Data or Gut?

Data or gut? It is the dilemma of anyone having to make a market call.

In the best book on chip marketing ever written, Marketing High Technology, Bill Davidow describes how it can all go horribly wrong

It was 1984. The emergent PC industry was in a frantic boom. All the PC companies were ordering chips like crazy.

“We knew there was going to be a bust in the market,” wrote Davidow, “our efforts to get them to cut back on orders were met with hostility. It was like asking a starving man to share his food.”

“The optimum strategy for the semiconductor companies at the time would have been to continue to take orders while cutting on back plant capacity,” continues Davidow, “we all should have done that six months before the boom ended. But no one did. So instead, semiconductor manufacturers eventually were stuck with massive cancellations and a huge overcapacity.”

“Our analysis of the hard data led to all sorts of erroneous conclusions. The gut feeling that Ed Gelbach, a senior vice president of Intel, had about the situation was far more accurate than all the quantitative information the product managers generated.”

“But people cling to hard data. The more of it there is around, the more they will believe it rather than their own feelings and impressions. It is tough to argue for instinct or intuition against numbers, even when you know much of the information is erroneous.”

“Unfortunately, there is security in order and repetition. Human beings have powerful inclinations to reduce everything to numbers.”

“I am convinced that surprisingly few important marketing insights are ever gained from these numbers,” concludes Davidow, “many more come from keen observation – the human factor.”


Comments

2 comments

  1. It is not just the best book on chip marketing, it is one of the best books ever written on marketing. It is full of common sense and knowledge from making mistakes, some of which he confesses. I would regard it as compulsory reading for any one entering product marketing, along with the MythicalMan Month by Brookes

  2. SecretEuroPatentAgentMan

    Hard data often is not as hard as it claims and this is a huge problem and in fact gets worse with more analysis. As an example, imagine an intelligent fire alarm with “smart” sensors A, B, and C.
    A think there might be a fire but is not sure, flags up a possible maybe.
    B hasn’t sensed anything but notices A is onto something, and raises a flag of a possible fire, perhaps a different location meant it has not sensed it itself yet.
    A notices B is also sensing something, raises level to just below triggering the alarm
    C notices B and A is escalating. It concludes a fire is on and sounds the alarm, even though it never sensed anything.
    A and B see C detects fire and joins in on the fun. Within a few milliseconds the “smart” fire system concludes a massive fire has broken out everywhere.

    So yes, gut feeling should not be dismissed.

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