Realizing Insight by Stating Assumptions – People respond to incentives

Realizing InsightThe field of Economics can be summed up in one sentence: people respond to incentives. This premise coupled with the ever-constant pursuit to understand the cause and effect relationship of events are the foundations of western thought. It’s this drive to discern the causes of behavior that drives people to search for answers when predicted behavior fails to materialize.


One of Mark Twain’s more amusing quotes is, “There are three kinds of lies: lies, damn lies, and statistics.” That quote never fails to bring a smile to my lips. Not because I believe numbers lie; given our business, of course, I don’t. But because numbers can be manipulated to serve whatever position someone wishes to support.


I bring up these three isolated concepts not to debunk them, but to raise our consciousness as we pursue understanding our customers. Many of us have built huge repositories of data chronicling the behavior of our current and prospective customers. We believe that within these oceans of data lies hidden the keys to understanding their future behavior. And, perhaps, it does.


In his best-seller, Freakonomics, Steven Levitt encourages us to pull back and look for relationships between apparently unrelated subject areas. Some of his insights about such varied topics as lowered crime rates, the motivations of salespeople and parenting all required the willingness to consciously examine and then question unstated perceptions and commonly held explanations.


So, let me encourage you to examine the obvious. It’s difficult because most unstated assumptions seem so obvious that it feels condescending to even mention them. Taking the risk to seem foolish stating the “givens”, questioning their current validity and then looking at all of our data can be the beginning of discerning earth-shaking new insights.


We are finding that given the current economy getting the basics right is now more important than ever. Remember, at one time it was common knowledge that the sun revolved around the earth.

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