Culture of learning key for data success

12/02/2016
When it comes to business analytics, a culture of learning is essential if organisations are to ask the right questions.
 
 
That was the key message delivered by Professor Steve Tadelis at the ‘Talking Data’ series event hosted by the Centre for Business Analytics at Melbourne Business SchoolProf Tadelis is Professor of Economics, Business and Public Policy at the University of California at Berkeley and former Distinguished Economist at eBay. 

Prof Tadelis, whose research is mainly focused on the economics of the internet, spoke to a full house of industry leaders, alumni, and students at the Melbourne Business School’s Carlton campus on 11 February about causation and correlation.



Drawing on his work at eBay, Prof Tadelis highlighted the importance of prescriptive analytics as the most important tool for business leaders when examining data.

“It’s a question of ‘how could I use the data to answer the question of what is the best thing I can do’,” Prof Tadelis said.

He said asking the right questions was imperative for this task.

“If we ask the wrong questions, then even the best people in the world are not going to give us the right answer,” Prof Tadelis said.

“It doesn’t matter if the data are big or small; they are only as good as the questions asked.”

When he was working with eBay, Prof Tadelis showed that paid searches were not as profitable for the company despite initial figures suggesting that the return on investment for paid keyword marketing was over 1200 per cent. Using large scale experimentation, he and his team found that the return on investment on keyword marketing was closer to -60%, leading eBay to significantly reduce its advertising budget.
Prof Tadelis said making decisions using question-driven analysis required experimentation that, in turn, required a “culture of learning” within organisations.

“A lot of businesses do not have a culture of learning. Someone thinks they know what’s going on, and no-one challenges them,” Prof Tadelis said.

He told the audience that if they worked in an organisation with a leadership that didn’t like to be challenged, then that would indicate a serious leadership weakness.

“One thing I’ve learned is is that politics trumps economics any day of the week in organizations.”

Prof Tadelis also said the three hardest words to say were “I don’t know”.

“If something is not knowable, you say ‘I don’t know’, Prof Tadelis said. “It’s okay not to know, but for that you need an organisation that appreciates when people say ‘we don’t know’.