In the first post of The Data Whisperer, I presented the relationship between data, information, knowledge, and wisdom. I also defined data and wisdom respectively as “facts taken out of context”, and “knowing and doing the right thing at the right time”. With this in mind, how do we consistently take a bunch of facts and turn them into actionable knowledge? What skills or domain does one study to become proficient in the alchemy of spinning data straw into insight gold? Is it analytics? Visualization? Statistics? Data mining? These are all useful skills, but none is broad or inclusive enough to encompass the systematic practice of turning data into insight. After thinking about this for a long time, I was surprised to find I had learned about this dark art many years ago in elementary school.
As a boy sitting at a desk, I learned of these wizards who turn mere observations into understanding of our world and our universe. I learned the magic they use is powered by methods passed down to them through the ages. These wizards are scientists, and the magic they use is reveled to us mere mortals as scientific method.
In the context of business, Steve Miller suggests here that the scientific method we employ looks like this:
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Observe a phenomenon or group of phenomena
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Formulate a hypothesis to explain the phenomena. The hypothesis takes the form of a causal relationship or a mathematical function (the more of X, the more of Y).
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Use the hypothesis to predict the results of new observations.
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Perform tests (experiments) with predictions.
Don’t fret if you don’t have a lab coat and you are not currently surrounded by test tubes and beakers. You don’t need those things to do this kind of science.
Consider this scenario. An accountant produces an annual educational course to teach small business owners what he has learned from decades of analyzing financials of successful and failed businesses. Every year he sends out mailings inviting prospects to a free seminar where participants are offered enrollment in the paid course. The response rate to the mailing is predictable based on past results. On the advice of an expert marketing consultant, one year he makes changes to the format of the mailing to increase response rate. The response rate plummets and the accountant suffers a loss in course enrollments for that year.
The lesson? Don’t make risky decisions based solely on the hypothesis of an expert. Do an experiment instead. The accountant learned he should test changes to a proven mailing by applying the changes to a sample instead of an entire campaign. This little experiment would have insulated him from the risk of losing enrollment in his educational course for the year while still exploiting the possibility of improving his mailing response rate.
So if you want to do more of the right things at the right time, the stuff you need to use is science, which you already learned in elementary school. But don’t throw out the statistics, analytics, visualization, and all the other stuff you learned since then. That stuff will come in handy too!
What’s your story? Have you ever had success employing scientific method to a problem in your business? Ever had a failure where you regret you didn’t? Please share in a comment below.
About Julius Campbell