Why the Data Economy should become the Evidence Economy
Boost innovation by learning from cause and effect.
The European Political Strategy Center (EPSC) has issued a strategic note, Enter Data the Economy, at the beginning of this year. I personally like the way they are trying to make bold predictions to influence the Brussels agenda. But in the case of data I think they are missing the point.
From the EPSC Note’s Conclusion:
“The data revolution is already underway and gaining speed. It profoundly changes how value is created, with a relentless focus on user-centricity. At the same time, the very nature of innovation is changing, with data now a decisive factor in the success or failure not only of businesses, but also of the economies that underpin them.”
Data doesn’t (yet) profoundly change how value is created
The claim that companies have a relentless focus on user-centricity is unclear and mostly unfounded. Of course this is how companies want to be perceived, but don’t take their word for it.
If data would fuel value creation through user-centered practices, I’d expect decisions about new products and services to be backed by experimental data on customer satisfaction.
Current practices don’t match that definition. The ruling KPI is still “sell more stuff”. And although there is more data ending up in powerpoint presentations nowadays, this is mostly data that was designed to confirm earlier beliefs.
It isn’t easy to use data to predict the success of new offerings or to truly understand why your current customers do what they do. Within organizational culture there is an own way of making sense of it all, and this just doesn’t reflect the scientific method.
Data isn’t (yet) changing the very nature of innovation
Data can be used in different ways. On the one hand you can collect data to understand your business and customers better. One the other hand you can use data to create new products and services.
What I think is important for companies is that they can understand what the potential effect is of new innovations that they launch. This means data is, like science, about probabilities and decreasing risk.
Companies will rise, and companies will fall. This is a fact. Given the set of current companies it’s only normal that we see differences in success. Any data minded person would agree that it is extremely hard to predict which individual company will be successful and which not.
I would argue that organizational cultures have difficulty with complexity the same way politics has. We know that the truth is more nuanced, but our constituency will not buy that story. So we will create powerpoints that we will know our bosses will gobble down like Kool-Aid.
The more data, the less you know
The Data Economy to me should fuel more evidence based practices. When data is used in a way it tries to unravel causal relations it adds to how fast organisations can learn.
But it means organizational culture has to change. A lot. It should change to a culture where the more you know, the less you know. Where you don’t increase revenuestreams every time you do something, but where you fail most of the time.
By accepting the harsh reality of innovation, Europe could take the lead. I can’t promise we will make more money, but I can promise we will learn from it.