Is there such a thing as a purely rational, logical business decision? Do business leaders and entrepreneurs rationalize and reason before arriving at that decision? Consider what a data-obsessed world we live in. It isn’t hard to see how central data has become to everyday life. Your smartphone can tell you how long it will take to get to your destination, your fitness tracker counts the number of steps you have taken throughout the day, your smart home device can raise and lower temperatures based on your preferences that it has recorded. Imagine taking that kind of microdata to a macro level and you can begin to grasp how critical data becomes to an organization. So crucial have data scientists become that they have quickly gained the confidence of the C-Suite. In fact, many recruiters make the argument that if you haven’t become comfortable with “data-speak” in the next ten years your chances of gaining the C-Suite are woefully slim.
However, some of the most famous business leaders of our time such as Steve Jobs and Richard Branson have relied on gut instinct rather than pure data to make critical business decisions. Some of those decisions have led to runaway successes and others to catastrophic failure. Jobs, for example, was known to often ignore market data and once boldly predicted that tablets would outsell PCs eventually. He launched the iPad in 2010 contrary to market intelligence that reportedly did not back his intuition. Fast forward to 2015 and tablets had outsold PCs, according to Gartner Research. Richard Branson too has gone on record to say that he trusts his instinct far more than any amount of statistics. Branson of course is the founder of the Virgin Group. Indeed, a majority of executives feel that it is necessary to rely on gut feelings rather than pure data to make crucial decisions.
But big data has become the trend du jour. It is fashionable to pursue a career as a Data Analyst, Data Scientist, or Data Marketer, etc. as data explodes around us. Harvard Business Reviews called Data Scientist the “sexiest job of the 21st century”. The rapid growth of business intelligence software has made the access to data easy and available. Vast amounts of data are now available from CRM systems, financial databases, web data and the new phenomenon, social media. From big retailers to tech companies to financial orgs, all want data about customer preferences and habits. Companies can now quickly compile and assemble data and there are tools to analyze and interpret the data. Data and marketing analytics thus brings tremendous value to businesses to enable them to better understand customers, processes, people, products and services. So why wouldn’t you ground your marketing strategies in data-driven knowledge, insight and facts?
Let’s look at the other side of this equation – the gut instinct, often maligned by those who believe in hardcore data. What is instinct really? A gnawing gut feeling that tells you to go in a certain direction even when the facts or data suggest otherwise? A gut instinct is a gamble that you have your finger on the pulse of the customer (and know better than the customer) what he or she wants. A gut feeling is a belief that you’re betting a customer is going to like or want something she doesn’t yet know she wants or likes. In retrospect, Steve Jobs had a pretty good finger on that pulse, didn’t he? But gut instinct or intuition is rooted in knowledge and understanding of the customer and her preferences. That knowledge informs our intuition which in turn drives a marketing plan which our brains may not consciously rationalize.
Let’s look at another market gamble that failed spectacularly – the Fire phone from Amazon. It was risky given that the market responded less than enthusiastically when news started to leak that Jeff Bezos was planning a competing product against Apple’s iconic iPhone. Up to this point Bezos had introduced some hardware products that had done quite well such as the Kindle e-reader and the Kindle Fire tablet that was positioned as a cheaper alternative to the expensive iPad. So far so good. But when Bezos positioned the Kindle Fire phone as a direct competitor to the iPhone it instantly raised expectations to stratospheric levels and we all know how that battle went down. The Fire phone could not live up to the hype and within a few months of the launch, Amazon was selling the phone at a fraction of its value and the Fire’s demise was swift.
The Fire story perceivably illustrates the dangers of sticking to gut feelings when market intelligence is clearly pointing in a different direction. But it’s wrong to say that gut feelings have no foundation in logic or reason. Intuition, experts argue, is enhanced by experiences. Perhaps Bezos ignored his instinct and the data to pursue the Fire phone that ended in disaster.
So what should you do in this new marketing age of exploding data? Ground your decisions on data that is available at your fingertips or trust your gut? Don’t ignore the data – it is there to help you better understand your customer, product, or service. Use the knowledge that inevitably influences your gut and helps you make intuitive decisions. And then trust your gut to arrive at the decision or conclusion.