If Only We Were Truly Data-Driven… Or Maybe Not

It is an old argument. “If you have all the data, you catch reality, and you have all the insight you need to fully optimize business.” Wired magazine ran an article called “The End of Theory” arguing this back in 2008 already, and with the digitalization of business the argument is back. With a vengeance.

From a recent publication: “big companies survive and compete in today’s data-driven market in one way and one way only – by allowing analytical insights to drive their business agenda”. And: “make lucrative decisions from, and at the speed of, data.” And: “data as your north star”.

And then there is the idea of “distributed autonomous organizations” that are completely blockchain driven. If only you code all the business rules, you’re in business!

I couldn’t disagree more. And I say that as a data and analytics professional.

Where do I even start. Ok.

Let’s start at the beginning – Data is not objective

Data is the poorest possible reflection of reality. To focus on data as your main lens on the world is just one step up from being completely blind. It is just one sense out of many.

Data isn’t the story. It is the start of a story. A set of observations, combined with other observations, that leads to sense making, taking a position, making a decision, execute on that, and then adapt where and when needed.

Data isn’t objective. In the literal sense, “of the object”. And in the regular sense, not being biased. Data is deeply subjective, per definition. In the literal sense, “of the subject, observing the object”, and in the regular sense, being biased.

You see, data is measured by an instrument. The instrument has a purpose. For that purpose, it measures some things, and other things not. It measures it in a certain way, and not in others. Subjective. And then analysis, presentation, communication and understanding add other layers of subjectiveness and bias on top of it.

There is no such thing as objective data. Data does not reflect reality.

My colleague Roxane Edjlali demonstrated the same point from a more artistic view. Let’s consider the example of a “starry night”. What would the data catch? That it is night time. That it is dark to a certain degree. That there are points of light, how many of them, and measure their distance and relative position towards each other. Great. Do we now know what a starry night is? Do we now know what a starry night means? This is the observation of painter Van Gogh, of what is a starry night.  And this is the observation of French music composer Henri Dutilleux of what is a starry night.

Data is not the North Star

The presumption that strategy determines a single target state that we fund, gather the forces, and then march towards it is flawed in today’s world. And probably also not yesterday’s world. And to the extent we can oversee, certainly not the world to come. The keywords for the future is ambiguity. There is no North Star.

In many cases, we play what is called an infinite game (in contrast with a finite game). In a finite game, there are only so many moves. Complicated, but we can optimize and solve. In an infinite game, it is more complex. Every move we make, creates new movies in the game. Even if we observe and measure, we influence already, something called the Hawthorne effect. In short, we are part of the game we play. We can not observe, optimize and solve, we can only sense and respond. There is data involved, through monitoring, but the data never shows the full object. Per definition. Because showing it would alter it.

The world, and business, and consequently strategy, is full of dilemmas. Impossible choices that in every case lead to unacceptable results. We know that all that data and analytics do is confirm and deepen dilemmas. Analysis is taking something apart in its constituent components and understand its inner working. Analytics are just not the tool to deal with dilemmas. What is needed here is a very different toolkit, a very different mindset. Synthesis. Synthesis is taking different components and create something new out of it. This is how you deal with dilemmas: find a higher purpose, eliminate a constraint, think in terms of options instead of choices.

The world does not contain of problems to solve. The world is a complex set of dilemmas and dualities that at best can be influenced for the positive – a little.

Lastly – competition

Is data and analytics really the only way how to compete in the market? I would argue the opposite. Imagine the world in which we all have all the data, and we all have all the analytics. We would have perfect competition. Perfect operational excellence. No market opacity. And consumers also have the insight to know where the best deal is. Perfect competition is an economic term, which describes a situation where there simply is no profit anymore. Data and analytics as the sole competitive differentiator is a race to the bottom.

This does work in a few situations. When you are really big, and when your business model is “convenience”, which is fueled by collecting large volumes of data. Like Amazon. Who really could compete with amazon on operational excellence, customer intimacy or product innovation (exhausting the three value disciplines here). Almost nobody could.

But does that leave you no alterative? Of course there is an alternative. By being very clear about what value you offer, and offer it in an authentic way. By having people associate with your brand. By being part of their life. By being genuine in your desire to improve their business and their life. There is data and analytics in that, but it is only the conversation starter.

I think this is the main point I want to make: if you run a completely data-driven business, you are not a player in the soccer game (or fill in your favorite ball sport), but the football. You just do as an organization what the data and analytics tell you too. That does not count for much strategic insight.

Being data-driven is the so-manyth iteration of our desire that it is possible to take the place of the Greek Gods, and be like them in the power and control that we have.

A deep and desperate belief.

Frank Buytendijk (@FrankBuytendijk) is a Research Fellow at Gartner Research & Advisory and a pioneer in the field of digital ethics, #digitalsociety, and futurism.