By Adam Gale
This piece originally appeared on Management Today
Don’t tell the true believers in silicon valley, but there’s an art as well as science to business.
You don’t need to look very far to find Silicon Valley’s influence on the way we conduct business. For the wannabe entrepreneurs of the world, it’s just a no-brainer. Success is disruptive; excellence can be found in an algorithm.
This way of thinking has found a receptive audience among corporate leaders too, many of whom secretly wish their extremely un-Googley businesses had a bit more west coast pizzazz. ‘We’re not a box factory,’ they say, ‘we’re a technology business.’ Everyone’s ‘agile’, everyone’s ‘disrupting themselves’.
At the heart of the Silicon Valley approach is an almost religious belief in the power of data, usually of the big variety. It is the source of their understanding of their customers, and the mechanism by which their ideas are tested. Without it you are, as W Edwards Deming once said, ‘just another person with an opinion.’
The idea that business decisions should be driven by quantifiable data sounds very convincing, very scientific. It’s hardly new, either - MBA graduates have been steeped in it for fifty years.
But what if it’s wrong?
‘The gospel of big data is being repeated over and over by Silicon Valley, and they don’t understand there’s a philosophical flaw at the heart of it,’ says Christian Madsbjerg, senior partner at strategy consultancy ReD Associates and author of Sensemaking: What Makes Human Intelligence Essential in the Age of the Algorithm.
‘It’s a 400-year old debate that started with Francis Bacon, who believed that if you just gather enough data, the truth will fall out of it. That was wrong 400 years ago and it’s wrong today.’
A scientific approach to quantitative data has many uses, Madsbjerg says, but it becomes a problem when people think it’s the only valid way to understand something. Partly, this is because your data is only as good as the question you’re asking of it, and partly it’s because not everything can be reduced to a number.
‘Let’s say you want to figure out what it was like to be the Duke of Windsor, saying no to the crown in 1936. So you start gathering data, old pictures, news, his scrapbook from the time. Some of the data’s artefacts, some of it’s pictures, some of it’s text. In order to understand him, you need to piece together all those types of data. There certainly could be quantitative data, but just relying on that would give you a very incomplete picture of the Duke of Windsor,’ says Madsbjerg.
Context, judgement, a critical appreciation of different types of evidence, imagination – this is essentially the arts and humanities approach to knowledge, which Madsbjerg calls sensemaking.
At first glance, it sounds rather more ivory tower than boardroom, but understanding people is at the very heart of business. For this task, relying only on a hypothesis-driven, quantitative approach is inadequate. ‘You leave out most of the important things and therefore misunderstand things all the time,' Madsbjerg says.
Quantitative data can capture who customers are and what they do, but not why, which is the essential question you need to ask when selling to people, particularly when their experience of life is very different from your own. We may want certainty and unambiguous facts, but sometimes they don’t exist, because we live in an ambiguous and uncertain world.
‘Business is an art making sense of large amounts of data,’ Madsbjerg concludes, noting the continued dominance of ‘well-rounded’ humanities graduates in the upper echelons of corporate life. ‘But that data should be treated with the rigour and discipline from the natural sciences.’
Of course, Mark, Larry, Sergiy, Bill and Jeff would probably take issue with that – and they do have a rather impressive collective commercial record to back them up. Madsbjerg is unsurprisingly unconvinced. ‘Facebook and Google are essentially ad placement companies. The jury is still out if placing an ad on Facebook is any more effective than doing that on a billboard,’ he says.
‘I will start believing in these approaches when Amazon after 25 years of collected data suggests something relevant to me. It is mind boggling that the algorithms at Amazon still suggest me things I [already] bought from Amazon.’
Amazon's not alone either. Facebook's fake news and YouTube's placing ads next to extremist content also showcase the limitations of algorithms - they're great at rules, but so far not so great with exceptions, the realm of human judgement. There are plenty more examples.
Unfortunately for Madsbjerg, the powers that be still find Google rather more convincing than Gaugin. Governments around the world are going out their way to show their commitment to STEM (science, technology, engineering and maths) education, rarely acknowledging the implicit, corresponding cuts to the arts and humanities.
Most people who decry such cuts worry about the cultural impoverishment they could bring, but if Madsbjerg is right and the best place to learn how to make sense of the world is in the library not the lab, then it could have consequences for business too.
This piece originally appeared on Management Today