The Myth of the “Data-Driven” Business

Published by Eric T. Peterson on September 6, 2011 All posts from Eric T. Peterson

You may have noticed I have been pretty quiet in my blog lately aside from sharing news about our ACCELERATE event in San Francisco in November. It’s partially because honestly I’ve been swamped with new clients, existing work, and the never-ending effort to be a good husband, dad, and friend in the midst of Demystifying web analytics …

But being busy is no excuse to stop sharing ideas and encouraging conversation so let’s dive into something that has increasingly become a pet-peeve of mine: the notion leveraging web analytics to create a “data-driven” business.

I’m sure I have used this phrase in the past in an effort to describe the transformation that companies need to go through in the digital world, relying less on “gut feel” and more on cold, hard data to guide business decision making. Hell, a lot of smart of people have, including Omniture’s Brent Dykes and Google Analytics Evangelist Avinash Kaushik who has gone so far as to describe creating a data-driven culture as the “holiest of holy grails.”

Becoming “data driven” is the way to silence the HIPPO and to more firmly establish the value of our collective investments in digital measurement, analysis, and optimization technology. It sounds great, except for one thing:

A “data-driven business” would be doomed to fail.

I think that perhaps what people mean when they talk about being “data-driven” is the need for a heightened awareness of the numerous source of data and information we have available in the digital world, enough so that we are able to take advantage of these sources to create insights and make recommendations. On this point I agree — better use of available data in the decision making process is an awesome thing indeed.

My concern arises from the idea that any business of even moderate size and complexity can be truly “driven” by data. I think the right word is “informed” and what we are collectively trying to create is “increasingly data-informed and data-aware businesses and business people” who integrate the wide array of knowledge we can generate about digital consumers into the traditional decisioning process. The end-goal of this integration is more agile, responsive, and intelligent businesses that are better able to compete in a rapidly changing business environment.

Perhaps this is mere semantics — you say “potato” I say “tuberous rhizome”  — but given the sheer number of consultants, vendors, and practitioners talking about creating, powering, and working in the mythical “data-driven business” I have started to worry that we’re about to shoot ourselves in the collective foot. We (meaning the web analytics industry as a whole) have done this before, first by claiming that web analytics was easy, then by insisting that cookies were harmless … and personally I’d prefer we avoid yet another self-imposed crisis of credibility if possible.

And while this may be semantics, I do disagree with Brent Dykes assertion that in the absence of carrot-and-stick accountability that web analytics breaks down and fails to create any benefit within the business, although I do understand fully where Mr. Dykes is coming from. I simply have not seen nearly enough evidence that eschewing the type of business acumen, experience, and awareness that is the very heart-and-soul of every successful business in favor of a “by the numbers” approach creates the type of result that the “data-driven” school seems to be evangelizing for.

What I do see in our best clients and those rare, transcendent organizations that truly understand the relationship between people, process, and technology — and are able to leverage that knowledge to inform their overarching business strategy — is a very healthy blend of data and business knowledge, each applied judiciously based on the challenge at hand. Smart business leaders leveraging insights and recommendations made by a trusted analytics organization — not automatons pulling levers based on a hit count, p-value, or conversion rate.

Kishore Swaminathan, Accenture’s chief scientist, in his discussion on “What the C-suite should know about analytics” outlines how an over-dependence on data can lead to “analysis-paralysis”, stating:

“Data is a double-edged sword. When properly used, it can lead to sound and well-informed decisions. When improperly used, the same data can lead not only to poor decisions but to poor decisions made with high confidence that, in turn, could lead to actions that could be erroneous and expensive.”

Success with web analytics and optimization requires a balance, and business leaders who will be successful analytical competitors in the future will need to develop a top-down strategy to govern how their businesses will leverage both digitally-generated insights and the collective know-how of their organizations. Conversely, being “driven” implies imbalance and over-correction — going out of your way to devalue experience, ignore process, and eschew established governance in favor of a new, entirely metrics-powered approach towards decision making.

You can do this, but to Swaminathan’s point, what if the numbers you’re using are wrong?

I think that creating a “data informed” business is a huge victory and for most companies a major step in the right direction. What’s more, working to create a “data informed” business shows respect for the hard work, commitment, and passion your employees have for their jobs and your company and products.

Rather than walk in and “embarrass the boss” with your profound and amazing knowledge of customer interactions, you can actively work with your management team by providing insights and recommendations that reflect your knowledge of how the entire business works, not just your amazing talent as web analytics implementer (or analyst, whatever …)

But I digress.

