Big Data Demands Big Context

When we entered the age of big data, many of us assumed we had left the age of big risk. We didn’t have to guess anymore. We didn’t have to go out on a limb. We’d follow the numbers, the “truths.”

But time and time again we’re finding that it’s not that simple. No matter how good the research is, big data is nothing without big context.

The promise of big data is a complicated one.  When I hear most non-statistical people talk about big data, they believe it will answer all the questions they have about their business.  Big data is just making sense out of larger data sets that may not be historically the data everyone has focused on in the past.  

Once you break down what big data is and what it isn't, the question then becomes how to use it.  Context is extremely important.  Not just in the form of survey or research, but in the form of humans that have been working in the business.  The human intuition and psychology of consumers is just as important as ever.  Just as before there was big data, organizations combined data with business acumen to make the best decisions.  Nothing has changed with big data.  There has to be business acumen to combine with the big data finding to build the best product and have the best marketing strategies.

This article looks at Microsoft and Windows 8 to put this into context.  

Microsoft’s engineers discovered that people were doing less of the time-consuming writing and creating that had once been the norm. Increasingly, users were socializing for short bursts.

The research also showed that people loved having “touch” functionality and were avidly consuming small pieces of live information.

Consequently, Microsoft decided that Windows 8 should feature navigation that enabled multitasking and quick interactions, and that it should also have touch and live tiles.

People love touch.  I love to touch on my iPad and iPhone all the time.  However, those devices are more intimate than a computer.  They don't have the bulk of a computer and they can sit on my lap or I can hold them up.  

It turns out touching a screen on a computer is very hard over time.  While little touches here and there will work, overall it is literally a pain to touch on a computer.  After time your arm will become tired and a trackpad can solve many of the problems.  While I believe at some point there will be a touch interface that makes sense in a computer, to have the whole interface built around touch does not make too much sense.  

But what people say and what they do are two very different animals.

This is so important to understand when doing any research.  It goes back to the famous Henry Ford quote of "If I would have asked my customers what they wanted, they would have asked for a faster horse."  

Context is important, but so is psychology.  Customers don't think beyond using the devises or tools they have when answering questions.  They want a computer to solve a problem that another device should solve, but thats just because they don't know about the other device.

Also, doing research on what a customer would do if they were given a choice of the following is very deceptive.  I never believe what a customer says they will do, I always rely on what they do in combination of what they say.  When you combine the two, you get the truth which is always somewhere in the middle.  Remember to never change an entire strategy based on customer surveys of "what they will do if" questions.

Consultants Should All Get Real Jobs

Amen. 

The Three Tribes of Social Shopping

Do people share what they plan to buy, or buy what they share?

That’s the question my colleagues and I had to ask after discovering that a significant number of Pinterest users go on to buy the items they have pinned.  As we reported in Harvard Business Review, 21% of Pinterest users say they have purchased an item in-store after pinning, re-pinning, or liking it on Twitter, and 36% of users under 35 said they had done so. Look beyond in-store purchases, and the numbers are even bigger:

29% of Pinterest users have purchased something (in-store or online) after sharing or favoriting it on Pinterest

22% of Twitter users have purchased something after tweeting, retweeting, or favoriting on on Twitter

38% of Facebook users have purchased something after liking, sharing, or commenting on it on Facebook

Very interesting article.  What they still didn't answer is the act of sharing a driver?  Does the customer share because it is available to share or does the share drive a purchase? And the outcome is to monitor and ask a lot of questions from people who share your products on social media channels.  Sounds pretty pricey.  

For marketers, the opportunity of social lies in the ability to reach and inspire the “thinkers” and “leapers” — to find and drive sales from people who might never otherwise move from interest to commitment.

First you have to identify these people.  The key is predicting who is not going to purchase and nudge those potential buyers, that will optimize revenue.  If you nudge everyone with discounts or more ads, you might have just spent money on people who were already going to purchase. 

How the U.S. Airline Industry Found Its Edge or Demise?

