SPOILER ALERT: Not much
Many authors claim to have uncovered the secrets of business success by studying successful businesses. They didn’t and they can’t. But before we get to that, step inside the barn…
Inside the wooden building there is a complex aroma of rotting timbers, straw, engine oil and rust. It’s a smell most of us would find hard to describe but a farmer would simply call it ‘old barn’.
High in the rafters strip lights flicker, providing weak but adequate illumination. Rays of bright sunlight pierce gaps in the timbers. Multiple searchlights that pick out dust particles suspended in the still air.
Hank stands motionless in the middle of the barn, his hand poised above the old school revolver he has holstered, low on his right hip.
In one single action he draws, aims and fires. Keeping his feet firmly planted he turns at the waist and fires again. He turns and fires once more. This continues until, in a few seconds, his six-shooter has lived up to its name and is returned, with a flourish, to its holster. Hank steps back to admire his handiwork.
There are six new holes in the barn wall, each revealed by a new shaft of bright sunlight. Hank grabs a magic marker, walks to the wall and carefully draws a target around each of the recently created bullet holes, making sure the hole is exactly in the center of each target. Hank then claims he is the best sharpshooter in the world.
Hank is full of shit. If you witnessed this event you would not be impressed by Hank’s demonstration of pistol shooting prowess. He is clearly doing things ass backward, as they say round these parts.
You may not challenge him directly, though. Hank doesn’t look like he’s too fond of personal criticism. And he has a gun. So while you might say “great shooting Hank” you would be thinking “what a dick” and also “where is the nearest exit”
The story of Hank in his barn is ridiculous. Yet this is how many business experts find evidence to support their latest hypotheses. They draw targets around existing bullet holes and claim they are a great shot.
The analytical process that often used is superficially appealing but logically flawed. It goes like this.
Step one – identify several businesses that are doing very well against a preselected criteria. Revenue growth say, or innovation.
Step two – collect as many data points as possible about each business
Step three – Look for those data that are shared by the successful businesses
Step four – claim these characteristics predicted their success
Now at this point it seems a pretty reasonable approach. If you can find what characteristics successful businesses share then you should probably adopt them too.
Reasonable but probably wrong. Or at least not necessarily right. Consider this thought experiment.
20,000 people are each given a coin to toss. If they get heads, they stay in the game, if it is tails they are out. After the first toss approximately 10,000 people remain. They get to toss again. Same rules. Now 5,000 remain. This process continues for ten rounds. Now only 20 people are left. They have each beaten odds of over 1000 to 1 and tossed ten heads in a row. What makes these twenty people so consistent at coming up with heads?
So we set about analyzing these twenty ‘gifted’ individuals. After looking at hundreds of variables, we discover that all twenty have quite conservative political views and think Brexit was a good idea. Is it reasonable to say that being conservative and voting for Brexit are good predictors that you may be an exceptional tosser?
Obviously not. If we repeated this test we would get a different group of twenty people with different shared characteristics. We know the experiment will always produce around twenty people who toss ten heads in a row, purely down to the function of probability theory. These twenty people represent our bullet holes and our subsequent analysis is our attempt to draw targets around them.
Some wag once said, “if you torture data long enough it will confess anything”. If we analyze any group we may find common traits but they may not be predictive. You can’t find your hypothesis in your results.
This logically flawed approach is used by some of the best selling business books of all time. They all make similar claims; that good management practices can be identified by studying successful businesses and adopting these practices will lead to success in your business. They start with a group of already outstanding businesses and then set about ‘discovering’ the secrets of their success. This is bad science.
Phil Rosenzweig’s book, The Halo Effect (2007), does a great job of exposing the pseudo scientific tendencies in the explanation of business performance. A well thumbed copy should be should be a prized possession of every marketing professional.
In reality, the secret of marketing success is no secret. It doesn’t involve obsessing over your competition or studying businesses who have enjoyed remarkable success in an unrelated field. It’s not about being the Apple of air conditioning or the Procter & Gamble of publishing. It’s about your customers and how you relate to them.
Immerse yourself in your customer’s world. Develop a customer mindset and see everything from their perspective. Be aware of the outcomes they are trying to achieve. Understand their thinking, their habits and their beliefs. Appreciate the choices they have to make.
In order to make sense of this customer insight you will need a firm grasp of the core principles of marketing. Which means elements of psychology, sociology, behavioural economics, anthropology and so on.
Only then can you apply methods and techniques to turn this insight into action and results. These methods should predominantly be about increasing the mental and physical availability of your product to you target audience.
It’s a simple approach but it is not easy. in fact its quite difficult. It takes effort and discipline. Which is why books that promise you can learn the secret of success simply by reading about the success of others will continue to fly off the shelf. And why many businesses will still be asking the question “how can we get better at marketing?”