I’m interested in your collective thoughts here people. Am I over-reaching after a blogging hiatus and unnecessarily sniping in hopes of an early Fall dust-up in Google+? Or have you had the same thoughts and/or concerns, that by insisting that everyone needs to do exactly what the data tells them that we risk alienating (again) the very consumers of our efforts? Do you work at a truly “data driven” business and do what the numbers tell you each and every time? Or are you working to create a practice where otherwise smart, hard-working, and passionate marketers, merchandisers, and business leaders can benefit from the type of information and insights you are uniquely able to provide as a digital measurement, analysis, and optimization specialist?

While you consider your response I’ll leave you with a story that has shaped some of my thinking about web analytics over my career. Years ago my good friend Shari Cleary brought me into CBS News in New York to train her editorial team on Hitbox (yeah, Hitbox, I told you it was years ago!) Most of my clients at the time were “new school” but not these guys — they were hardcore news editors from the TV side of the business who had been tasked with making digital news work.

I talked and talked and talked about how powerful Hitbox was and how real-time analytics was going to power the content they put out there in the world. The editors were polite and showed real interest in the training until at one point the oldest and most grizzled of the group stopped me.

“Son, we’re not going to let the data make the decisions for us regarding editorial content,” he said with all sincerity. I was, of course, shocked to hear this — I mean, hell, that is what Hitbox was for! Figuring out which stories generated page views and which needed to be rolled off the page into obscurity.

“Umm, why is that?” I asked, figuring he’d lay into me about the inaccuracy of the system or how painful it was to use Hitbox …

“Because if we let the data drive editorial, all you will read about at CBS News is Paris Hilton’s breasts and Lindsay Lohan’s drinking problem.”

Needless to say, I stopped talking about real-time, data-driven changes to editorial content.

As always I welcome your comments, criticism, and feedback.

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  • Ben Gaines

    Ah, but I’ll bet they could have gotten a nice CPM on a constantly running feature about Paris’ breasts and Lindsay’s drinking problem. So maybe data *should* drive editorial content decisions? :)

    I’m kidding.

    And now, I shall rant about baseball.

    My first thought after reading your post was actually the book/movie Moneyball. For as radically as Billy Beane changed the way people assess players’ value in baseball, the Oakland A’s still haven’t won a World Series since 1989. At least during the book (not sure about the movie adaptation), he insists on using data in every situation, to the complete exclusion of his scouts’ expertise and collective wisdom. It nets a 100-win season, but no World Series ring.

    Then I just read an article by Bill James — whose theories powered Beane’s revolution — quantifying a previously unquantifiable measure: the way pitchers respond to pressure situations. The thing is, Beane didn’t have access to that calculation in 2002, so it seems to me that he was throwing himself behind data that was, at best, incomplete, and (as you said) over-correcting rather than balancing data with experience. And maybe one problem with this is that data in 2002 couldn’t tell Beane which pitchers respond well to high-pressure situations. He was data driven. But was he successful?

    My Red Sox (who hired James) seem to have gotten this model right. Not every draftee or free agent signing is a high-value, low-cost prospect, but certainly some are. Data is informing decisions, but not *making* decisions as it (apparently) was in Oakland. And Boston has won two World Series since Moneyball was first published.

    Just my two (random) cents.

  • Pingback: Elegant D » The Myth of the “Data-Driven” Business | Web Analytics Demystified

  • http://randyzwitch.com Randy

    Eric, I agree with the point you’re making about letting *logic* dictate the business rather than raw data trends, but I also think your argument is one of semantics.

    Yes, no business should run on auto-pilot. “More page views” from your example does lead to a poor quality editorial page. But at the same time, what if you were using a better metric to represent “quality popularity”? Then, you could potentially start auto-optimizing based on that metric.

    My feeling is when people are saying “data-driven” as the holy grail, they mean at the margin and giving data the benefit of the doubt instead of the HiPPO’s gut feeling or who is friends with whom that can get more budget for their pet initiative. No data is ever going to be perfect, but rarely is a decision worse off by having data to evaluate.

    That’s what I think people are referring to when saying “data-driven”, not that business will begin to run on a trigger-based system of IF-THEN statements.

  • Matt S.

    Nice post. Your concern is understandable but in the end I don’t think the pendulum will swing so far as to make any organization a robotic “data-driven” entity.
    Luckily, companies are filled with human beings and human beings don’t like to behave like robots (ask any assembly line worker) and will integrate external events and critical thinking into every decision.
    Theoretically, informed companies should make better decisions but are often hampered because they are often not careful of the various land mines. A couple are…

    1) Past behavior does not necessarily predict future behavior – in the stock market the trend is your friend but pay attention to that future press release, it can change everything.

    2) Context is king – The “numbers” don’t make the decisions they guide/inform them. The business needs to have a clear strategy/objective and then use information to optimize that strategy/objective.

