Is customer analysis a puzzle or a mystery?

Malcolm Gladwell (Blink, The Tipping Point) is up to his old tricks again—gathering pseudo-scientific concepts from psychology and sociology and mapping their eye-opening implications to business and other areas of everyday life. His descriptions of these phenomena leave you feeling like you've been let in on a small secret of the universe.

His latest article in the New Yorker, Open Secrets, uses the Enron scandal as a launching point to discuss the difference between puzzles and mysteries (as defined by national-security expert Gregory Treverton):

Osama bin Laden’s whereabouts are a puzzle. We can’t find him because we don’t have enough information. The key to the puzzle will probably come from someone close to bin Laden, and until we can find that source bin Laden will remain at large.

The problem of what would happen in Iraq after the toppling of Saddam Hussein was, by contrast, a mystery. It wasn’t a question that had a simple, factual answer. Mysteries require judgments and the assessment of uncertainty, and the hard part is not that we have too little information but that we have too much.

You need more information to solve a puzzle, but once you have it, there is a clear, definitive answer. The Watergate scandal was a puzzle; Woodward and Bernstein needed to dig up more clues to uncover the truth.

In contrast, Gladwell argues that the Enron scandal is a mystery. Information about the energy company's financial engineering was largely available—if you had the patience and expertise to dig through SEC filings. The clues were available, decoding their meaning was the challenge.

All of which left me with this riddle: Business are constantly trying to gain a clearer picture of their customers. Should this effort be approached as a puzzle or as a mystery?

Let's break it down:

1. Where is the data? In my experience, the data to understand customers often already exists somewhere within the enterprise—granted, it is spread out about amongst various transactional and customers databases, surveys results, focus groups reports, and the collective wisdom of customer-facing employees. But like the Enron case, the challenge is largely one of collection and analysis, not of gathering new data.

2. What will the answer look like? I'll tell you what it doesn't look like: MicroStrategy's Customer Analysis Module:

MicroStrategy CAM

Customer understanding is not a dashboard tool reporting on a mountain of customer data—despite MicroStrategy's claim that it "provides deep insight into customer behavior" with "more than 65 performance metrics and 40 key reports." That's puzzle thinking, i.e. if we have access to more data, we'll necessarily arrive at an answer.

Customer understanding requires synthesis of data, not just reporting. It requires multiple perspectives balanced against each other through the mind of experienced analysts. It requires a recognition that segmentation models and demographic profiles are simplifications of a more complex whole.

3. What does it take to get to the answer? Solving puzzles and mysteries take different skills sets. Puzzles "require the application of energy and persistence, which are the virtues of youth. Mysteries demand experience and insight." In essence, it requires more of the deep and challenging analytics that you'd rather be doing and less of the data gathering and reporting that you are doing.

This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License. All source code is released under a BSD License unless otherwise specified.

8 comments | Show all comments only the last 5 are shown


January 8, 2007
jimmay said:

Is it just me, or is way too much vendor-driven 'analytics' focused on reporting. I have been in the analytic arena for years, both on client and supplier side, and I have yet to see an application of customer reporting (or any reporting) that continued to add value after the first run.


January 8, 2007
Zach said:

Jimmay, I totally agree. Reporting is most useful in steady-state situations where the important metrics are known, goals have been set, and you are looking to maintain control of performance. Most business situations don't look this way -- there is confusion about the important drivers of performance and building a better understanding of the "system" is the critical challenge.


January 15, 2007
Analytical Engine » Solving Mysteries said:

[...] The core thesis of the article is that we take too many problems to be puzzles (and try to gather more data), whereas in most cases we will get to the answers if we think of them as mysteries (and do more analysis of the available data). Avinash and folks from Juice analytics tend to agree that the problem with many practitioners of web analytics and customer analysis is a ‘puzzle’ attitude which results in producing lots of reports and metrics, many of which do not provide any actionable insights. For businesses that have spent millions of dollars on data warehouses and ERP systems over the last decade, the problem clearly falls into the ‘mystery’ domain. [...]


January 16, 2007
makingmark said:

Love that you had the same interpretation of Malcolm's article as I did.

I work in a database marketing department of a large New York based credit card company and lots of higher ups just don't get it. They want to chase down every last piece of information, as if that will tell them something about our customers. As a "senior manager" who, in the true scheme of things (read, military-style hierarchy), is really a junior employee, I've been preaching a hypothesis-based approach for quite some time as being both more effective and more efficient. All for deaf ears.

It makes so much sense to me that your firm consults to small/med sized companies. Companies do what they have to and nothing else. Large companies like my employer can "afford" to waste assets (capital and human) churning data that is merely "interesting". My personal hope is that - to marry Malcolm's article with what I've been reading in The Long Tail - smaller/medium sized companies will better serve the underserved niches in every big company's customer base, hollow out their profitability, and destroy them (creatively, after Schumpeter) through death by 1,000 cuts.


February 11, 2007
Databikkel » Blog Archive » Een puzzel of een mysterie aanpak said:

[...] Avinash en de jongens van Juice Analytics hebben de knuppel in het hoenderhok gegooid. Ze vragen zich of we Business Intelligence of web analytics vraagstukken wel als een puzzle moeten oplossen door bv zo veel mogelijk data te verzamelen over klanten. Zou een mysterie-achtige aanpak niet beter werken? [...]

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