The Weakness of Data Analytics

It was one of the greatest new product introduction disasters in America’s history.  Coca-Cola reformulated its recipe and introduced the new version in April 1985.  The new version was discontinued three months later and replaced with the former recipe.

The new version had surpassed the original version in taste tests, focus groups, and customer surveys.  The focus groups were generally positive, except when told that the new product would replace the original recipe.  Executives within Coca-Cola dismissed those concerns.  The surveys were more positive.

Once introduced, the new recipe was successful.  But a backlash began almost immediately, especially in the south.  Coca-Cola was a part of the south’s heritage.  The new version of Coca-Cola was considered another Yankee invasion.  Calls of disgruntled customers started flooding the headquarters.  The dissatisfaction started spreading across America.  The new version was removed in May.

As Coca-Cola did a review of what went wrong, it seems as if they discounted the loyalty of their customers to the original recipe.  They also didn’t realize the resentment of customers over not having a choice between the original recipe and the new one.  They neglected What Matters.  Instead, they relied upon data from surveys, taste tests, and focus groups.  The data (What Counts) overwhelmed their sense of what really matters to customers.

Data analytics is a growing trend in business decision making.  As technology advances, we can get more and more data on all aspects of our business.  What we haven’t seemed to have mastered yet is the assessment of what matters.  One reason for this is what people tell you about what matters is often different from what really matters.

Try this experiment.  What is the longest amount of time you are willing to wait for something that you need to do twice per day.  Now test out your answer on the time it takes to get through the busiest intersection on your way to and from work.  What seems intolerable sitting in your car may be a lot different than your original answer.

To find out What Matters, we need to understand how humans behave rather than what they say.  The new Coke recipe might have been fine, but what wasn’t accounted for were the human reactions of not having a choice.

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“It’s not what you look at that matters, it’s what you see.”  – Henry David Thoreau (essayist and philosopher)

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