Yesterday I received this plea for help. “Frankly speaking the article [Al Ries's article in AdAge titled "Metrics Madness"] is quite frustrating… I work as a research analyst [and] his article has demoralized me so much that I am thinking of changing my profession.” The email went on to ask me if I would write a post to help convince the writer not to jump ship. How could I refuse?
The sub-title to Al’s article outlines his proposition very succinctly:
“The Answer to Mathematical Failure Seems to Be More Math. If You Run a Company by Numbers Alone, You’ll Run It Into the Ground.”
I certainly do not believe the article justifies abandoning one’s job as a research analyst. But it may challenge all of us to accept that numbers can only guide us so far. Instead of just delivering more math, maybe we need to be able to tell stories as well.
While it may come as a surprise to many, I am in total agreement with Al’s belief that running a business on the numbers alone is a recipe for disaster. Some while ago, I wrote “Counting what counts: sales and brand equity.” In that post, I reviewed the paper by Len Lodish and Carl Mela called “If brands are built over years, why are they managed over quarters?” which stated that marketers who rely on short-term analysis of scanned sales data do so to the detriment of their brands. I suggested, “All too often, managers do get lured into making decisions based on the data that’s available, not the data that is really called for. Then they justify those decisions as being based on “the numbers” rather than careful thought about what the numbers might really mean.”
There is another problem with relying solely on the numbers to make decisions, particularly when those numbers come from complex models. In my post “Do we pay enough attention to risk in ROI modeling?” I suggested that econometric models are not set in stone. Not only do the means of calculation affect the results, but so too do changing circumstances. “All too often we regard the findings from models like these as timeless. They are not. They are merely estimates based on historical data. And just like they say in the stock market, ‘past performance is no guarantee of future results.’ But then, no one seems to listen to that warning, do they?” (I know I didn’t.)
Does all of this mean that I believe market research and models are a waste of time and that marketers should ignore the numbers and trust their guts? Of course not. Nothing could be further from the truth. The vast majority of marketing successes originated from thorough research and analysis.
However, as a research analyst, I do recognize that the numbers do not tell the whole story. And our job is to tell the whole story. To rely on modeling the past is like reading stories from history. We need to go a step further. We should be aiming to identify what the numbers imply but do not explicitly state. This will help us tell new stories. And it requires inspiration and creativity. We need to make “more math” into better math by blending some art with the science. As Oscar Wilde said, “Anybody can make history. Only a great man can write it.”
To research analysts depressed by Al Ries’s article: Take heart. Don’t abandon ship. This is your chance to become great by blending a little storytelling into your math.
Do you agree that marketing by the numbers alone is a recipe for disaster? What else might you say to stop our analyst friend from leaving the profession?
(3 votes, average: 5 out of 5)
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May 8th, 2009 at 1:11 am
Hi Nigel,
Well written - how is the leg?
I have allways been fasinated how the big braands are launched by entrepreneyrs who use no ‘numbers’ and succeed.
(There is the trite counter that many more failures are launched also using no numbers.)
I believe that the reason these brands become big is that the entrepreneur had a clear idea of what the brand should be and stuck to the knitting.
When the founding entrepreneur moves on this centralising vision also moves on and professional managers now have to maintain the brand - a very different job. Because they did not have the clear vision and did not grow up with the brand they do need research to keep the central theme running through the brand.
Unfortunately, in many cases, the brand managers believe that they have a similar strength of vision as the founder had, and can tweak the brand to be more sucessful or launch new products and do so without numbers. This is when things often go wrong.
Obviously I agree that numbers without stories are sterile. Good researchers weave magic with numbers, the rest just produce numbers.
Erik.
May 8th, 2009 at 5:41 am
Hi Nigel,
I appreciate the way you have blended the words of Alries in your post.
Please refer to his post as he is challenging every marketer that marketing is not logical and mathematical models are like flying cars always a distance away.
Numbers provide idea & idea lead to execution and ultimately success/disaster. No marketer can play blindly only on case studies when the global trend are changing on a roller coaster ride.
I don’t feel shy to say that Alries is a marketing authority. After reading the sentences of Alries anyone would give it a second thought about his profession as a researcher.
I wish you would have read the comments below his article. He wasn’t even there to defend his words.
I agree numbers should be blended with story to make it great but what about marketing is not even 1% maths?
