The Problem with Models
(or: We are all Modelers)
As the cliché says, the world divides into two groups. For now, the two groups are those who approach problems from a top-down perspective and those who approach them from a bottom-up point of view.
Historians, for example, diligently collect as much data as they can, and then build a model of how the world works. Economists, on the other hand, construct models of how they think the world should work, and then try to make the data fit. (And we’ve all seen how well that works.)
These same two world views collide on the level of market and marketing models.
Academics and consultative gurus have the luxury of telling the rest of us how marketing should work. They never have to execute. Too many of these people operate from the top-down. They present us with elegant charts and software programs that will, they tell us, help us formulate better strategies and develop profound competitive advantages. When they don’t work, it is the fault of implementation.
Unfortunately, life and the marketplace are messy. Every company’s market space is, at least slightly, different from everyone else’s. And customers keep changing their minds about what they want and how they decide to buy.
Actually, we are all modelers. But marketers work from the data up, not from grand concepts down. Every time we design a strategy, and devise tactics on how to implement it, we are operating on a concept of how the marketplace works: a model.
The proficient marketer is both an historian and a futurist of the marketplace. He/she knows the trends in his/her industry, what has worked in the past, what didn’t work, what products sold well, and what products languished. Combining that knowledge with a continuing stream of current information, the adept marketer looks to new trends, changes in behavior, and emerging needs. And from that we construct a strategy and implementation tactics to execute that strategy. Put another way, the marketer constructs a model of how he/she believes the market will operate in the relatively near-term future.
But here’s the key: Everyone knows that strategies need to change as the economy and the marketplace change. Thus, successful marketers change their models, i.e. their strategy. They do not try to fit the new realities into an old strategy, a pre-formed “model.”
Every marketer knows his world is a fluid and dynamic space. Every company knows that to retain the same approach to customers and competition as customers and competition evolve is to dwindle and die.
So why are we so entranced by the concept that there is a key to success in a quantitative “model” or a marketing “model” that someone outside our space has developed? Obviously, there are the exceptional few, the models that were actually built from the data up to the concept. But no matter how exceptional, these models ultimately become out of date. And with the current pace of market change and technological developments that allow customers and prospects 24/7 access to information and opinion, models become out of date with alarming speed.
We are all modelers. And for the foreseeable future, our most successful models, our strategies, will be the ones we build ourselves, based on our understanding of our marketplace, our products, and our customers.