• November 1, 2015
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

Blinded With (Data) Science

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“You can't manage what you can't measure." This famous quotation, attributed to ur–management consultant Peter Drucker, gets brought up all the time in discussions about CRM, business intelligence, and related topics. Having a set of properly measured data is considered crucial to any business endeavor.

The Drucker quote is often incorrectly attributed to a fellow consultant, the statistician William Edwards Deming. This is particularly ironic because one of Deming's works lists the Seven Deadly Diseases of Management, which includes "running a company on visible figures alone." The numbers don't tell the whole story by themselves, and it's up to analysts—or anybody who has access to the numbers—to discover meaning. In honor of Veterans Day, I'd like to share a story about how understanding the implications of a data set made a real difference in the world.

During the Second World War, aerial bombing was a major component of the Allied strategy. Bomber aircraft had to fly straight and level when approaching their targets to have a hope of hitting anything, but this made them relatively easy pickings for fighters and anti-aircraft guns. Consequently, Allied aircrew losses were dreadfully high.

But you can't put armor all over a plane; it will quickly be too heavy to get off the ground. There's a reason tanks don't have wings. With this in mind, the Center for Naval Analyses studied damaged bombers to see where armor was most desperately needed.

The researchers included one Abraham Wald, a Hungarian Jew who had fled to the United States in 1938. Wald created a simple diagram of a plane and shaded in the areas where returning bombers showed damage. The thinking by military planners was that the damaged areas were the ones that should be better armored. The problem: Pretty much all of Wald's diagram was heavily blackened, so they were back to the problem of getting a tank to fly.

Then Wald showed what human insight can do. The data came from aircraft returning from battle, he reasoned—the damage by definition was not fatal to the aircraft. The crew was another story, but if a plane goes down, the entire crew is lost. Wald flipped the model and looked at the undamaged parts of the bombers, reasoning that those were the important components. Armoring these pristine areas, Wald argued, would improve the rate of survival. He was right, and because he refused to limit himself to visible figures and conventional ideas, more Allied bomber crews made it back.

In other words, it's not just the people with rifles who win wars. Nerds do, too.

The sort of thinking that Wald applied to the bomber problem is what W. Edwards Deming was getting at. Sometimes the holes we don't see are the most damaging, and realizing that requires an understanding that goes beyond a list of numbers. To elaborate with another Deming quote: "Knowledge is theory. We should be thankful if action of management is based on theory. Knowledge has temporal spread. Information is not knowledge. The world is drowning in information but is slow in acquisition of knowledge. There is no substitute for knowledge."

Enterprise software gathers information, but it goes beyond that. Good applications preserve the context of information and combine it with the knowledge of people who use it. Data scientists are important, but so are line-of-business personnel who know what the numbers really indicate and why they matter to the business. This is why the best CRM solutions give access to everybody in the company.

If you weren't familiar with Deming before this article, you might want to Google him. The name was familiar, but I only really became aware of his work while researching this column (yes, I occasionally do research), and discovered a wealth of quotes and wisdom that should be indispensable to CRM fans. Add him to your list.  

Marshall Lager is the managing principal of Third Idea Consulting; bring him the information and he'll give you the knowledge. Start the process at www.3rd-idea.com, or www.twitter.com/Lager.

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