    For example, in your CBS news story, the role of a news organization is to identify the important events in society and then convey them to the general public in an enticing manner. With that objective, I think the appropriate response to the senior editor would be not to use the “Data” to alter what stories to show, but to use the “data” to improve your headline writing skills to attract more readers to the important news items.

    I believe that “making informed decisions” is a trait of any successful manager. Data is just one input out of many that guide corporate decisions and it’s up to the decision maker to determine how much of an influence that data will have on their decision. Make no mistake, many decision makers are missing the “data” portion of inputs, and I hope that this “data-driven” initiative convinces them to include it into their “inputs”.

  • Pingback: Data Driven…or Data Informed? | Eric D. Brown

  • http://brandingme.tumblr.com Adrian Palacios

    God, I am so glad someone in the analytics industry finally said this.

    Coming from the agency side that has a roster of clients in the SMB/lead gen category, I have been so frustrated by this idea of being “data-driven”. I feel like the analytics industry keeps throwing out these platitudes from on high of how we aspiring analysts should think, operate, feel, etc. However, not everyone has the pleasure of being part of a Fortune 500 company, or getting their hands on a website with 25,000 visits a month or more. How much can you drive a company that gets data points of 1,000 website visits or less a month? Analyze *that*!!! Or, for instance, try selling out all the condos in a building that only has 16 units total! Not much potential with predictive analysis for that…or am I wrong?

    I apologize; I probably let my frustration get the best of me in this comment. I love reading the blog posts, tweets, etc., from the more visible folks in the web analytics world, but I would appreciate more realism out there in the web analytics world…

  • http://www.webanalyticsdemystified.com eric

    Ben: Snap, you fell into the “breasts and booze” trap right away my friend, thanks for that! The problem with going for the high CPM — and letting the data drive the business — is that it would change the fundamental character of CBS News and inevitably lead them into markets that they are A) not known for and B) not likely to be particularly competitive in. If CBS editors would have continued down that path they would almost certainly have lost all of their key talent, their self-respect, and likely their key advertisers.

    Your point on Moneyball is spot on. In an attempt to let data drive the A’s decision making has not made them a baseball better team (at least using “World Series Won” as the key performance indicator.) Conversely, the fact that your Red Sox have some success using a variation on James’s strategy is likely more testament to an innovative management team willing to try different things than it was exclusively a commitment to managing “by the numbers.”

    It pained me hugely to make anything close to a compliment about the Sox, by the way. Just so you know … ;-)

    Randy: I don’t disagree with you about the “semantics” argument, which is why I mentioned it a few times. I’m not trying to spit-hairs but again the insistence on doing things like “embarrassing your boss” and “forced accountability” kept creating that sick feeling in my stomach that after 12 years of this I have finally learned to listen to.

    Also, are you sure that decisions are “rarely” worse off when there is data to evaluate? Again, during my tenure I have seen some pretty sharp people make some pretty bad decisions based on what ultimately turned out to be inaccurate data and sloppy analysis.

    Finally, if you’re correct, and if folks mean “more data informed” when they say “data driven” then perhaps all that is required is a semantic overhaul, not a foundational shift. But I’m not convinced that is what people mean, primarily because of the hype, hyperbole, and passion some folks have brought to the table on this subject.

    Matt: Agree fully. So why are we being encouraged (and encouraging) companies to make such a dramatic change? Why not just say “get better at incorporating web analytics and testing into your existing business process” and then explain clearly how to do that? How is declaring that being data-driven is the “holy grail” a reasonable path from point A to point B?

    Agree fully on your examples as well. There are many such examples of how data can fail us, especially in the absence of A) a clear governing strategy and B) smart people providing the context you speak of.

    I suppose at the end of the day my response is similar to my reaction to the “web analytics is easy” crowd. What, per se, is wrong with telling people the truth? Why not just say “this will be harder than you think, and a lot harder than the vendors told you, just so you know” or “you don’t need to be led around by the data, but there is a substantial benefit associated with using the information and insights we can provide to inform your business practices.”

    That’s what I don’t get. I am probably old.

    Adrian: Thanks! I’m always happy to help clarify (or rather, Demystify) what is really going on in our little corner of the world. And you raise a good point — how can you possibly be justified in being driven by data that is far too small a sample to have any predictive or statistical power?

    At the end of the day I am pretty confident that companies large and small will be much better off building foundational digital measurement, analysis, and optimization practices capable of delivering insights back to the business, packaged for consumption and integration into otherwise decision making processes.

    But hell, what do I know ;-)

  • Brian Hendrixson

    Totally Agree!

