Analytics Will Only Get You So Far

Anyone who knows the story of Apple knows that it was built on insights rather than analytics. Steve Jobs was actually highly resistant to quantitative research.

When Jobs returned to Apple in 1997, it was a mess. In his absence, the emphasis had been on developing more and more products. Apple was even selling printers in partnership with Hewlett Packard — and making next-to-no money on them. Resistant to quantitative research, Jobs used his judgment to quickly cut the numbers of models and products. He then drew a simple two-by-two diagram and told his colleagues that Apple needed to have one product in each quadrant.

As indicated by the Apple story, the capability to generate and apply insights and qualitative judgments to innovation is a key competitive advantage — or at least, it should be. The trouble is, most companies remain tied to a numbers-aboveall-else approach and continue to invest heavily in developing analytic skills. As a result, innovation processes have been re-engineered — or over-engineered — with stage-gate processes equipped with financial evaluation tools to support go/ no go decisions.

Strategy and innovation should not be a mere exercise of analytical power, but instead, a qualitative process in which an analysis of the available data from the past leads to insights about the future, born out of individual observation and reflection — rather than the other way round.

The problem is, measurement is comforting. Companies, mostly large ones, need to maintain some kind of control over processes, and playing the management-by-numbers-game makes decision makers feel more confident. Enraptured by the Holy Grail of quantitative analysis, business leaders become so obsessed by numbers that they rarely question their guidance. Preoccupied with issues such as predictability and control, they have become increasingly suspicious of qualitative perceptions.

However comforting it might be to ‘stick with what you can measure’, leadership isn’t about feeling comfortable:

It’s about seizing opportunities as they occur — even if the numbers suggest otherwise. The analysis of data will always be useful, no question. But judgment is the driving power behind innovation.