Saturday, January 08, 2005

Data and Patterns

Britton Manasco writes in the Customer Intelligence blog on Corante about Clayton Christensons' view of the "data-driven" model of Harvard Business School and why they should change.

Harvard Business School, he explains, is in danger of being over-run by corporate universities (like GE Crotonville), on-the-job training and web-based technical schools like the University of Phoenix.

"When we were having this case discussion about the disruption of Harvard Business School, I walked into the classroom and took a vote of the students, and there were 100 students in the class," he explains. “'How many of you think Harvard’s in trouble?' Three students raised their hand; 97 -- there were no abstentions -- voted that, 'Don’t worry, be happy, this could never happen to our school.'”

"And so I asked if one of the three who was worried why he was worried and he said, 'Well, there’s a real pattern here,' and he lists out the elements of the pattern and then he said, 'Now look in the case and everything that happened to all of these other people is happening to us. That’s why I am worried.' So then I turned to the don’t -- worry -- be -- happy crowd and said, 'So why aren’t you worried because it fits the pattern so closely?'”

"And everything that they cited related to the data, that more people are applying to Harvard then ever before, our students are getting more money than ever before, and the more money they get paid, the higher…we’re much further ahead of Stanford on the rankings, and so on. And so we had this argument back and forth."

"So then I asked one of the students who was the most vociferous defender of Harvard’s invincibility, 'So imagine you were dean of the school, what evidence would you need to see to become convinced that this is a problem that we need to address?' And he said, 'Well, I would look at Harvard’s market share amongst the CEO’s of the global 1000 corporations, and if it starts to dip, then I’d worry.'”

"And I said, 'Well, when you saw that data, would it signal that the problem needs to be addressed, or that the game is over?' He said, 'Oh, yeah, the game would be over!' And so I turned to the rest of the don’t -- worry -- be -- happy crowd and said, 'So any of the rest of you, imagine you were dean. Could you give me data that would convince you that it was time to take action?' And actually, every piece of data that they could come up with was evidence that the game was over."

One key insight that emerged from Chistensen's exercise is that data and analysis revolve around the past, leaving us blind to the threats and opportunities of the future. "And yet, the way we teach our students, at our school we teach by the case method and if the student makes a comment in a case discussion that can’t be backed up by his analysis of the data in the case, the instructors are trained to crucify the student on the spot," he notes. "And so we enshrine the virtues of data -- driven analytical decision making in the way we teach at our business schools, and the our students go to work for McKinsey and they carry data-driven analytics to the nth degree, but in many ways the very ways we teach them condemns our managers to take action when the game is over."

This is a very important assesment of what is needed to be taught at business schools. The number crunching game will provide better understanding of what has happened, the past. Whereas it is important to understand what is hapenning in the present and how to predict the future. Here, patterns become more important.

Brian, writing about Michael Lewis in the Customer Intelligence blog, provides more insight on patterns and data.

The idea for this blog was heavily inspired by Michael Lewis' book Moneyball, in which the author showed that our intuition and conventional wisdom often fail us. In baseball as in business, it turns out that facts, evidence and statistical analysis are a crucial corrective to the dangerous tendency to "shoot from the hip" or "follow your gut." That's why companies like Harrah's and CapitalOne have been so successful in recent years.

But the Lewis book seems to provide a metaphor for B2C strategy more than B2B. With B2C, there's a large base of consumers from which to draw key findings. It's about statistics. With B2B, it's largely about the account. And because every client is different and complex, statistics are less useful. What we are looking for in the B2B world are meaningful patterns.

So it was great to see that Michael Lewis had drawn a new and rich metaphorical portrait from the world of sports in the New York Times Magazine this past week. He profiles Eli Manning, rookie quarterback for the New York Giants.

"Football statistics do not capture the performance of individual football players as cleanly as, say, baseball statistics capture the performance of individual baseball players," explains Lewis. "No player ever does anything on a football field that isn't dependent on some other player. The individual achievements of football players are often, in effect, hidden in plain sight."

Lewis then goes on to share something even more interesting: "[T]his hidden game can be seen, though not by the average viewer. Shot unceremoniously from two pillboxes on the stadium's upper rim, the videotape made by the Giants coaching staff frames all 22 players on the field. The view the coaches want is the view from the cheapest seat in the house... The coaches want to see that shot because they know it is the only shot that will enable them to figure out who did what -- and assign credit and blame -- on any given football play."

Giants Stadium is compared by Lewis to Plato's Cave. "The millions of people watching the game are inside the cave, staring at shadows on the wall," he writes. "The shadows are distortions of the reality outside the cave, treated, erroneously, as the thing itself. No matter how he plays, some part of Eli Manning's game, like his personality, will remain hidden from public understanding."

This is similar to the problem that afflicts most company leaders trying to understand complex, collaborative and interrelated B2B activities. They can make sales projections. They can count leads all they want. They can monitor the performance of their individual sales people. But unless they step back and look at the whole field (the company and the account) from the cheap seats above, they won't understand the web of interactions and relationship dynamics that contribute to overall value. Too many of us are trying to manage and coach from the sidelines. But we aren't getting advice from the sky box during the game and we aren't watching the game films on Monday.

The goal is to use statistics to verify our intuition. At the sametime we need to be careful and understand the interrelationships and connectedness of the business world. Data and Patterns are both important. We need to have the wisdom to use the right tool at the right time and if you think about it this is something which is hard to teach at any business school.


Blogger Efrain Waldroup said...

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12 February, 2017 11:51  

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