    We had this conversation recently and I think for me its semantics. When I use the phrase “data driven organization” it’s in the context of better leveraging investment in digital measurement to – and this is the key – HELP make better informed decisions. Sure there’s an argument that “driven” is a poor choice of words, but to me it just sounds more powerful and something that resonates better with said HIPPOS.

    Here’s an analogy that I think works. As an avid golfer I use a GPS device. This GPS gives me the distances to pin, hazards etc. All this data is extremely HELPful in selecting the club/shot I want to hit, but there are many other factors that are more gut that go into the selection of a shot; current confidence, wind, pin placement etc. The combination of both result in the decision.

    This combination of Intuition, Feel and Experience with Data to shape is what successful “Data Driven(or whatever)” organizations have mastered!

  • DonL

    Loved your post; it is about semantics and always will be because semantics do matter. Nuanced language is a powerful tool in the persuasion game.
    “Data-driven” is an arrogant concept so it is no surprise that it generates resistance. No one wants to be driven in a way that usurps their control over a decision. On the other hand, we welcome information and insights to help us make an informed decision, especially from a trusted business partner. It’s all in the approach, agreeing on shared goals and finding common ground.

  • http://www.webanalyticsdemystified.com eric

    Brian: Thanks for writing, and for openly admitting you cheat at golf … ;-) But I wonder about your assertion that “driven” sounds more powerful and resonates better with the HIPPO (which in itself is somewhat disrespectful to begin with, but let’s leave that for now.)

    I’m not 100% sure that “driven” is merely a poor choice of words. I have seen other consultants use the “data driven” mindset to evangelize for embarrassing one’s boss and making their decisions look foolish when faced with supposedly “rock solid” data to refute their opinions.

    Let me ask this another way. Would you be comfortable, given the data you have and the organizational issues we have discussed offline, going to Jill and saying “the strategy you have set is all messed up and not likely to work. I have some KPIs that indicate that we need to go in a completely different direction …”

    I’m guessing no, at least not based on your existing environment, data, etc.

    Again, it might just be me, but I’m increasingly of the opinion that there is a ** good reason ** that business leaders are, you know, leading companies like yours and others out there. And yes, this may just be semantics, but (as evidenced by the cookie issue, the “easy” debate, etc.) it turns out that the words we use to describe what we do ** are important. **

  • Ben Gaines

    Heh. Note that I *did* say I was kidding about letting data drive editorial decisions! I understood the point loud and clear, just playing around with the concept :)

  • http://www.solutionanalytics.com Ryan Ekins

    Love this. I love all the varying points of view. If we all thought alike then no one would be thinking at all. With that thought, I have my own opinion. I do agree with you Eric that “a data-driven business would be doomed to fail” with an asterisk. The asterisk is the state of the market for the company in question. A few years ago when I was in my MBA classes we focused on corporate culture and my interest was intensely peaked. There are four quadrants of culture; Clan, Innovative, Market, and Organized. Corporations have a blend of each of these culture types that make up their unique culture. We discussed the dark side that can manifest in each of these cultures. For example, HP at one point went down the dark side of Clan Culture where the “HP Way” inhibited innovation and marketing. A data-driven culture, in my opinion, tends to go down the side of Organized Culture which is on the opposite side of Innovative Culture. If allowed to go down the dark side, that would mean complete efficiency for their market, but if anything changed in the market (like a technology disruptor), then yes they would be doomed to fail. Now Baseball, not much of a fan, but if anyone should be leaning towards organized it would be Baseball. I can’t think of any disruptor that could threaten their market. I can’t think of anything innovative to get me interested in Baseball short of adding a Tiger to the field (which isn’t going to happen). Any company that is worried about disruptors should have some focus on innovation, and this is where being “informed” is powerful. Measurement is good as long as you are learning something (at least that is what the modern innovation leaders are saying on Twitter :) ). I think as long as you are learning about your market and your customers from your data, you are balancing organized and innovative successfully. Once again, just another point-of-view to throw into the mix.

  • Marta

    What a mind refreshing article! Finally! Would Apple have ever come up with IPhone and IPads if they relied on data centric customer surveys? Never. People don’t know what they want… Until you show them… Would you dare to use new communications channels if you relied on marketing mix modeling? Never. Because you can only model what happened in the past… And the story goes on…but in many other cases it’s better to be somewhat wrong with data than completely wrong without it

  • Mark Walker

    Great post and I agree with some other comments above that semantics plays a big part in this.

    One simple point I’d like to raise, that I’ve observed with several clients, is that ‘data driven’ seems to be interpreted as ‘having lots of reports’.

  • http://randyzwitch.com Randy

    “Also, are you sure that decisions are “rarely” worse off when there is data to evaluate? Again, during my tenure I have seen some pretty sharp people make some pretty bad decisions based on what ultimately turned out to be inaccurate data and sloppy analysis.”

