the lack of good-quality, complete and accurate data, with 47% saying their data is lacking and obstructs timely decision-making.
That may be because many executives are relying on rudimentary tools to assess information. 70% of respondents still use Excel spreadsheets to gain access to data and just 43% feel they have gained better visibility of metrics in recent years.
But the survey confirmed that using empirical data rather than instinct is more likely to yield higher profits. 72% of CFOs saw a profit increase when they ground their decisions in hard facts. And the companies which describe themselves as highly data-driven were three times more likely to report solid decision-making over the past three years.
In light of those results, even the most gut-driven financial officers are coming around to data. 64% of executives report that data has changed the way their companies make decisions and expect it to have an even greater role in decision-making in the future.
Dan DiFilippo, data and analytics leader at PwC, said: “While executives say they continue to rely on experience, advice, or their own gut instinct, they also see investment in data and analytics as critical to success.
“Experience and intuition and the use of data and analytics are not mutually exclusive. The challenge for business is how best to marry the two.”
