Data and The Donald

Originally published on HUFFPOST BUSINESS.

What Brands Can Learn from Trumpism

A few weeks ago, the New York Times carried an article that should be of deep interest to brands. Not because it dealt with Donald Trump—enough has been written about that subject—but because it showed how the Republican Party dealt with the data that was available to it. It turns out that when smart people ignore what the numbers are telling them, it opens the door to major disruption.

In writing this, I want to make it clear that I’m not talking politics or advocating for a candidate. Data errors are a bi-partisan phenomenon, and as Nate Silver has repeatedly pointed out, politics makes us particularly susceptible to them. It’s just that we see brands and even entire industries make the same mistakes.

The outline of the story is the following. Since 2006, the Republican Party has had a solid block of blue-collar voters, particularly in former manufacturing regions under economic stress. In spite of these voters’ tendency to support the party, they did not agree with large parts of its agenda, and in particular on immigration and entitlements. As time went on, the divide became deeper and deeper, until the point where a disruptive innovation, Trumpism, was at hand.

We often think that disruptive innovation requires brilliant insight into human nature and deep technical knowhow. But it also occurs whenever an industry is staring at unsettling data and chooses to ignore it. In that case, what seems like a safe business model suddenly gets blindsided by a disruptive force that paid attention to the data.

This is exactly, of course, what happened to the taxi industry before Uber and Lyft came along. No one liked taxis. Everyone in the industry knew that, but they chose to ignore the problem, so long as their profits were solid. In fact, all through the last decade, medallion prices (otherwise known as taxi licenses) in New York City actually rose until they nearly topped $1 million per cab. Then the new car-hiring services came along, and the collapse was swift. Today, medallion prices have fallen by about half, and customers have departed in droves. If the taxi industry had not been so unconcerned about its customers, it would not have had its Trump moment.

So what do we ignore in data? A few things:

Changes in competitors. Although everyone praises disruption, industries tend to dismiss upstarts until they’re eating their lunch. Today, you need to take a very wide spectrum approach to competition. The barrier to entry in most businesses has fallen dramatically, and a minor threat can quickly metastasize into an existential one.

Changes in what people want. You have to always make sure you understand your customer base. The New York Times article about Trump points out that in the Republican’s successful 2006 election, the party picked up many people disaffected with Obama. But when faced with data about their true concerns, it failed to take them into account. Whenever you do that, you make it easy for your competitors.

Anything other than the main metric. If you’re happy with your sales, but unconcerned about poor customer satisfaction, you may have a big problem. The article points out that while the GOP was aware of voter dissatisfaction, it was comfortable so long as its chosen candidates were getting votes. This is a big no-no. If you ignore the fact that your customers dislike you, you’re rolling out the red carpet for a competitor.

Contradictory evidence. Obviously, there was a lot of anger amongst Trump supporters prior to his arrival, but that seems to have been ignored.  Brands have a very similar problem. A 2015 IBM study showed that while most of them believe they deliver a superior customer experience, around two thirds of their customers disagree. This bit of contradictory evidence should have a lot of us worried.

Doing something because everyone else is. Sometimes you stick with the status quo, because that’s just the way it is. Taxis fell into this trap when they ignored things like ease of access, cleanliness, and a friendly experience. After all, didn’t every company in the industry have those problems? Likewise, the Republicans felt fine pursuing policies their constituents disliked­­—like free trade agreements—because the Democrats had roughly the same position on them.

Whatever happens with the Trump phenomenon, and it’s increasingly looking like a nomination, it serves as a cautionary tale to complacent brands. You can have all the data in the world, but if you find a way to set aside what it’s telling you, you may be setting yourself up for a big fail. Honesty in the face of uncomfortable evidence is usually a much better idea.

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