    Well, there’s always the possibility of inaccurate data and sloppy analysis, but “data-driven companies” should understand the benefit of data management and quality analysts. I really meant that I’d rather have data that doesn’t make sense that I can disregard, than to not have data and base everything off of a guess.

    For example, if I did a test multiple times where I raised my prices, and sometimes consumers converted more, sometimes less, and generally conversion rate didn’t change, that doesn’t paint a clear “IF-THEN” picture. What it does present is that pricing *may not* matter. In that case, you have data that doesn’t tell you definitively to move in any direction, but I can add logic there. In absence of this uncertain data, I’d probably assume that we *had to* lower prices, b/c economics dictates increased demand that way.

  • Matthias

    many years ago my grandma gave my grandpa this beautiful hand-made African waste-basket from her living room, which was filled with paper.
    “Burn this” she said (my grandpa always burned garbage in the backyard). He came back after a while and said “..but it was such a nice basket”.

    Two lessons I learned from this. One: Making a fire is fun. And second: Never stop thinking when obeying an authority (no matter if it’s your wife or a database).

    I never understood “data-driven” as something which replaces or automates brainwork. But I understand the need to discuss this in order to avoid a potentially senseless implementation.

  • http://www.themeasurementstandard.com Bill Paarlberg

    Nice rable-rousing post, Eric. You are right, of course, but perhaps “data driven” is a bit of a straw man. It’s not the word that’s the problem, it’s the complexity of decisions.

    I have spent years in the world of PR measurement–along with Katie Paine, whose work I edit–as a cheerleader for “the data-driven communicator” (see The Measurement Standard Newsletter). It’s only natural that measurement evangelists would use the tough-sounding language of “driven,” when maybe what we really mean is the more nuanced “informed.” In trying to make a point, we have forcefully emphasized the extreme. But we aren’t really encouraging you to drive your car into the lake because the GPS says to.

    What we really mean, and this is what you and various excellent comments have touched on, is that data is a valuable tool. But it’s not always the whole story, or the most important thing to base a decision on. The simplicity of beautiful data can blind one to a complex problem.

    So, as you ask, do we shoot ourselves in the foot by implying that measurement/analytics/metrics is the Holy Grail? Are we courting disaster by making the world seem less complex that it really is?

    I don’t know. Perhaps our job should be less “Measurement Rules!” and more “Decision are Complex, Data can Help.”

  • http://www.blackbeak.com Steve Jackson

    >“Because if we let the data drive editorial, all you will read about at CBS News is Paris Hilton’s breasts and Lindsay Lohan’s drinking problem.”

    :D The power of context in action.

    I agree with Eric on this that the problem is very understated in our industry. It’s not really about whether Eric said Data Driven or Data informed it’s more about the cultural aspects of businesses. I decided to pull three of the central points Eric discusses in his post and put my slant on them.

    On Embarrassing the Boss.

    I don’t get why this is a good idea. I blogged a while back about how the HiPPO could be your best friend and I’ve only met 1 actual HiPPO as popularly described (around 10 years ago). All of the executives I’ve worked with in the past 5 years need as much information as we can give them to power their decision making. By getting the HiPPO on your side, working for you, you enlist a powerful ally. So to embarrass them is counterproductive.

    I totally agree with Eric that business leaders are there for a reason. It’s primarily because they take good decisions. A lot of it is based on gut feeling. And gut feeling comes from years of experience. Experience comes from putting information into the right or the wrong context. Getting it right more than getting it wrong is what makes the difference between Steve Jobs and lesser CEOs.

    I haven’t heard too much hype about being data driven for the sake of it coming from any of my circles really. It’s more about needing high quality information and in my line of work increasingly that’s less about doing analytics and more about putting data into the correct context.

    On Analytics Being Easy Or Being Hard.

    The promise is easy. The execution is hard work.

    Consider the line “Though shalt not pay more than €1 per click for traffic.” That’s something easy for any senior manager to say and I’ve used it with some success. I know ppc people will be thinking €1 is expensive per click for some products but I was talking about everything including labour, creatives etc.

    The promise is easy to say, justify and explain. Putting that into practice is a shit load harder. Doable but much harder when you’re talking about global organizations. Just defining where to start is significant work because your analytics tools will give you the wrong data. It will need to be corrected because by default campaign analytics doesn’t take into account all of the cost to the business.

    Finally on the Data Being a Double Edged Sword.

    It’s extremely easy to manipulate data to have it tell you what you want it to tell you. That’s why I think there will always be consultants in the #measure industry. In order to be unbiased you have to either have no political gain from what you’re saying (IE a consultant) or you have to be in a very secure and strong position in the business (supported by the C level). Ideally you would have both.

