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Understanding Customers: Trusting Data Versus Trusting Your Gut
Posted on March 31st 2012
As if the CIO did not have enough to worry about: Cloud, Social, Mobile... along comes Data ("Big Data" to be buzzword compliant). OK, I might have it a little backwards, Data has been a concern for a long time, but now, because of Cloud, Mobile and Social, Data is an even bigger challenge. The list of issues surrounding data is a long one: growth of, quality of, management of, storage of, interpretation of, access to and last but not least, analysis. Many of these are technological, but the real issue is when data crashes into a human…
Do You Trust Data or Do You Trust Your Gut?
The stakes are real – the future of your business. Leveraged well, data will provide an edge, properly used it is a difference maker. Do phrases like: ‘My instincts got us here, and we are doing just fine’ or ‘it feels right’ fly around your office? Hyperbole, maybe, but most of us know the type and have experienced at least a bit of it. There is an argument that suggests that some people actually do know what the data says, and their ‘gut’ is right. As for the rest of us, I am not so sure, the answer is that balance is needed. According to HBR (Full source below), that balancing has a name – an informed skeptic:
At one end of the spectrum are the pure ‘trust your gut’ types on the other, the purists (“In god we trust, everyone else bring data”) types. The basis of the HBR article is: even if the data is good, decisions based on that data should be questioned – ie, be a bit of a skeptic. This is interesting and important.
“The ability to gather, store, access, and analyze data has grown exponentially over the past decade, and companies now spend tens of millions of dollars to manage the information streaming in from suppliers and customers.”
From my perspective, it is all about intelligence; using data, properly, to provide you and your business insights to make decisions. That is what you do, right; the data is there, everyone who needs it has access and the entire organization is leveraging it to its full potential? As the article also suggests, IT should spend more time on I, less on T – while it sounds fun, there is a small point there, not as big as the author makes it seem. To question data, to invite skeptics, everyone needs access
Do People Really Know What to Do with Data?
What are the reasons that data seems to scare people. Few will admit to being scared by data, but very few have the real background to argue on empirical terms when charts and graphs and conclusions are put in front of them. An IBM/MIT study (Source 3) identified three levels of analytical sophistication: Aspirational, Experienced and Transformed, in a Year-to-year comparisons of these groups (which can be seen in the source report) it shows that Experienced and Transformed organizations are increasing their analytical capabilities, significantly.
(note: The IBM/MIT report did not present the information in the format above, I used the article to create an image similar to the HBR article).
“The number of organizations using analytics to create a competitive advantage has surged 57 percent in just one year, to the point where nearly 6 out of 10 organizations are now differentiating themselves through analytics” IBM/MIT
What is unfortunate is that it sounds better than it really is. If you really start to dig deeper into the data (oh, the irony), the story is a bit more complex. While things are getting better, I am not sure I would characterize them as ‘good’. Out of curiosity, I wanted to look at a topic important to me, Customer Experience. Based on my interpretation of 3 sources of information, many know what to do, but are struggling to do it. By my read of the IBM/MIT report, only 1/2 ( 10%) of the organizations who ‘really get it’ (transformational) are using analytics to make decisions regarding customer experience. Turning that around, 90% are not, scary, unfortunate, reality.
“Typically, an organization’s highest-spending customers are the ones who take advantage of every channel, whether it’s the web, a mobile device, or a kiosk on a showroom floor.8 Unfortunately, these customers are most at risk for experiencing a disconnect in navigating channels that are not yet integrated. A unified multi-channel “bricks and clicks” approach can allow customers to move between website, smart phone app, or an in-store service counter with a consistent quality of engagement.” (Source 1)
The only way to know and really understand something like this is to have the data to prove it! It is not rocket science, but it does take some work. What steps are you taking to share data, train people and leverage what you have right there in front of you?
- Something as valuable as Data is not a Problem, it is powerful and valuable Asset,
- Help people to understand data, encourage them to be an educated skeptics (yes, question that Infographic)
- Gut Instincts are not bad, just keep things in perspective, right place right time,
- And for goodness sake, start using Data to better understand your Customers!
There is so much more to this story. In writing this post, I have a whole new level of respect for this topic…I hope you do too.
- Analytics in the Boardroom, IBM Institute for Business Value, Fred Balboni and Susan Cook
- Good Data Won’t Guarantee Good Decisions, Harvard Business Review, April 2012, Shvetank Shah, Andrew Horne, and Jaime Capellá
- Analytics: The Widening Divide How companies are achieving competitive advantage through analytics, MIT Sloan Management Review with IBM Institute for Business Value, David Kiron, Rebecca Shockley, Nina Kruschwitz, Glenn Finch and Dr. Michael Haydock
This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet.