Recent articles in New York Times and the McKinsley Quarterly make the case that not only is big data here to stay, it’s essential to driving your business success.
However, big data and analytics still don’t replace leadership and business acumen. I’m not suggesting that leaders ignore analytics and data. More than ever, leaders need to draw upon the insights generated by analytics or they and their organizations will quickly disappear. However, those insights need to be used to support the leader’s decision making, not replace it.
Analytics can tell you a lot about what has happened, what is happening, and increasingly, what is likely to happen. But, what analytics still can’t tell us is what SHOULD happen. That requires leadership.
For example, in another New York Times article, “How Companies Learn Your Secrets”, author Charles Duhigg explains how Target’s customer analytics has become so sophisticated that they can predict, with a high degree of accuracy, whether a woman is pregnant and even when she is due. The analytics can tell Target what products to market to expectant mothers, who to market to, and when.
However, analytics don’t tell you whether it’s always a good idea to send out those promotional materials. That requires common sense and judgment.
A Target manager found himself in a bit of hot water when he received an angry call from a father asking why Target was suggesting baby products to his teenaged daughter. It turns out that Target knew about his daughter’s pregnancy before he did. Yikes!
Another area that requires balance between leadership understanding and analytics is knowing what questions to ask in the first place. Analytics are only as good as the framing of the question they are intended to answer.
Clayton M. Christensen’s book, The Innovator’s Dilemma is filled with examples of companies that drove themselves to obsolescence by acting upon data about current needs while being blind to disruptive technologies that solved problems that current data didn’t address.
Finally, while analytics can tell you what opportunities exist, their potential return, and even their likelihood of success, they can’t tell you where you want to be in five years. Analytics won’t tell you if those opportunities are consistent with your mission and vision, integrated with your brand, or something you want to do. All of those questions require leadership and judgment.
The new reality of the business world is that big data is here to stay. However, big data doesn’t replace leadership. Questions of vision and strategy still require leaders to think, extrapolate, and make judgment calls. The winners will do so using data as a foundation to supplement their understanding. The losers will blindly follow the numbers without understanding the context or repercussions of what they are saying.
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Brad Kolar is the President of Kolar Associates, a leadership consulting and workforce productivity consulting firm. He can be reached at brad.kolar@kolarassociates.com.
