With the advent of big data and increased computer power, it is easy for business leaders to believe that more data will provide all the answers. But research from the Kellogg School of Management at NorthWestern University suggests that data alone cannot provide solutions to all business questions.
The Kellogg researchers note that “while there’s no doubt that quantitative analysis can play a powerful role in telling you what happens, even the most robust, granular data won’t tell you why something happens”.
Instead, according to the researchers, employing a combination of qualitative and quantitative methods to identify both the what and the why is what makes an analytics strategy a useful tool for change.
Kellogg Professor David Schonthal notes that “When you combine data analytics with a deeper understanding of a customer’s motivation and experience—that’s how you will create better products and services”.
The researchers consider the example of banking. This is an industry that has changed tremendously with ATMs, online banking, and apps replacing many tellers. A quantitative analysis might show that a bank has trouble getting customers to sign up for e-banking accounts. The data can show that e-banking accounts are unpopular, but it might not tell you why. It could be a lack of trust or perhaps customers are turned off by the website’s design. However, the research suggests that, just because the analytics show that app users seem happier with e-banking than desktop users, it does not mean the solution is to redesign the website. It could just be that app users are more comfortable with all types of e-commerce and e-service.
Qualitative analysis — in the form of focus groups, surveys, and customer observation — might provide some insight here by examining customers’ motivations.
The researchers conclude by suggesting that when qualitative and quantitative approaches are presented as self-contained methods of analysis, they can lead to bad assumptions.
For businesses to make better decisions the two approaches need to be combined to help get the best solution to problems.
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