Even in a data-obsessed era, your company is ultimately driven by human opinions. 

There's a scientific reason for this. And it goes beyond the obvious reminder that sustaining an analytics advantage requires talented employees who'll ask the right questions, make the correct decisions, and persuade their colleagues to come along for the ride. 

The reason is that people, on the whole, favor the laziness of opinion over the rigor of scientific study. "Decades of research have shown that humans are so-called cognitive misers. When we approach a problem, our natural default is to tap the least tiring cognitive process," explains Keith E. Stanovich, an emeritus professor of applied psychology and human development at the University of Toronto, in Scientific American

If that answer sounds familiar, it's likely because you've heard it from psychologist Daniel Kahneman, Nobel laureate and author of bestseller Thinking, Fast and Slow. One of Kahneman's go-to pieces of advice for entrepreneurs is to be careful when trusting their "gut" or initial reaction. He thinks it's wiser to trust the data

Psychologists call going with your gut "type 1" thinking. Think of it as thinking fast. By contrast, "type 2" thinking is thinking slow. It means you're taking your time and evaluating. 

Type 1 thinking has an evolutionary purpose. "If we can solve a problem more simply, we can bank extra mental capacity for completing other tasks," writes Stanovich. "A problem arises, however, when the simple cues available are either insufficient or vastly inferior to the more complex cues at hand."

Even if type 1 thinking is as old as the human race, the tension between the types can feel more pronounced than ever, in today's scientific or business settings. Contemporary organizations have much better data than they've had in the past, notes Michael Schrage, research fellow at MIT Sloan School's Center for Digital Business, in the Harvard Business Review. "Their analysts and analytics are first-rate, too. But managers still seem to be having the same kinds of business arguments and debates--except with much better data and analytics," he writes.

His point is that even data-driven organizations have cultures to reckon with. And cultures are the sum of the human beings within them. As such, any organization hoping to become more type 2 in its thinking can't just flip an analytics switch. You have to change human behaviors, too. Which means potentially changing incentives, to make sure your systems of promotion and recognition reward employees who make analytics-based decisions. 

"The questions, the answers--the data and the analytics--are undeniably important," Schrage concludes. "But how those questions, answers and analytics align, or conflict, with individual and institutional behaviors matters more."

Published on: Oct 29, 2015