Instinct – why you should trust it?
Every one of us possesses a comprehensive set of instincts – yet in our world today, we seem to place less and less value on them. Before moving on, let me tell you how I define ‘an instinct’. I consider a person’s instincts to be the ability to come up with the answer to a problem by applying his or her innate, not quite conscious thought process to all the knowledge he or she has accumulated over time.
Sure, we might not be able to clearly articulate our thoughts about every topic, in every situation, at every moment. We may not be able to justify every conclusion we draw, but it goes without saying that we possess opinions about right and wrong, about the best strategic direction to take, and about actions we should avoid. In my opinion, an instinct is the personal quality that has led you to your current job. Think of it like this: Most employers treasure your experience and your knowledge more than your ability to read spreadsheets.
Why all this fuss about instinct?
Because our instincts are in danger. Have you ever had a powerful gut-feeling about what you should do, yet overwhelming pressure and argument from the people around you has caused you to change your mind – only to realize later on that you were right all along?
Our instincts are vital. Time after time, they prove to be the asset that justifies your job, making your company stand out from the competition. But our instincts are fragile, too.
In early 2003, the LEGO company was in trouble. During the past year, it had lost 30 percent of its turnover. Then, in 2004, another 10 percent vanished. As Jørgen Vig Knudstorp, LEGO’s CEO, put it, ‘We are on a burning platform, losing money with negative cash flow, and at real risk of debt default which could lead to a breakup of the company.’
How had the Danish toymaker fallen so far so fast? Arguably, the company’s problems could be traced back to 1981, when the world’s first handheld game, Donkey Kong, came to market. Toy companies all around the world, including LEGO, were convinced they could read the future of children’s play in that popular electronic game.
LEGO began moving away from the small plastic building blocks that had always been its core product, and it started focusing instead on its loosely knit empire of theme parks, children’s clothing lines, video games, books, magazines, television programs and retail stores. Somewhere during this same period, management decided that modern children – impatient, impulsive, and fidgety – would respond to bigger LEGO bricks. But the bigger blocks were a failure.
Every Big Data study LEGO commissioned drew the exact same conclusions: Future generations would simply lose interest in LEGO. But then, in early 2004, we paid an ethnographic visit to the home of an 11-year-old boy in a midsized German city. Our mission? We were on a last-ditch effort to figure out what, if anything, really made LEGO appeal to children. That day, the LEGO executives found out that everything they thought they knew about early twenty-first-century children and their new digital behaviors – including their lack of patience, their desire for time compression, and their need for instant results – was wrong.
In addition to being a LEGO aficionado, the 11-year-old German boy was a passionate skateboarder. Asked which of his possessions he took the most pride in, he pointed to a pair of beat-up Adidas sneakers with ridges and gouges along one side. Those sneakers were his trophy, he said – his gold medal, his masterpiece. Most of all, they were evidence. Holding them up so everyone in the room could see and admire them, he explained that one side was worn down and abraded at precisely the right angle. The heels were scuffed and planed in an unmistakable way. The look of those sneakers, and the impression they conveyed to the world, was perfect. Those shoes signaled to his friends that he was one of the best skateboarders in the city.
At that moment, it all came together for the LEGO team. Those theories about impatience, time compression, and instant gratification? They were totally off-base. Inspired by what an 11-year-old German boy had told them about an old pair of Adidas, the team realized that children attain social currency among their peers by achieving a high level of mastery at their chosen skill, whatever that skill happens to be. If the skill is valuable and worthwhile in their eyes and in the opinion of their peers, they’ll stick with it until they get it right, never mind how long it takes. For kids, it was all about paying your dues and having something tangible to show for it in the end – in this case, a pair of beat-up Adidas sneakers.
Until that point, LEGO’s decision making had been predicated entirely on reams of Big Data. Yet ultimately it was a chance insight, a bit of ‘small data’, that helped propel the company’s turnaround. LEGO refocused on its core product and even upped the ante. The company returned to its small bricks, made them more detailed, and put more of them inside their boxes. The instruction manuals became more exacting, the construction challenges more labor-intensive. Children responded with enthusiasm. For users, it seemed, LEGO was all about the summons, the provocation, the mastery, the craftsmanship, and the hard-won experience – a conclusion that complex predictive analytics, despite their remarkable ability to parse ‘average’ scores, had missed.
