New Coke + Data Driven Decisions = Disastrous Outcomes
Digital Transformation: Update Your Business Before It’s too Late
With the retirement of paper memos and fax machines, some offices permanently closed, the highest hurdle to clear for most businesses is the leap to the digital space. Any business with an online presence has the potential to hit a vast array of markets because it is not bound by physical borders, time zones, or office hours. This success is only obtainable if your team is digitally fluent.
Data and artificial intelligence seem to be the answer to all of our problems, but without the human element, companies that rely only on data driven decisions will encounter disaster. This article will explain what digital transformation is, how more digital fluency creates more innovation, and why companies should be data informed instead of data driven.
Dangers of Data Driven Decisions
Remember the disaster that was the New Coke Formula? Coca-Cola’s blunder was a data driven decision based on blind taste tests of over 200,000 coke fans that tended to reach for the cup with the new coke rather than their competitor or the original formula. Based on the data, the executives decided to take the ultimate risk at the height of the coke wars and promoted new Coke. The results were an unanimous outrage from the fans that prompted a reversal. The campaign was abruptly canceled due to the negative uproar and the company recalled all of their new cokes, totalling in a loss of $30 million.
Don’t get me wrong. Every company needs to utilize data, but not at the expense of eliminating the human element. It is not sufficient to rely on algorithms or artificial intelligence to automate analysis. The algorithm's outputs are limited to the biases and shortcomings of the programmers, which is why there needs to be an outside, human intervention.
Data works best when it is used as another piece of evidence that is filtered by diverse subject experts. The difference between data driven and data influenced evidence is these unique perspectives and experiences that analyze the data. Without the expertise and experience to provide context for the data the company is blind at the wheel.
A data driven company will follow the data even if it drives them off a cliff. That’s why we need a digitally fluent workforce to provide the perspective that will set the company on the right course. Having an experienced and diverse team of analysts will come in especially handy when the data does not act as expected.
What is Digital Transformation?
Every business goes through four phases of a life cycle: startup, growth, maturity and renewal/rebirth or decline. Watershed moments like the COVID 19 Pandemic and the shift to a predominantly remote workforce, are unpredictable; however, the companies that made the digital transformation, not only avoided decline, but rather experienced a booming renewal.
Digital transformation is the transition to a global marketplace by updating operations, business procedures, and customer experience with digital products and processes. To survive in the digital age, a company must adapt to the technology. The benefit is that the technology allows your employees to build on their skill sets to create innovation by becoming digitally fluent.
Digital fluency is the ability to discover, evaluate, and drive results using digital technology. For many workers, they are hesitant to interact with digital technology because they worry they are unable to learn the products. Digital fluency is fostered in a company that offers resources, mentorship, and encourages employees to experiment as they learn to use unfamiliar technology. The reward for your team’s hard work is the increased opportunity for innovation.
In the past, only the leadership or product experts could make decisions based on data, but with digital fluency, anyone can argue their point using the data as evidence. Data functions as the great equalizer because it is raw information ready to be interpreted. The true benefits of digital transformation are the insights derived from contextualizing data. If there are more eyes that are able to interpret data there are equally less concentrations of power that block innovation.
On Brené Brown’s Dare to Lead Podcast, Brown & Dr. Linda Hill, (a professor at Harvard Business), discusses why and how companies should lead with empathy in the digital age. The discussion focuses on how leaders can use empathy to influence their team to innovate and build confidence by improving their digital fluency.
“It’s not so much about the technology, it’s about building the culture and capabilities necessary to help people be willing and able to actually use the technology. And if you want to build a culture in which people will actually use data to make decisions, you have to deal with the fact that data, like all information, is about power, there are power dynamics. And when you tell someone, your decision is supposed to be data driven, you’re fundamentally questioning their expertise, their experience.” - Dr. Hill
Dr. Hill makes a sharp distinction between companies that are data driven and companies that make decisions by data backed evidence. Data driven decisions are impulsive, naively veiled as “following the facts,” but in reality it is an abuse of technology’s convenience.
Following an algorithm is limited to the biases and blindspots of the developer. Increasing the digital fluency of your team fully utilizes their ability and removes hierarchical power systems that block progress. These different inputs avoid tunnel vision and lead to more innovation. Remember 1% of gradual improvement everyday results in a company that is thirty-seven times better by the end of the year.