The danger of anecdotal experience

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Resist simple explanations that fit too easily

We’re taking a video crew to the Canadian Automotive Institute at Georgian College to record the launch of Dennis DesRosiers’ new book, Best of Observations. This book is a collection of Dennis’ favourite writings from his many years analyzing the automotive industry.

It goes without saying you should get your hands on a copy and read it, but that’s not what’s on my mind.

The power of Dennis’ insights comes from data. Sound like I have an over-developed flair for the obvious? Perhaps, but in day-to-day business, managers often lack specific data to support decision-making. Instead, we often fall back on extrapolated anecdotal experiences.

Let me give you a dangerous example from my own world.

We publish magazines serving a wide variety of industries. One of our magazines (not automotive) is getting its butt handed to it on a platter by its main competition. Through the economic downturn, we’ve lost a fair bit of share (as measured in advertising pages).

In trying to better understand the reason(s) for the slide, I was told that advertisers are responding to price-cutting by our competitor, and that the share change was not a result of product differences. This feeling was universally shared by the team selling on that magazine.

As we discussed it further, it seemed to me that this market-reality was not based on solid data. We could not identify a large number of advertisers who reported being offered pricing by our competition that was well off rate card. Instead, it seems we knew of a couple of advertisers who reported this kind or pricing to us, and decided to assume it was the main driver behind our competitive difficulties in this market.

Why did this happen? Because it can be easier to extrapolate limited experiences than perform the due diligence to really understand a situation. When the behaviour that’s being extrapolated fits a broader market condition, like a competitor “giving it away” in a recession, the extrapolation easily gains credibility, reducing the sense that further analysis is needed.

Deeper analysis showed our competitor had responded to changes in the market by modifying their editorial mix and circulation – changes we had not matched. These changes were measurable and specific, but our staff wasn’t looking for them because they felt they knew the answer.

Many businesses are susceptible to this kind of thing, but perhaps none more so than a car dealership. Human experiences provide powerful fodder for forming attitudes, and your staff are collecting those experiences every time they deal with your customers and prospects. Consider the advisor who is reluctant to sell a specific service because he had a customer or two push back hard in earlier efforts. Or the salesman basing competitive comparisons not on data, but on popular stereotypes.

As you oversee the staff operating your business, resist simple explanations that fit too easily. Dig for the data. It may be true that the devil is in the details, but so are the answers.

 

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