The Role of Data in Strategy: Learning from the Past to Shape the Future

I am often told that data looks to the past while strategy looks to the future. And while this is true, some take it a step further and suggest this as a reason for not overly relying on data when developing strategy.

But if we don't rely on data, what should we rely on? 🤔 Not relying on data because it reflects the past doesn’t make much sense. After all, the past is all we have to inform us about what works, what doesn’t, and why.

The Past is Our Only Reference Point

When strategising, the future is inherently uncertain. No one can predict it with any certainty. But by looking back at past trends, patterns, and experiences, we can make educated guesses about where things are heading. Data helps us do exactly that—whether it’s quantitative metrics or qualitative insights. It serves as a reflection of what's happened before and, more importantly, why.

For instance, when market researchers examine customer behaviour, they aren’t just looking at yesterday's purchases. They’re analysing patterns — patterns that reveal how customer preferences have evolved and how they might continue to change. This kind of analysis allows companies to stay ahead of trends and innovate in ways that resonate with their target audience.

Steve Jobs and the Calligraphy Example

A common counter-argument to the use of data in strategy is the case of Steve Jobs, who famously designed the fonts for Apple based on his study of calligraphy during his college years. At first glance, it might seem that this story is about inspiration, creativity, and thinking outside the box, which aren't typically associated with data.

But let’s look at this a little more closely. What is the study of calligraphy, if not a form of qualitative data? Jobs was drawing from historical knowledge and techniques. He wasn't reinventing the wheel — he was building on the artistry, precision, and discipline of centuries-old traditions. By studying calligraphy, he was collecting data about the past in order to innovate in the present and future.

His decision wasn’t purely whimsical or gut-driven. It was an informed choice based on patterns of visual appeal, readability, and user experience that calligraphers had discovered and refined over time. In essence, it’s another example of how understanding the past can inspire future breakthroughs. 📜✍️

Data Provides Context and Insight

When we say strategy is about the future, what we really mean is that it’s about making decisions that will have future outcomes. The only way to make informed decisions is to understand the context, the landscape, and the forces shaping it.

Data — whether qualitative, like Steve Jobs' study of calligraphy, or quantitative, like sales reports and customer analytics—provides critical insights that help businesses assess risks, identify opportunities, and anticipate future trends.

Here’s why relying on data is crucial for strategic planning:

1. Trends and Patterns: Data reveals long-term trends that would be impossible to spot otherwise. It shows how things are changing and helps us anticipate future changes.
2. Risk Mitigation: By analysing past mistakes and successes, businesses can reduce the likelihood of repeating errors and increase their chances of success.
3. Informed Innovation: Data doesn’t just tell us what happened—it can also reveal why it happened. Armed with this knowledge, businesses can innovate more intelligently.
4. Competitive Advantage: Competitors who ignore data run the risk of making poorly informed decisions, leaving the field wide open for those who leverage data-driven insights to make smarter moves.

Balancing Intuition and Data

Of course, strategy isn't purely data-driven. There’s still room for creativity, intuition, and vision. Some of the best ideas come from out-of-the-box thinking, and not every decision can be backed up by numbers. But these creative decisions should still be informed by data. They should be rooted in an understanding of what’s been tried before, what succeeded, and what failed. Just like Jobs' development of Apple's fonts was.

The real magic happens when you balance intuition with data. Visionary leaders can see beyond the data, but they use it as their foundation. Without that solid base, even the most inspired ideas run the risk of being disconnected from reality.

So, Should We Rely on Data in Strategy?

Absolutely! While data reflects the past, it is our most valuable tool for shaping the future. Whether it's a market analysis, customer feedback, or even the study of ancient calligraphy, data provides a foundation for making informed decisions. Without it, we're left guessing or gazing into a crystal ball — and neither of those approaches is a sound business strategy.

The next time someone suggests we shouldn’t rely on data because it looks backwards, remind them that the past is the only lens through which we can view the future. What we choose to learn from it will determine how successful we are in charting the course ahead. 🌍🔮

See also:

• More data usually beats better algorithms [Updated 2022]
• Rethinking Big Data and Personalisation
• Analyse the business and its environment
• Data Analysis Lessons from "The implications of Brexit for monetary policy"
• 'Big data' is a big opportunity, not a big error
• 7 top tips for strategy analysis
• Everyone is entitled to an opinion, but...
• Poets versus Quants: the battle lines of business strategy
• Using online research to build an evidence base
• How to balance Creativity and Analysis in Business Strategy