Leadership & Business

The CEO’s Drug of Choice

Data—can’t live with it, can’t live without it. There’s an old saying that I’m sure most of you have heard: “We manage what we measure.” Other variations go something like this: “If you can’t measure it, you can’t manage it,” or “Without data, we’re flying blind.”

The information age has given us the ability to collect massive quantities of data. In a 1960s episode of the original Star Trek series, there was one particular episode in which the crew of the Enterprise discovered a deserted planet, and on it a computer. Spock reported to Captain Kirk: “Captain, there’s over a terabyte of data here, more information than the world has ever known.” Today we can store a Terabyte of data on a single disk drive.

And so companies are overflowing with data that is used to make million – and billion – dollar decisions every day. Having data to support our conclusions gives us a greater sense of confidence. But should it?

Data acts like a drug for many executives. It gives us a warm fuzzy feeling; it helps us feel confident in our conclusions; it helps us justify our decisions; and it insulates us from blame should our plans go awry.

Unfortunately, all too often today, I see executives using bad data—and they don’t even know it. The reasons are many, but at the most fundamental level it’s because no one has done the grueling work of figuring out what the right data is.

One of the most common misuses of data is estimating the size of a new market. I’m sure many readers have heard the one about the shoe company whose business was slowing in the U.S., so it sent two marketing managers to Africa to explore the market there. The first called back to headquarters in the U.S., reporting, “There’s no market here for us. No one wears shoes.” The second called in reporting, “There’s a huge market here. No one wears shoes.”

Given the same data, one could conclude that there is either a tremendous market or none at all. And one could use the same data to kill any plans to take the business to Africa, or to make a huge investment there. So what data is needed in this case? The needed data is “How many people want or need shoes and can they pay for them?” It’s not a question of how many have or do not have shoes.

Obviously my story is an anecdote, and no established company would make a decision about entering a new market based on such simple reasoning. But even when more data is collected and analyzed, and when the team believes its decision will pay off, sometimes it’s just a failure. So what happened? All the data in the world couldn’t save us. We thought we were managing what we measure.

A big part of the problem is that we often start with the data and ask, “What can we learn from it?” But that’s simply backwards, because available data can severely bias our conclusions. Instead we need to ask, “What do we need to know? What decisions do we need to make? And what data is necessary to support those decisions?” Then we can search out the data, if it’s available, or we can install a means of collecting it. What we can’t do is settle for data that might be available and force-fit it to our problem.

That’s no different than abusing drugs to make us feel better for a time – until we suffer the crash of a hangover.

Can you hear what your customers really want?

Listening to the “Voice of the Customer” has almost become synonymous with smart business in recent years. So I think it’s interesting, and appropriate, to examine what it means to listen to the voice of the customer and to discuss whether it’s good, bad, or indifferent; who should listen; who shouldn’t; and the risks associated with “listening,” to what your customer has to say.

Before diving into this from a business perspective, though, how about a little discussion of politics just to introduce some irony. Think about the “voice of the customer” in politics. Isn’t the “customer” really the voter that elects politicians? Yet think about how much a politician is vilified for “following the polls,” or “caving to the pressure of the people.” Now, I agree caving to the pressure of special interests that don’t truly represent the “customer” is wrong, but why is it so wrong for a politician to say, “well, I don’t really like this bill, but the polls say my constituents support it three to one,” so I’m going to go ahead and vote for it. Is that immoral? Is it wrong? Why is it any different than an auto maker saying, “well, I don’t really like red cars, but my customers buy them at a rate of three times that of any other color, so I guess I’ll make red cars.” Now it’s true that we live in a democratic republic, not a pure democracy, so our elected officials are empowered, and expected, to vote their conscience and to do what they believe is right. But how can we call it wrong to do what a majority of our constituents think is right? And what is the likelihood that whatever it is the politician is voting on is bad or immoral, if a majority of the elected officials support it? Just some food for thought.

Now, let’s talk business.

The voice of the customer is not all it’s cracked up to be. In his recent book, The Culture Code, Clotaire Rapaille reveals the stark difference between what people say they want and what really turns them on. In one fascinating study, Rapaille demonstrates how Chrysler revived the Jeep in the 1990s, not by asking people what they want (to which they answer reliability, a good price, safety, etc.) but by studying their subconscious coding of the product. During the study, by asking people about their first memories of the Jeep and studying their subconscious perceptions, Rapaille discovered that the “Culture Code” for the Jeep in America is, “the horse.” Because for American, the Jeep symbolizes the Wild West, a the wind in the hair, bravado, etc. Yet in Europe the culture code for the Jeep was revealed to be the “liberator.” That is, the American soldier coming over the hill in a jeep to liberate a town. By using these images, the Jeep was slightly restyled, ad campaigns launched, and sales of the Jeep rejuvenated. Yet in VOC studies, not a single participant said, “I want to feel like I’m in the Wild West.”

Along similar (but different) lines, a lot of work has been done in recent years to discover what is often referred to as “the unarticulated needs of the customer.” In other words, if the customer can tell us, “I need this,” we’re probably a little late to the game. But if we can discover their unarticulated needs by studying their business and our ability to add value, we can stay one step ahead of our competitors.