Consider this fundamental concern: can a machine, or data produced from such a machine, provide meaning? The answer to date is “no.”
In marketing, we are trying to understand people and hopefully through our actions, inspire, convince and persuade them to perform a behavior, whether irrational or rational. “Meaning” is the connective tissue that forms the muscle of that behavior — take, for example, children and hot stoves. In the kitchen, I can remember the countless times we would tell our daughter, “Watch the stove; it’s hot!” Why do some children heed this warning, while others only do so only after they feel the burn? I believe the difference is in each individual’s richness of meaning – an understanding of what is being communicated and how that relates to us and our ultimate behavior choice. Why do some bystanders walk past a person screaming for help, while others jump into action to assist that person? Both groups witness the same event and have the same stimuli, but the meaning connects with each individual in a different way to drive a certain behavior.
Delaying Gratification and Resulting Behavior
There is an enlightening experiment and online video involving children and the temptation presented by marshmallows. In it, a researcher places a marshmallow in front of a child and tells them not to eat it. If the child doesn’t eat it before the researcher returns, he or she gets a second one. The results found most children could not resist and ate the marshmallow. This defies the logic of the researcher’s request, and the data that the child may be rewarded and punished for different behavior. What is overlooked in this scenario is that marshmallows are irresistible. It is a notion like this that big data, at least for the moment, cannot account for.
Blaming Big Data for Human Faults
Back to the central question: does big data inspire or hinder creative thinking? Creative thinking is the process of coming up with fresh perspectives or solutions. By its very nature, we provide meaning or context to a series of underlying components in our solution that ultimately create something new. Framing the problem is likely where big data can hinder creative thinking, but it is not big data’s fault. People who frame the problem are the ones who should be held responsible. Big data cannot create rules or meaning – it can provide insights or trends. People provide the meaning for those facts and figures. So, does big data hinder creative thinking? No – people do.
As an example, remember back to the well-known Target example where the company’s algorithms correctly predicted that a teenage girl from Minnesota was pregnant based on her purchases of unscented lotion, cotton balls and mineral supplements. The big data application accurately predicted the pregnancy, but as we now know, there was a considerable backlash against Target and the industry for this type of “spying” into our lives. The problem here was Target inadequately framed the challenge they were trying to solve (and showed negligence when it came to controls on the application of the algorithm). Target had framed the challenge around the life-changing event of having a baby as being one of only a few opportunities to change a person’s shopping behavior and location.
Prior to this example, most retailers would key off of public birth records to then “hit” new parents with everything they could. I still remember the stacks of direct mail in my mailbox when our daughter was born. Target asked an appropriate question: “Can we reach new parents earlier in the process?” The answer was undoubtedly “yes.” The problem, however, was they improperly framed the solution to address the likely scenario that pregnant teenage girls would also be identified. Big data opened up a new line of options for marketers, however poorly framing the challenge resulted in unintended damage.
Reframing the Problem
Framing can lead good people to bad conclusions. Take the ever-present competitive challenge today in consumer package goods (CPG) – private label brands. Now, let’s compound the issue by saying that your branded offering has a 70 percent share of the market. Over the last five years, you’ve slowly lost share to private label brand. Each year you try to protect your share and volume by pumping more money into trade through price promotions. Over enough time, this strategy has eroded your healthy 50 percent margin to around 35 percent, and stockholders are not happy. What are you to do? Take cost out of the product either by using cheaper ingredients or reducing the number of ounces of product? For most CPG companies, this is a very real scenario. The issue here is the framing of the problem at each step. In the beginning, why is private label taking share? It is likely a perceived quality issue, and private label is “good enough.” The difference between branded product and private label is no longer meaningful to the point that people will buy you over the other guy when there is a $0.10-0.25 price difference.
Now, in each subsequent decision, the framing becomes more and more about how to beat private label competitors at the private label game. Before you know it, you have a product that is no different than private label and compressed margins. What the retailer doesn’t take from you in market share with their private brand, they take from you in trade concessions. What if instead, the frame was, “How to maintain a meaningful differentiation that consumers would desire for the cost of a gum ball?” This new frame focuses not on competition but instead on how to chart your course to a place where consumers will follow. Good people can be led astray by bad framing.
Alan Hart is founder of Avid, a company focused on growing brands through its proprietary consumer data and insights. A serial entrepreneur, he started six companies before age 40. Alan is was most recently founding partner at Keen Strategy, recognized in 2015 at number 399 on Inc. 5000: The Fastest-Growing Private U.S. Companies, and receiving recognition as the 7th fastest growing company in North Carolina.
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