    The point here is we’re talking about how people in an organisation use data. When we start talking about organisations I feel one of the things that’s missing from much of our reasoning is the organisations vision and how we align analytics thinking to that vision. The data becomes less double edged when people know why they need to use it. If we bang on about being data driven people will ask “why?”. I said this in my book. Any analytics we use has to align with what the company is trying to achieve.

    That might sound obvious but to the guy sending reports upstairs every day with no response from busy people it isn’t. To the consultant who does an analysis about what he thinks is the right thing but is completely missing the point it isn’t.

    In summary (and I quote) it is about people & process. But I’d add its also about putting data into a strong business context that aligns with the company vision.

  • http://kuhr-strategies.blogspot.com Tom Kuhr

    Great points, Eric, as usual.

    Let’s not forget the age-old ‘analysis paralysis’ problem. The drive to integrate more data (analysis, really) causes some companies to truly fail. This causes some HIPPOs to stop making good decisions altogether, or constantly delay decisions, or not commit one way or another on a decision because they are always in search of more data. They never feel “informed enough” to make an informed decision and that is indeed harmful to growth.

    I’ve seen this manifest itself and be especially dangerous when seeking quantification of future ‘what if’ scenarios. Historical data analysis isn’t going to predict the outcome of significant innovation, merely guide decision making. Past performance does not guarantee future results.

  • http://twitter.com/#!/research4comms Robin Roemer

    In my opinion the problem with “data-driven” is, that there never is only one way to interpret data especially as often it is incomplete. Therefore looking at data and trying to come up with a strategy is pretty difficult as others have already mentioned.

    For me data is mostly about testing strategy and measuring impact. Rather than asking “Based on past data what strategy should we use” the question becomes “Is there data that seems to indicate, that the strategy we are about to chose is wrong/not working”.

    Roger Martin has a good post about that here: http://blogs.hbr.org/martin/2010/05/the-day-i-discovered-the-most.html

    I think this also kind of mirrors the scientific debate around Popper/critical rationalism/falsification.

  • http://www.webanalyticsdemystified.com eric

    Ben: You are forgiven, but if Moneyball the movie stinks we will hold you directly accountable. Deal? ;-)

    Ryan: Interesting mention of HP and the “HP Way” — one has to wonder, especially in the context of Apple and what is surely a “data informed, but not data driven” approach in Cupertino, how shareholders of both companies feel today. My experience with HP certainly highlights an interest in leveraging data, although it has been a few years since I worked there and so wouldn’t claim direct knowledge of the situation they are in now.

    Marta: Agree fully, and others have brought up Apple who inevitably had some data about the markets they have become so dominant in — there have long been small computers, smart phones, and MP3 players — but there does seem to be a greater tendency towards the balance I have described, at least in the recent literature about Steve Jobs.

    Thanks for your comment!

    Mark: Excellent point! What is the value of being “data driven” if the data that is driving you is the same old “web analytics is easy” crap that we all know doesn’t actually help the situation. Thanks!

    Randy: Good point, but in your “I’d rather have data” you’re basically admitting that it is just another input into the decision making process — that you’re informed by the data — and can drop it if it doesn’t make sense.

    I don’t disagree with you, by the way, about this not being an IF-THEN situation, but others in the industry paint it that way and again I worry that if we are suddenly taken quite literally (as has been the case in the past) we will end up with our feet in our collective mouths.

    Matthias: Don’t play with fire, okay? ;-)

    Bill: Nice to hear from you — Katie is one of my favorite people anywhere! I guess I question the need for “tough-sounding language” — don’t you think business people are smart enough to understand all the work we do provided we explain it coherently and in the context of the business problems they are trying to solve?

    This is the big assumption, but I think yes we are courting disaster by making the world seem less complex. That was my entire point with “web analytics is hard” and it’s the same point here. If we sugarcoat everything at what point do our customers, clients, and co-workers realize this and rebel?

    I think that day is coming sooner than we think in some companies.

    Steve: Nice of your to write a blog post as a response to my blog post … don’t you sleep? ;-) Suffice I appreciate your input and we are in heated agreement on several fronts. Do you want to come work for Web Analytics Demystified? Let me know!

    Tom: Agree, agree, agree. The “analysis paralysis” problem manifests a lot of different ways but if we lose our ability to evaluate the available data objectively, leveraging it when it makes sense and moving on when it fails that test, we collectively run the risk of falling behind or failing altogether.

    Great to hear from you again, by the way!

