Business Butterfly Effects - Barking up the Wrong Tree

"Not everything that counts can be counted, and not everything that can be counted counts.” - (Quote Investigator suggests crediting William Bruce Cameron instead of Albert Einstein)

The Butterfly Effect is the theory where one small change in the starting condition of an event can have a monumental effect on the outcome of such an event.

The term was coined by Edward Lorenz and is derived from the metaphorical example of the details of a tornado being influenced by minor effects of the flapping of wings of a distant butterfly several weeks earlier.

Lorenz discovered the effect in 1961 when he was running a numerical computer model to redo a weather prediction. As a shortcut, he rounded off the initial condition as 0.506 instead of entering the full 0.506127 value. The result was a dramatically different weather scenario.

This Thursday Thought explores how the initial hypotheses on which we base our assumptions can have such a profound impact on our results.

Barking up the Wrong Tree

The idiom ‘Barking up the Wrong Tree” refers to making the wrong choice, asking the wrong person or following the wrong course. The term dates back to the early 1800s, when hunting with packs of dogs was popular. The term literally referred to when animals would trick the dog packs into believing they were up a certain tree when in fact they had escaped or were in another tree.

On a personal level, have you ever completed (or thought you had completed) a maths problem only to get to the end and discover a little mistake you made earlier had a massive impact on the end result? Perhaps you experienced this with a piece of self-assembly furniture, where you misread the instructions (or didn't read them at all :) and discovered you have extra screws left over at the end or had assembled the furniture in the wrong manner? With both these examples you have to retrace all your steps to find the error. This is extremely frustrating, a waste of time and an opportunity cost.

Business Butterfly Effects

Let's imagine for a second that the stakes were higher and the information you lacked or possessed was wrong. This information is the data on which you built your strategy. That strategy is in turn the information with which you build your business. What happens in that instance?

This use of and reliance on the wrong data happens all the time. Businesses lose millions and rarely identify where they went wrong. The diagnosis of where they went wrong would only lead to the accusation of someone. When many organisations have a culture of blame and finger pointing it is hard for anyone to admit mistakes, even if those mistakes can be turned into lessons to serve the business to grow and learn.

Even worse than a lack of accountability, is the decision to ignore that the data feeding a direction or strategy could be flawed in the first place. On this week's innovation show we discuss this all-too-common phenomena in business with consumer behavior expert and author of the best-seller 'Consumer.ology, The Truth about Consumers and the Psychology of Shopping’, Philip Graves.

Just as we see with business disruption, there is a bias to keep doing things the way we are because that is what got us there in the first place.

As John Maynard Keynes said:

“Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”

Butterflies of the Past

We are still suffering the side effects of business theories and practices from the 80s and 90s. We are still using organisational structures from the industrial age, from army structures, from the church.

I was in the fantastic science museum in London last year. There was a great exhibition on the history of the transport system in London. There are quotes from many scientists and data scientists working on smart city projects. The most common quote is that they wished their forefathers had the vision to have made a scaleable transport system.

Why?

Think for a moment of architecture and indeed building foundations. If you build a house upon bad land or bad foundations it will eventually go wrong. We often kick the can down the road because it is easier to do so than open the can of worms, let alone reimagine it. Many people sell a rental property that needs a lot of work instead of dealing with that work themselves because it is just too much hassle.

This happens in business all the time.

Many CEOs, MDs and board members become custodians of a role. True leadership would care about a business beyond short-term monthly or quarterly earning calls. Let's call out that many leaders do indeed start off with great intentions of long-term strategy, but get conditioned by short-term goals. This kills strategy, this kills game-changing and it certainly kills innovation.

Behavioural Data V Declared Data

Above is a set of images, if I were to ask you where you would look on both the man and the woman, you would “declare” an answer. I would usually conduct this with a survey. In the majority of cases I would take the collective responses as input to inform my strategy for new feature development, new product development or even new business creation. 

Now, if I were to heat map those same images with eye tracking software, I would get a far different answer to the answer that you had declared. This is “behavioural” data, this is what you do organically versus what you say or think you would do. Below are the results, one set is male eye tracking and one is female eye tracking. (by the way I don't own the rights to these images and could not track down the source to credit them).

Below will tell you which is male and which is female:

Do You Want Salads in a Fast Food Joint? Hell Yeah!

Imagine you are a global fast food establishment. You have a hunch your customers want healthier food than you have on offer. You spend a small fortune on focus groups, consumer surveys and declared data. The data tells you to go for it. You do and it it is a total flop!

What might you have done instead?

What if you simply put salads on your menu? What if you logged how many times people requested a salad and indeed which type of salad. To appease the disappointed customer simply offer them a discount and tell them you are out of stock?

That is behavioural data in action.

Machine Says Yes?

In the brilliant movie 'Ex Machina', Nathan Bateman is a multibillionaire who created BlueBook, a search engine that accounts for more than 90% of all internet searches. Now Nathan has switched his time and attention into building supreme artificial intelligent humanoids.

In the movie, he is asked how he has made one such humanoid Ava so "human", so capable of human thought. I loved his answer, because it captures the very essence of behavioural data.

Search engines capture how people are thinking. It tracks the exact terms we search for (by the way this information should inform our search engine marketing strategies, organic search terms are what people search for rather than keywords). Have a look at Google trends for yourself and see how your country is thinking.

On this week's innovation show Philip Graves has no hesitation in calling out a multi-billion dollar industry for its frailties and suggesting a better way. I was delighted to invite Philip on the show, not to throw a cat among the pigeons, but to be the kid who calls out that the emperor is naked.

Individuals, businesses and industries are being disrupted in every sector at a faster rate than ever before. If we don't even entertain the possibility that our information could be wrong, then we could be headed for disruption.

Here are some questions we should be asking of ourselves:

‘How game-changing is our strategy?’

‘How future-proofed are we?’,

‘How unique are our offerings?’

‘Are our insights really insights?

“The opposite of courage in our society is not cowardice, it is conformity” - Rollo May

One final warning:

Thank you for reading, if you like this please click the Thumb so others will see it.

On this week's innovation show, we welcome consumer behaviour expert and author of the best-seller ‘Consumer.ology: The Truth about Consumers and the Psychology of Shopping’, Philip Graves

We talk:

• Focus groups versus real life situations?
• Why Asking Is Fruitless
• Brand Fails such as New Coke and The Post Office rebranding as Consignia
• How brands like Red Bull succeeded in face of bad focus group research
• Simplification and Stickiness
• The misattributing of consultancy spend
• The importance of the entrepreneurial gut feeling
• The importance of Social proof
• The biases that sway our decisions
• The Philip Graves AFECT Model Analysis (of behavioural data) Frame (of mind) “Environment” “Covert study” “Timeframe”

Have a listen:

Web https://bit.ly/2FwsOJw

Soundcloud https://lnkd.in/gBbTTuF

Spotify https://spoti.fi/2rXnAF4

iTunes https://apple.co/2gFvFbO

Tunein https://bit.ly/2rRwDad

iHeart Radio https://bit.ly/2E4fhfl

You can find out more about Philip including where to buy his book here: https://philipgraves.net/