An­a­lyt­ics Will Only Get You So Far

Rotman Management Magazine - - FROM THE EDITOR - - Alessan­dro Di Fiore

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.

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