Cut to ten years later. During the first half of 2014, in the wake of the worldwide success of The Lego Movie and sales of related merchandise, LEGO’s sales rose 11 percent to exceed $2 billion. For the first time ever, LEGO had surpassed Mattel to become the world’s largest toymaker.
I’ve come to realize that many companies experience an almost identical scenario: traction, success, and then a crisis as the company loses its ‘focus on the ball’.
This is where instinct comes into play.
If we study the most powerful business leaders of all time, we find that they share one thing: they trust in their own instincts.
Consider Rupert Murdoch, who supposedly reads most of his newspapers every morning. That adds up to more than 50 newspapers. If a headline is out of line with what he believes his readers want, he’s on the phone to his editors. He has the knack of putting himself in his reader’s shoes, whether it’s a business reader of the Wall StreetJournal, a worker reading the New York Post, or a British housewife reading The Sun.
The founder of IKEA was no different. You’d find Ingvar Kamprad running cash registers in his stores. Why? Because he was determined to understand not just whatpeople buy, but also why. Sitting at the checkout stand let him interact with customers, one at a time.
“There is only one boss,” said Sam Walton, founder of Walmart. “The customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else.” You’d often find Walton walking around his stores, interacting with customers.
Last year, NBC’s Today Show asked me to turn around a range of small businesses across North America. I quickly realized that these businesses suffered from a serious disconnect with the consumer. Time after time, owners viewed their businesses from their own perspective, rather than from the consumer’s viewpoint.
One of the retailers was a 100-year-old shop called Veach’s Toy Station. As I entered their store, their lack of customer focus struck me instantly. So, I asked the staff to join me on our hands and knees to crawl through the store. I wanted them to see the world from a six-year-old’s perspective. “Can you reach that toy?” I asked. “Can you see that doll? Can you play with that car?” They answered, “No, of course not.” But wasn’t their primary consumer a child below the age of ten?
I’m reminded of the late Michele Ferrero, Italy’s richest man, owner of Nutella, Kinder Surprise, Ferrero Rocher and Tic Tac. Some years ago, Ferrero was spotted doing exactly what I’d asked the Veach’s Toy Station staff to do. Ferrero was crawling through a retail store to test whether children could reach his chocolates.
Leaving the office and entering the world of consumers can be uncomfortable. Suddenly, you’re stripped of your expensive tie, your name tag, and your flashy watch – all those things that contribute to your image. But how will you ever know how your consumer thinks if you never stand in her shoes?
Remember my definition of instinct as the application of our innate mental abilities to our accumulation of thousands of observations? Isn’t that the secret of Murdoch, Kamprad, Walton, and Ferrero?
They trusted their instinct! I will argue, strongly, that a successful organization can’t be run on Big Data alone. After all, your competition has all the same data that you have, and it will lead them to the same conclusions.
Data doesn’t create meaning. We do. An executive needs to be far more than a data analyst. He should constantly strive to see the world from a customer’s point of view. I believe that the truly dynamic business leader of the future, though immersed in a flood of Big Data, will need the courage to adopt the mindset of the consumer. He must dare to trust his instincts.
Which brings me back to the very premise of Small Data. In a world where we’re all obsessed with Big Data, we desperately need a different, complementary viewpoint. Where Big Data is all about seeking correlations, Small Data is all about seeking causation – that is, the reason why.
Everyone has access to Big Data, they use the same software, and, perhaps not too surprisingly, they tend to reach the same conclusions. However, in Small Data you’ll find the tiny clue that, if you have the courage to let your fragile instinct run loose on it, may be profound and unexpected enough to set your brand apart.
My question is, do you really want to gamble your instincts away, your ability to recognize and use Small Data, in a quest to go Big Data – like everyone else?