May 8th, 2009 at 7:35 am
I like to think of marketing as a betting game where you are going to place $1 bet on a brand or a channel and if you choose the right one you might get $5 back or you pick the wrong one and lose your money. An entrepreneur has a particular passion and nose for what they are doing. they may be able to see the horses in the parade ring and have a look at the jockeys and get a sense of what to put their bet on. For the rest of us looking at the bookmakers odds would be enormously helpful. Occasionally the 100 to 1 shot will romp home and sometimes the favourite will fall at the first, but generally the odds will be a good guide. Its is very difficult as a researcher to convey that, marketeers often think they are paying their money for certainty not for narrowing the odds. Saying “this brand is going to be successful (but there is a 1 in 20 chance it will fail)” feels disturbing and confusing even if it is more accurate. So, like politicians we get trapped by the need for certainty.
See this wonderful article about projected certainty http://news.bbc.co.uk/1/hi/programmes/analysis/7712933.stm
One benefit of storytelling is that it helps round out the story and soften the edges.
Finally, on entrepreneurs, most “successful” entrepreneurs have a long string of failures to their name. They are more prepared to have a go at something and accept that it might fail. They work on the basis that the odds will bend in their favour if they back a number of horses.
May 8th, 2009 at 7:37 am
Thanks Erik, I agree that there is a fundamental difference between an entrepreneur who has an intuitive and intimate understanding of his/her product and audience and the managers who come after. This is not to denigrate the managers. They often fill a role for which the entrepreneur is ill-equipped: efficiently running a big organization.
Yancy, I have read Al’s article and the reason I did not quote more from it is that I did not think it was very good. In my experience good marketers use all the tools at their disposal to figure out how to make their brand more desirable than the competition. Math and models are just a tool. And you know what they say about bad workmen don’t you?
I have to disagree when you say marketing is not logical. Nonsense, all successful marketing is emminently logical after the fact. As you say, the trick is to identify the right idea and execute it effectively. Research, qualitative, quantitative and modeling, can help inform that process. Any model is an approximation. The question is whether or not it provides useful guidance.
Where Al, you and I appear to agree is that numbers should not be followed blindly. They must be subject to interpretation and judgment.
To that point we had a classic example in the commentary on my Twitter post. The number under debate was Twitter’s 40% retention rate. Miro thinks that is poor and signals weakness. Duncan thinks it is a sign of future strength. The two interpretations are wildly different. Which one is right? A lot of money could be riding on that answer but in the end it comes down to someone making a call.
May 8th, 2009 at 8:09 am
Good analogy, Gordon, and you are right. All too often we give people the simple answers they demand, not realizing that they may be taken at face value.
I forgot to add the link to the orginal article. In posting it (above) I reviewed the commentary on AdAge again. The comments reflect such a wide spectrum both for and against Al’s POV. However, one by Jonathan Goldfuss stood out to me. He says:
“The problem is not that metrics are bad. It’s that picking the right metric on which to focus, and using techniques that give meaningful results, is an art in itself.
It is true that we put far too much faith in “the data.” But only because we don’t pay enough attention to how the data was collected, who was collecting it, under what circumstances, from what sample, and using what techniques. Without answering these questions, we might as well be reading tea leaves, as our conclusions will be based on information we don’t understand.”
May 8th, 2009 at 2:00 pm
As a researcher interacting with marketeers you can come across two extremes which are equally frustrating.
The first - they have a view and no matter how compelling your case for change, they will not consider anything else. To extend Gordon’s analogy - they are like the old gambler’s who have a system that has worked well for them in the past, it may not be so effective now, but better to stick with what you know than go out on a limb.
The second - they do not hold any strong view of their own and expect you to tell them the exact direction they should take. But of course, returning again to Gordon’s analogy, every bookmaker, form guide or tipster may offer a different favourite in the same race - and even if you do back the favourite every time, the returns will never be as big as occasionally backing the winning outsiders. They end up completely without coherent direction.
Both of these reactions are designed with the intention to eliminate or avoid risk in a scenario where that is not possible - what is possible is the intelligent management of risk.
The best brand managers take information from all sources - qual and quant research, sales, competitor intelligence etc - they then use this information selectively to inform, shape and inspire their decisions about their brand. But the essential thing is that it is the end decision is theirs - they are not looking at the numbers for answers, they are looking for the level of risk associated with each choice and the selecting the option at a level acceptable to them.
May 8th, 2009 at 5:49 pm
This debate is a little like nature vs. nurture — in the end one of them loads the bullet, and the other pulls the trigger. The best companies in the world use numbers, metrics and analysis extenstively - and then add intuition, qualitative understanding and best practice to pull the trigger.
May 14th, 2009 at 10:51 am
There is research that makes sense and provides valuable insights to “tell a story”.
I think what Al Ries criticized is that major companies too often make lot of senseless research, don’t think on their and aren’t willing to accept the obvious thing (because they get paid to much salary to come up with simple things).
Consequently they might loose their brand’s focus…
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