Data v stories - what matters most?
The business news that matters
Hello and welcome to the latest edition of Off to Lunch…
“Intangibles aren’t necessarily myths just because they are elusive to measure”. That’s the words of Ed Smith in his latest column for Business Leader. It’s a fascinating piece, one which explores the limitations of data and how it must work hand-in-hand with stories and anecdotes when trying to make a decision.
Ed is the former chief selector for England cricket, the author of Making Decisions and director of the Institute of Sports Humanities. He is writing a monthly column for Business Leader on decision-making.
In his latest column he takes the debate about data to the next level. He looks at its limitations in sport, business and life and how it needs to work alongside stories, anecdotes and good-old human judgement - assets which seem to have been written-off in recent years.
Ed points out how data gurus in sport like Billy Beane and Daryl Morey have failed to win championships, despite making a revolutionary impact. Equally, however, he points out that business leaders who sell a story about their business without the data to back it up - such as Adam Neumann of WeWork - eventually fail.
Ed writes:
“Big Data,” in theory, was supposed to ride to our rescue, myth-busting the antique crutch of storytelling. As soon as we could just “run the numbers”, surely hard facts and numerical rigour would relegate storytelling to the status of camp-fire curiosity?
Well, it hasn’t worked out that way.
First, the proliferation of data ended up bewildering decision-makers as often as informing them. Choose any question, any data set, any algorithmic tool: what’s not to like? But infinite choice fatigues people – as Spotify users will know – so they often end up doing what they’ve always done (or nothing at all), as though their options were narrowing rather than expanding.
Secondly – from the perspective of management rather than strategy – saying “the data supports your selection for the team” doesn’t turn out to be a great way to inspire human beings in the real world. Data-heavy coaches can underestimate how teams gel together as a whole, preferring to focus on assembling under-valued players (like an investment portfolio).
Data gurus Billy Beane (baseball) and Daryl Morey (basketball) – despite their insights and revolutionary impact on their sports – have been less effective at exploiting the non-quantifiable levers that also forge champion teams. Intangibles aren’t necessarily myths just because they are elusive to measure.
He concludes by saying:
The master of the algorithm, Jeff Bezos at Amazon, always understood this point. “The thing I have noticed,” he’s reflected, “is that when the anecdotes and the data disagree, the anecdotes are usually right. There’s something wrong with the way you’re measuring.”
A data guy who gets the value of stories – an example of uniting insights from two apparently contradictory sources of authority. Instead of picking sides, you have to get the best out of both.
You can read Ed’s full piece here
Podcast…
The latest episode of our Business Leader podcast looks at the story behind Robinhood, one of the fastest-growing companies in America, and its launch in the UK. Jordan Sinclair, the president of Robinhood UK, explains how it is approaching the launch and the challenges that Robinhood has faced along the way…
You can listen to the podcast episode on Substack here, Apple here or Spotify here
Other stories that matter…
1. The chief executive of Boeing, Dave Calhoun, is to stand down. Boeing has been struggling to deal with the fall-out from a cabin panel blowing out on one of its planes. Announcement here
2. The owners of Gail’s, the upmarket bakery chain and coffee shops, are working on plans to sell the business in a deal that could value it at well over £200 million. Story by Sky News here
3. Merlin Entertainments is to roll-out surge pricing across its theme parks and attractions across the UK, which include Legoland, Alton Towers and Madame Tussauds. This means families will pay more to visit the attractions in the summer. Story by the Financial Times here
4. OakNorth, the digital bank for businesses, has reported a 23 per cent rise in pre-tax profits to £187 million for 2023 and announced it is expanding into the US. Rishi Khosla, the co-founder and chief executive, said: “In the year ahead, we’ll maintain our firm commitment to supporting ambitious scaling businesses, whose contribution to growth is more important than ever in the current macroeconomic climate.” You can find the results here
5. A piece from the weekend papers: The Sunday Times looked at the project that could make Sunderland the Hollywood of the North and why Rishi Sunak is backing it. You can read more about this here. I visited Sunderland last summer to hear about this project. You can read that here
The new Business Leader…
The new Business Leader website and magazine have now launched. We are building a new inspirational, aspirational and agenda-setting business publication for the UK. You can read our analysis, interviews and expert columnists on our website by clicking the image below. Our new magazine is now available in shops and you can subscribe to your own print or digital version by clicking here
And finally…
A fascinating LinkedIn post from the weekend shared a leaked memo from 2005. The memo was the analysis that the venture capital firm Sequoia Capital produced on YouTube when it was considering whether to invest in the fledging online video business. It’s a great insight into what successful businesses can look like in the beginning….
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