Is Big Data Killing Innovation? 

Is Big Data Killing Innovation? 
Delivery & Logistics

The Cambridge Group's Chris Fosdick and Linda Deeken discuss ways to apply Amazon's tactics to retail to achieve business growth

PSFK Op-Eds
  • 2 october 2017

If you have even casually followed the career of Amazon Founder and CEO Jeff Bezos, you likely know of his obsession with Day 1 versus Day 2 companies. Day 1 is about vitality, energy and growth. Day 2 is stasis, followed at some point in the not so distant future by death. Given this sharp contrast, it’s no wonder that Bezos keeps his team at Amazon focused on fending off Day 2 at all costs. 

Although most readers will naturally connect these Amazonian tactics to retail, we suggest some of the insights here are relevant across a range of industries—particularly if we consider them through the lens of innovation. Indeed, these thoughts from Bezos are a pretty good compass to inform potentially business-changing opportunities. 

 To that end, three key insights Amazon can teach us all include: 

  1. A customer-obsessed culture pays dividends
  2. Big data is great, but innovators need to master “small data” too
  3. Better innovation requires a better process

Here are a few ways to apply this approach and achieve growth in your own business:

A customer-obsessed culture pays dividends: As Bezos notes, “obsessive customer focus is by far the most protective of Day 1 vitality.” So, what does that mean? For companies intent on profitable growth, it means there is no holy grail ‘holier’ than deeply understanding the customer and their needs. Customers consistently drive companies to be better, to be more efficient, to be more innovative, to be more! Even when customers cannot yet articulate the ‘more’ they seek, they leave clues about their needs, struggles, and aspirations. At The Cambridge Group, we use Jobs Theory to unpack the functional, emotive and social progress customers are seeking that ultimately drives their purchase choices. Essentially, Jobs Theory means customers “hire” products and services to solve a problem in their life. Innovators can use this valuable trail of bread crumbs to understand the “Job-to-be-done” for their customers, and drive growth around superior delivery against these critical customer Jobs. This type of customer obsession can also shape the internal culture of a company. A singular focus on the customer’s struggles and needs provides a clear rallying cry to direct and align cross-functional efforts. As Bezos noted, “even when they don’t know it yet, customers want something better, and your desire to delight customers will drive you to invent on their behalf.” 

Big (quantitative) data is great, but innovators need to master “small data” too: If you’ve read this far, a simple question naturally raises itself: Where does this intimate customer insight come from? The answer is data, but maybe not the data you think. Most companies are swimming in more data than they know what to do with, and have invested in tools and techniques to aggregate and analyze this data. But too often, well-meaning innovators comb these volumes of data, looking for insights to drive successful innovation, and come up short. Why? First, they don’t really know WHAT to look for in this big data. And second, quantitative data is essential for identifying correlation but does not explain causation—so they never get to the WHY behind the WHAT. How does one get to causation? Via “small” data, or taking the time to understand consumer stories and struggles, not just aggregated consumer statistics. Understanding the consumer’s Job-to-be-Done requires you to actually talk to them and walk in their shoes. Big data is an important compass for understanding correlation and trends, but this type of ‘small’ data – the stories of individual customers seeking to make progress – can be even more critical to uncovering innovation gold. 

Better innovation requires a better process: We won’t take you through the storied history of W. Edwards Deming, but you may know of his profound impact on the Quality Revolution in in the U.S. and Japan. How does this relate to innovation and Jeff Bezos? Bezos talks in a recent shareholder letter about the importance of great managers constantly seeking to improve the process, rather than being ruled by it. The reality is that the innovation processes at too many companies are too poorly designed to achieve desired innovation outcomes. Prevailing metrics, incentives and hurdles create a process that often rejects experimentation and calculated risk-taking—key hallmarks of breakthrough innovation. Even when organizations we work with grasp the power of Jobs-to-be-Done as a lens for innovation, they often find it very hard to evolve their innovation process to harness it. This calls to mind Deming’s astute observation about the two basic rules of life: “1. Change is inevitable. 2. Everyone resists change.” In order to change innovation outcomes, companies need to change their innovation processes and harness big AND small data to unlock the full growth potential of customer-obsessed innovation.

Not every company needs to be like Amazon, but every company can learn something from what they are doing well. Take a look at your own business. Are you customer-obsessed? Are you taking advantage of big AND small data? Are you re-inventing process to fit your innovation aspirations? If not, why not start now?

Chris Fosdick is a Principal with The Cambridge Group, a leading strategy consulting firm and a subsidiary of Nielsen. He has spent the last ten years with TCG helping clients primarily in the consumer products, retail and media spaces develop demand-driven growth strategies and respond to change. Chris’ work explores how shifting consumer demand is reshaping competition, and how dynamic companies can adapt to meet new challenges. He has developed strategies for domestic and global clients around new product development, innovation strategy, business and brand portfolio optimization, pricing strategy, customer and market segmentation, and business model evolution.

Linda Deeken is the Chief Marketing Officer of The Cambridge Group. She has been published in Harvard Business Review, among other publications, and has been a key contributor to several books recently released by The Cambridge Group. Previously she was a consultant with The Cambridge Group, focusing on developing customer-driven strategies, new product development, positioning and consumer segmentation, in addition to advancing critical new pieces of intellectual capital for the firm.


Lead Image: Vodafone Institute | CC | Image resized

If you have even casually followed the career of Amazon Founder and CEO Jeff Bezos, you likely know of his obsession with Day 1 versus Day 2 companies. Day 1 is about vitality, energy and growth. Day 2 is stasis, followed at some point in the not so distant future by death. Given this sharp contrast, it’s no wonder that Bezos keeps his team at Amazon focused on fending off Day 2 at all costs. 

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+technology
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