So what happened? The turnaround can’t be attributed to a bold, Da Vinci-esque initiative such as new carbon fiber aircraft, the pioneering of new markets or even low-cost innovation. Rather, it was the result of something far more modest: the slicing of airlines’ base offerings into customizable “options and extras.” The most famous of these options was checked-bag fees, but most of the recent innovations have focused on “upselling” passengers into an improved experience (e.g., selling fast-track boarding, lounge-access, extra leg room and others).  

This is one of the most interesting articles I have read from Harvard Business Review.  For one, I can't disagree more with the premise.  The premise of the article is that charging fees is a good thing for businesses.  Like many businesses in the "what have you done for me lately" quarterly earnings craze, the airlines have gone with the strategy of making bad profit.  

What's bad profit do you ask?  It's profit that erodes the long term profitability of the business.  Not all profit is created equal.  The airlines have sacrificed customer satisfaction and loyalty for short term profit.  The article argues it saved the industry and these are innovative.  I argue there is nothing innovative about this strategy.  It is lazy. 

As part of this shift, airlines realized that some people didn’t need everything that was included in the sale of a standard ticket; this opened the door to unbundling the “one size fits all” offer — and led to the introduction of fees for checked bags. Many business travelers never check a bag but historically subsidized the substantial cost for leisure travelers who did. Today, those who need the option pay for it. Many passengers grumbled, but the impact has been undeniably positive for the industry. Last year bag fees alone generated $3.6 billion in revenue in the U.S. Imagine where the industry would be without this?

What?  Unbundling?  They didn't unbundle, they added on fees.  If they were truly unbundling, that business traveler referenced above would start paying less for their ticket.  Instead, they kept prices the same or even raised them and tacked on these fees.  I can't comprehend this thought process. 

What really has saved the airline business?  From the outside looking in it seems they have become smarter about their routes.  They have cancelled many unnecessary flights, because most flights I go on are completely full.  That wasn't the case before, and it's not because the customers are excited about paying for baggage fees. 

The airlines seem to have become better at yielding their prices.  I don't know if it was a big practice in the past, but the airlines seem to be much more strategic about their pricing model.   

Articles like these make me wonder what we are learning about customer service.  These strategies allow for an upstart competitor to come in and take major share, think Southwest.  Southwest is growing faster than ever and that is because they don't nickel and dime their customers.  Maybe the other airlines should find their "true innovation". 

Keep Up with Your Quants - Harvard Business Review

Very good article about using data to make decisions and communicate results.  

having big data—and even people who can manipulate it successfully—is not enough. Companies need general managers who can partner effectively with “quants” to ensure that their work yields better strategic and tactical decisions.

Often times analysts struggle to communicate their findings in a way the organization understands.  Finding a common ground makes for a great combination. 

We all know how easily “figures lie and liars figure.” Analytics consumers should never pressure their producers with comments like “See if you can find some evidence in the data to support my idea.” Instead, your explicit goal should be to find the truth.

How many times I have heard this in my career?  Quite a few times.  As data consumers, we can't be afraid of being wrong or showing that a decision we have made lost money.  That happens.  Always strive for the truth.  It is much better to improve results then to take a hit to your ego.

The rest of the article is a great read on how to better receive analytics.   Being someone who can take analytics and turn data into money is what separates the men from the boys.    

Too Much Data? →

When data is missing, we overestimate its value. Our mind assumes that since we are expending resource locating information, it must be useful.

We're fascinated with filling information gaps and that obsession can lead us astray. Especially today, when reducing uncertainty has become all too easy.

An interesting study on how our minds work utilizing data.  I see this everyday.  People are more fascinated with the information they don't know, rather than looking at what is known and making a solid decision based on the facts at hand.  So many times a report is issued and there are thirty questions, most of the time the questions are deflecting making a decision.  The lack of some piece of data is reason enough to put off the decision and look for further validation.    ​

I believe there is a combination of data and experience hat goes into making a qualified decision.  ​Validation of whether a decision was right or needs to be tweaked happens after the fact.  There is never going to be enough perfect data to make a right decision 100% of the time, so trust your experience and the data you have.