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Why business shouldn’t depend on big data

Unilever has challenged its marketing teams to deploy 'more magic and less logic'

January 15, 2014 | By:

Analytics, algorithms, KPIs, dashboards: don't  fixate on digitally-driven research at the expense of such qualities as judgement, intuition and instinct, says the IoD's Martin Thomas

Big Data_Delete key_620 Corbis

It’s humans that best understand human behaviour: is data fixation making us forget this?  Photo from Corbis

Our lives are increasingly governed by data. The information derived from what we search for online, the websites we view, what we buy, the content and comments that we share through social media; all these can be used to anticipate our future behaviour. Offers of products and services can be personalised to our particular needs.

The experts can predict, with an amazing level of accuracy, when we are about to move house, when women are about to have a baby, when we are likely to be in the market for life insurance and a myriad of other day-to-day transactions.

Business has embraced this new world with unbridled enthusiasm. Ian Davis, worldwide managing director of McKinsey, is a typical data evangelist, arguing that: “Long-gone is the day of the gut-instinct management style. Today’s business leaders are adopting algorithmic decision-making techniques and using highly sophisticated software to run their organisations.”

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It all sounds pretty alarming to those of us brought up at a time when judgement, intuition and gut instinct were valued as primary leadership skills.  

The case for intuition over algorithms

But before digital neophytes and data novices get too worried about our ability to function in this new business environment, Professor Roger Martin, until recently Dean of the Rotman School of Management at the University of Toronto, gives us room for optimism.

He says: “Let me suggest an alternative trend: the rise of heuristics [the application of intuition or common sense to problem solving] over algorithms; qualitative over quantitative research; judgement over analytics, creativity over crunching. Smart executives are recognising that the analytic approach to business has overreached.”

A similar spirit appears to be pervading the corridors of power within consumer goods giant Unilever, which has challenged its marketing teams to deploy “more magic and less logic”. Insiders are suggesting that an unthinking adherence to data has made it less willing to embrace the inspirational creative ideas that underpin its longer-term commercial success.  

Let’s not forget that the global financial crisis was created by some very smart people, responding to even smarter algorithmic models.

Jeremy Granthan, a respected market strategist with GMO, an institutional asset management company, says: “In their desire for mathematical order and elegant models, the economic establishment played down the role of bad behaviour… and flat-out bursts of irrationality.”

Nothing can understand a human like another human

The data enthusiasts often forget that we are wonderfully irrational, idiosyncratic, unpredictable people. We do odd things. We buy odd things. We don’t always do what is right or sensible.

We hate being pigeon-holed into predictable patterns of behaviour. This is what makes us human and what makes our intuitive skills so precious.

When Karl Lagerfeld designs a look for his latest muse, you can guarantee that he doesn’t wait to see what the data tells him.

Hollywood movie producer Harvey Weinstein continues to rely on his legendary ‘golden gut’ when choosing to finance unconventional but ultimately successful movies such as Silver Linings Playbook. An algorithm has never won an Oscar.

The business world may celebrate the emergence of big data, but fortunately our brains are bigger.