Whether it’s big data scores, over-hyped Silicon Valley apps, or the panacea of artificial intelligence, the world is fixated on the possibilities of algorithmic knowledge.
This will prove to be a costly mistake for business. The greatest challenges and opportunities of the coming century will all be cultural.
Major companies like Intel, Ford, and IBM already know this, and are shifting their strategies from a focus on technological innovations to one centred around people and their experiences.
This call for a deeper understanding of consumer behaviour goes by many names: customer, patient, and user centricity are just three. But it always demands the same set of skills – understanding other people and how they live.
Ford, for example, has a long history of using technology to drive decisions, but it needed to gain more cultural intelligence as it shifted to foreign markets.
Investments in technology such as Lane Assist – an automated system to keep vehicles inside the white lines – took priority until the carmaker realised potential drivers in Chinese cities use roads without clearly demarcated lanes.
Ford is exploring driverless cars, but many of its customers live in places such as New Delhi, where employing a driver is the norm for car owners, and an important status signifier. Put simply, you cannot build great things for people if you have no idea how your products will connect with everyday aspirations and challenges.
It matters not how many data scientists or programmers are on your team, if you don’t understand cultural disparity, your business will fail.
A perfect example of this is the Google Glass, back in 2014. Taken from a purely technological perspective, the product was a success. From a cultural perspective, however, it was a disaster. Wearers were dubbed “Glassholes” and people shunned them at social events. Silicon Valley proved deft at software, yet completely inept at social mores and norms.
Take Starbucks as another example. Yes, the success of the company relies on technology and quantitative analysis: it needs the most advanced coffee machines and roasters, a streamlined supply chain, well-designed mobile apps, and up-to-date financial technology to drive growth. But the actual heart and soul of the company – its raison d’etre – is based on a simple but profound cultural insight. Former chief executive Howard Schultz understood how to modify the Southern European coffee culture to the contours of American life.
Today all this seems far too obvious, but it was only 35 years ago that coffee in North America meant a lukewarm cup of Folgers. Schultz’s insight required an understanding of Italian language and culture, as well as an attunement to an unmet desire in the US for more shared community spaces.
This is the type of cultural intelligence that drives all great business. Big data and an assortment of algorithms can tell us that 86 per cent of households in America drink more than six quarts (that’s 12 pints) of milk per week, for example. But why? Why do they drink milk? And what is it like for them?
Our growing neglect for this type of cultural intelligence has disastrous consequences in a business context. After all, business is almost always about making bets on human behaviour: which product is most likely to sell, which employee is most likely to succeed, what price is a customer willing to pay?
Companies that excel at making these bets tend to thrive in the marketplace. And the only way to make these types of killer bets is to understand people better. This is an investment in culture, not solely in algorithms.
Christian Madsbjerg is the author of SENSEMAKING: The Power of the Humanities in the Age of the Algorithm and a founder of ReD Associates.