  • http://twitter.com/#!/BrianMakas Brian Makas

    Great post, I’ve been dealing with exactly that issue when looking at so called ROI conversion reports that are often based on last click tracking on a single cookied computer. Unfortunately, while the reports are often accurate so as to say x click led to y sale and it’s hard to dismiss the reports when they’re proving a positive ROI … they can do a terrible mis-service to B2B particularly when the advertisements (i.e. banner ads) can make an impression without a click.

    As such (with the possible exception of using a reverse IP lookup of companies viewing the ad and comparing it to subsequent activity occurring on the advertiser’s website to build a story around sample behaviors) relying on data here will often backfire and “prove” successful ads to be failures.

    On the other hand, are there some industries and parts of the business that the data collected by analytics tools is sufficient to succeed in a data driven environment and where optimizing to increase the stated ROI is a good idea? Absolutely! Heck, in the real world you can often, literally, judge a book by its cover and get a strong sense for the contents based on the cover artwork … but again … just because it works sometimes doesn’t mean it always will.

  • Stewart

    This is great Eric and I totally get where you are coming from. I just wanted to say as an analyst I have always had the mind set of enhancing the decision-making process when providing simple reports, measurement dashboards or deep-dive analysis + insights. Having a marketing degree, the first thing that made sense to me when I learned about web Analytics is that it’s like a support. It should not be solely depended on to make decisions.
    It all comes back to the fundamentals of marketing combined with the use of a new content/product/service platform. For the most part I think the general consumers of this data have a good idea for what they should be doing. Knowing even more about their tests, campaigns or web design changes will only provide more support to their ideas and hypotheses.
    It only tool me two paragraphs to say that I agree with all of what you are talking about. I just wanted to explain a little bit of where I’m coming from.

  • http://www.redeye.com Mark Patron

    Thanks Eric for the invigorating post. Must admit I don’t agree, data informed is for wimps, marketers want actionable data which data-driven implies. Yes, we have issues with cookies but all media have their challenges. Yes, web analytics is not an exact science, all numbers should come with a health warning, but it’s what you do with them that counts.

  • Ty Snouffer

    I have to admit that from time to time I have encouraged clients to be *more* data driven. I don’t think I’ve ever asked them to be *only* data driven though. One, I don’t think it would be a good idea. Two, I doubt that I would have enough sway to do that in a reasonable manner.

    Often the idea of being more data driven is compared to the existing state where they are primarily data consumers; knowing they should be looking at data but really not learning or taking action on it. Encouraging them to be data driven and take action, any (reasonable) action, is a victory in those cases.

    I’ve certainly come to the table with data driven recommendations (like your CBS example) only to have a brand manager shoot it down. “Doesn’t work for our brand” they might say. At that point I have to decide if that recommendation has a strong enough business impact that it is worth fighting for. More likely I am going to take it up with an account manger behind the scenes and let them decide if it is worth the fight.

    Bottom line, I don’t think there is a problem with encouraging being data driven especially in a world of data consumers.

  • http://www.webanalyticsdemystified.com eric

    Everyone: I am sorry to have been slow to respond to comments … I spent the day starting an engagement with a new client and, ahem, it is my 10 year anniversary today (so yes, I am sneaking away to use the Internet … don’t tell my wife!)

    Also, you should go and read awesome posts from Beth Kanter and KD Paine who followed up on my work:

    Beth’s thread on Google+: http://bit.ly/nL9RdR
    Beth’s blog post: http://www.bethkanter.org/?p=3323
    Katie’s post: http://bit.ly/r8tKl3

    Now on to your comments.

    Brian: Great point — what do you do if the data you have is wrong, misleading, or known to be incomplete? Again, leveraging data to inform your business will give you an answer and not make you feel bad for not getting the carrot or being able to drink from the grail.

    Stewart: Exactly … but the trend has been towards people (okay, mostly consultants and vendors) making it seem like if you’re not using data as the arbiter of your success you are somehow doing something wrong. It sounds great, but it simply does not work …

    Mark: THANK YOU for writing and finally offering a counter-point to my argument! Of course, you provide the exact response I expected from a CEO at a vendor with a vested interest in making marketers believe that if they haven’t purchased and mastered your solution that they are somehow inadequate (or “wimps” in your words.)

    It’s interesting as well that in you immediately went on the defensive regarding accuracy and privacy as well.

    Still, I agree that “all numbers should come with a health warning” and it’s what you do with your data that counts. My thesis is that the health warning should be something like:

    WARNING: THE DATA GENERAL HAS DETERMINED THAT YOU ARE LIKELY DOING WHAT YOU ARE DOING FOR A LIVING BECAUSE YOU HAVE DEMONSTRATED SOME LEVEL OF COMPETENCY AND THEREFORE THE DATA YOU ARE VIEWING SHOULD NOT COMPEL YOU TO MAKE A DECISION THAT YOU KNOW OTHERWISE TO BE BAD FOR YOUR BUSINESS.

