I found this thought-provoking article from a consultancy working in the private equity operational improvement sector, which challenges the idea that Big Data and AI can solve everything. Data is important, and when I think back to how portfolio companies collected and used data 20 years ago, businesses are in a much healthier place now - but it is also too easy to forget the emotional & psychological interactions. I have seen some investors try to reduce investing down to a spreadsheet, even the management judgement. At oxford Capital, we never forget the human side is what makes the difference - the x-factor - and make a point to spend as much time getting to know the people as we do the data. Portfolio companies are encouraged to take the same approach targeting their customers.
Management teams and investors everywhere seem to have become obsessed with reducing customer behaviour and product development to a number – a piece of objective data that can be fed into an algorithm that explains everything – sans the usual messy complexity that typically characterises human action. “If you rely entirely on data, you strip decision making of all context. Data is incredibly valuable, but on its own it does not provide insight. It does not explain why,”