Launching something new? Trust emotion over data
Relying too much on data without considering the human factor can be one of the most dangerous things a business can do. The examples of Nokia, Airbus and American Airlines show that, writes columnist Simone van Neerven. ‘More data does not necessarily lead to more insight.’
Nokia over-relied on data
Everybody knows that Nokia missed the boat with the mobile phone. Less well-known is the story behind it. In 2009, when Nokia was emerging as the world’s largest mobile phone company, ethnographer Tricia Wang made an important discovery. Commissioned by the company, she had spent years doing ethnographic work in China, from living with migrants to working as a street vendor and hanging out in internet cafes for months. She found that people with a low income were willing to pay for more expensive smartphones, even if it meant spending over half of their monthly income to get one.
So Wang saw a huge untapped market. Nokia had already launched a smartphone, but it was expensive and complex, and therefore only used by a select audience. She advised Nokia to change its current product development strategy from making expensive smartphones for elite users to smartphones that would be affordable for everyone. But Nokia did not know what to do with these findings. They said a sample size of a hundred was weak and small compared to their sample size of several million data points. In addition, they said that there weren’t any signs of my insights in their existing datasets. They decided to disregard Wang’s insights.
How Airbus’ largest plane flopped
In the 1990s, Airbus was faced with the question of how would air travel develop in the coming decades. One certain thing was that air travel was going to continue to grow at a massive rate over the next 20-30 years. Studies showed that the growth would be so rapid that capacity at airports and in the air could well become the limiting factor. Airbus’ concluded that a larger aircraft would be needed. They developed the A380, the largest passenger aircraft in the world measuring 73 meters in length with a wingspan of almost 80 meters.
In 2007, the first commercial A380 flight took place. Airbus expected to sell well over a thousand planes in the first 20 years. But ten years later, the orders dried up and only 250 had been sold. Production was stopped with a total loss of about 25 billion euros.
Airbus had predicted well the enormous growth of the market. However, they overlooked that budget airlines were on the rise, and accounted for most of the market growth. These airlines often fly to secondary airports to save costs. But these airports are far too small to handle such a large aircraft. And contrary to expectations, customers were more than happy to go to these more distant airports as the price of their flight tickets was significantly lower. Airbus had completely missed this – then still weak – signal.
Using ‘Big Data’ can be incredibly valuable to an organization. But more data does not necessarily lead to more insights. There is a danger in relying solely on data. People can become so completely obsessed with the numbers that they are not open to weaker, but crucial insights. Relying too much on data without considering human dynamics can be one of the most dangerous things a business can do. Nokia and Airbus are examples of that.
Don’t always listen to what customers say
At the same time, people often don’t know what they want. They say they will do or buy something, but in practice, they do the opposite. A customer survey conducted by American Airlines showed that they were willing to pay more for extra legroom. Based on that insight, in 2000 American Airlines began retrofitting all their aircraft, removing two rows of seats from their airplanes. Planes were taken out of service for a short while and huge budgets were spent on marketing. This whole operation took months and they spent 70 million dollars in total.
But American Airlines soon learned that despite consumers’ enthusiasm for the idea of more legroom when they fly, in reality, the vast majority didn’t pay those extra dollars. And so, four years later, they spent more money putting all the seats back.
Spotting weak signals and emerging trends
Customer feedback can be very valuable in discovering friction in an organization’s service or process. But it does not turn out to be a good indicator at all for innovation or creating something new. It’s like Henry Ford said, “If I’d asked my customers what they wanted, they’d have said a faster horse.”
It is important to realize that human dynamics are what drive trends, which is difficult to capture in data. Emerging trends can be noticed much earlier with keen observation. It will lead to unexpected, surprising insights that may contradict what you have always believed and undermine what you have always been so sure of.
The key is to be open, to let go of your assumptions, and to dare to make choices that are not (yet) supported by the data.
This article has been translated from its original version, which was originally published in Dutch on MT/SPROUT in November, 2022.
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