Can’t decide? This is how you can insert important information to make it easier!

It’s okay if you’re not sure what’s important, what’s authentic either. Here are four questions that can make your job easier.

The twenty-first century is the age of information abundance, our problems do not come from knowing too little about certain things, but from knowing too much. How can we make decisions effectively? Harvard Business Review sought an answer to this question .

Avoid these mistakes!

I. The first mistake we can run into is inaccuracy. We should not treat a statement as fact because it may not be accurate. How many times do we take claims for cash just because we like them? Have you ever accepted someone else’s conclusion because it justified you?

The first and most important step is to check the facts. Let’s follow the chain of sources and if we don’t find any convincing facts at the end of it, then don’t accept it.

II. The second is measurement error. Even if we asked a lot of people about something, the data can still be inaccurate, in fact. Nor can we be sure that the given answers are representative: this is the eternal problem with case studies. They are lively, they bring the topic to life, they inspire readers and company managers much more than any statistics or regression.

This is true of all business bestsellers and motivational speeches that illustrate the point through a story. A single anecdote — or even several — does not mean anything, since these may be the very exceptions that «prove» the rule.

Many management tools are sold with stories of famous companies that followed it and became successful. But there may be hundreds of other organizations that have also used the tool and failed.

To prove that the formula works, you’d have to look at hundreds of companies that have used it—both the ones that worked and the ones that failed—and compare their success rates to a control group that didn’t.

III. The third common mistake is that, although a result supports one solution, it cannot substantively refute the alternatives. This is the science of filtering out causal relationships.

Let’s examine the relationship between corporate governance and corporate performance! Suppose we find that well-managed companies are more successful than poorly managed companies. The data are consistent with the idea that good corporate governance leads to better performance.

However, the data may be consistent with two rival theories.

1. Poorly performing companies may need to focus on firefighting: companies care about corporate governance when they are not in trouble.
2. But it may even be that the cause is common: good managers improve the corporate governance system at the same time and increase performance on the other hand. It does not follow that the former causes the latter.

ARC. The last mistake is to believe that an empirical fact is always true. According to one study, companies with high employee satisfaction outperform their competitors in terms of long-term stock returns by 2.3-3.8% per year.

However, the study was limited to the United States, and to those rich, Western, educated, democracy-loving people and companies that are not necessarily representative of the rest of the world. So the hypothesis may or may not be true in general.

How to avoid these mistakes!

The four questions.

1. If you see a claim, is it backed up by data? It’s not enough to have a source, look at what’s behind it.
2. When you hear an anecdote, is it about a representative character or group, or is it the exception?
3. Could there be other reasons for the result? Have we really found cause and effect in the situation?
4. Is the statement in question also true in the economic, social or private situation in which you or your company is involved?

In order to understand the data and make a good decision, it is often not statistical knowledge that is needed, but common sense and critical thinking, says Alex Edmans , professor at London Business School.