    Of course you can mitigate some of this with careful testing but again, if the tests showed that you could generate more traffic to RedEye.com if you used pictures of naked people … would you?

    Thanks for taking a stand and I’d love to hear from you more often!

    Ty: Fair enough, and I’m sure that is the logic that most folks who rally behind the “get data driven or die” cry actually mean — you have to over-message sometimes to make a point. But at the same time you seem to agree with me that really what we all want is for business people to better use data to make informed decisions …

    So why don’t we just say that?

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  • Winston Rooney

    In business (and politics) THE most important data is who knows who, not some historical trend or cool product…it is all about people. Companies and people that capitalize on THAT data will be the titans of the information industry (and in fact, already are). Stop worrying about using the right argument, and instead focus on knowing the right people and engaging in an open honest conversation on their needs, not your beliefs.

    Regarding ‘data-driven’ phraseology…people like sound bites, or at least people think people like sound bites. “Data-Driven Business”; “A Smarter Planet”; “The Cloud” are all sound bites. Companies that have a vested stake in other companies becoming data driven then promote these sound bites for their own financial gain. It is simple. Simplicity, speed, and greed drive the day. I do not need electronic data or petabytes of big data storage and processing power to show me this. With every passing year the people, behaviors, and success stories I expereince inform this conclusion. So find a phrase that speaks to your / your company’s goals and objectives and evangelize it to the community and people you know, while simultaneously expanding that community. “Success”, however you personally define it, will follow…

  • http://twitter.com/robmclaughlin1 Rob McLaughlin

    Eric, your sentiment here highlights an important but subtle difference, data driven vs. informed, which I thoroughly support.

    Adopting the ‘informed’ path sets analytics on a non-competitive course, alongside intuition and experience. As you state, as analysts we can sometimes be seduced into trying to destroy the HiPPO with what we perceive as thundering, all conquering insight – fact is business is more complex and strategy and innovation rightly have wider influences than data, whether it be historical or predictive.

    Love that you wrote this article.

    Rob McLaughlin

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  • Matt Lillig

    Interesting you mention the line, “Because if we let the data drive editorial, all you will read about at CBS News is Paris Hilton’s breasts and Lindsay Lohan’s drinking problem.”

    That’s what hurt CBS in becoming a top online destination for news. At Yahoo, we took dove into that data to help drive our editorial content and it’s helped us become the #1 online news site in the world.

    Interesting Fast Company article below that talks about how we (Yahoo) use tons of data to improve our audience targeting algorithms to provide up to the minute content.

    Example….

    In the two years that our new front page algorithm went live, clicks on the stories in the Today module (on the Yahoo front page) among U.S. users have increased 270%. This year, the module is averaging 1 billion clicks per month in the U.S. The increase in number of clicks in the Today box between this year and last–167 million–is the equivalent of adding an entire LATimes.com.

    We also use the data to help improve our personalization algorithm. The personalization algorithm helps us generate 45,000 totally unique versions of the Today module every five minutes. So what you see on the front page of Yahoo is a different experience than what I see on my frontpage.

    http://www.fastcompany.com/1770673/how-yahoo-got-to-a-billion-clicks

    CBS should have listened to you. I think you you right on target. :)

  • Benjamin Weiss

    Eric,

    I think perhaps your definition of “data driven organization” is a bit extreme. To me, being “data driven” doesn’t mean mean that data is in the driver’s seat; it’s more in the passengers seat- tagging along for the ride, constantly in close communication with the real drivers: management and vision.

    So, I think we’re ultimately in agreement here, but I’m cautious to relbrand a philosophy that still has yet to resonate within so many businesses today.

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  • http://www.adobe.com Brent Dykes

    Eric,

    In my rush to respond to this post, I failed to link to my article. You caught it on Twitter but other readers may not have.

    http://blogs.omniture.com/2011/09/08/is-your-data-driven-organization-heading-into-a-lake/

    Cheers,
    Brent.

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  • http://www.blueacorn.com Eric Winter

    While I don’t think the word “driven” within the word “data-driven” is bad compared to “opinion-driven” or “ego-driven”, I do see marketing causing an overreaching misapplication of the word. Thank you for the push back on that.

    So what does data-driven look like?

    As I see it, effective data-driven teams have three capabilities:
    1) They can unearth and properly frame questions whose answers impact organizations’ abilities to achieve their missions.
    2) They know how to bring data to the service of answering those questions.
    3) They can effectively prioritize data efforts to get good “bang for the buck”.

    Just for fun, what DID you end up coming with for CBS News?

    E

 


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