The profundity of feedback loop

Since time immemorial, decision-making has been based on a number of factors, the most important being the feedback loop. Decision-making governs every aspect of life - from birth to death - schooling, work/profession, romance, war, governance, business, innovation, social protection, etc. Some decisions are whimsical, some intuitive, and some data-based.

Data-based decision is a new thing. The two most consequential sectors are the business and corporate environment, and the political environment.

The corporate world has had better reliance of big data and the feedback loop. BlackRock, the wall street-based fund now relies almost exclusively on data and the feedback loop. BlackRock manages approximately US$ 10 trillion of its own fund, and approximately US$ 4 trillion on an advisory basis. For giant corporations (and the smaller) the consumer feedback loop is an essential component of a successful business strategy.

It is a continuous cycle of listening to consumer feedback, analysing the data, and making changes to improve products or services. The loop starts with collecting consumer feedback. Once the feedback is collected, it is important to identify patterns and trends and respond accordingly.

The process is continuous, year after year. To ignore the feedback loop would bring you face to face with the BCCI moment or the Lehman Brothers moment, or the Toshiba moment. In spite of all this, corporate failures are all too common.

The other sector that should rely on the feedback loop is the political sector (including the intelligence agencies). Yet, we see that governments (and political parties) are unable to read the trends and the signals correctly. They ignore the feedback loop at their own peril. In Pakistan, we earlier witnessed the concept of actionable intelligence (a word beloved by our political class). Now we are in the “Objectional Intelligence Era. What next?

Reza Shah Pahlavi of Iran

This is a perfect example of the failure of the feedback loop. Jan 16, 1979. Mehrabad Airport, Tehran. The two Royal Boeing 707s are parked in front of the Imperial Pavilion.

The other planes of Iran Air “The Carrier Airline” are grounded. Strikes, stoppages, power cuts and food shortages are the order of the day. Reza Shah says he is leaving on a one week’s medical vacation. He should know - he’s the king of kings, Shahenshah Aryamehr, the light of the Aryans.

A bloody revolution is sweeping through Iran. Queen Farah has emptied the Niavaran Palace. 20 planes have been sent to her various estates in Europe and the USA. Princess Ashraf, Shah’s sister, and head of the dreaded intelligence agency SAVAK is part of the departing entourage. She assures the Shah that things are under control. Boot lickers and courtiers are crying, kissing Shah’s hand, some even his shoes.

The Shah mounts the steps of Air Force One, gives a final ‘V’ salute, and takes the controls of the 707. The plane lifts off at 9:45am IST (Iran Standard Time). The Shah flies into oblivion. Never to return. He should have listened to the feedback loop.

1954 - Ford Edsel

Henry Ford is the richest man in the world. He is slightly bored. He wants a little excitement without consulting the technical, finance or marketing departments of the Ford Motor Co. He decided to create a car model named after his grandson, Edsel. Thereafter he creates a committee within the company to create a car that is “technically advanced, stylish and the best”. Millions of dollars are spent on R&D styling, market research, etc. A car launch is a mega event in the USA. Unfortunately, the car “bombs” (Detroit Lexicon for failure). In his excitement, he had overruled the feedback loop.

Pakistan - Paki Pakai Roti - early 1970s.

The People’s Party government of Zulfikar Ali Bhutto (ZAB) decides to launch the Paki Pakai Roti project. Pilot projects, then national rollout, apparent factors are favorable. Labor saving, freeing women from a major household chore. Packing and storage incentives, if successful, a major political deliverable achieved. A corporation is created in the public Sector and staff hired. A major advertising campaign ensues. The end result - project failure. What went wrong? No analysis was carried out. The feedback loop was either silent or did not exist.

1954 Cuba

Havana is the playground of rich America. The Mob rules Havana and most of Cuba. At best, Las Vegas is a second option. Vegas is way behind Havana. The President of Cuba, Fulgencio Batista, is a close friend of the USA. He guarantees protection to American assets in Cuba.

Huge American investments are pouring in. Some via the Mob, others via Front Corporations. The newly-formed CIA is monitoring Cuba. They assure Allen Dulles, the CIA Director, that there is no threat on the horizon. All is well. In the mountains and farmland of Cuba, a revolution is incubating. Fidel Castro is soon joined by the iconic Che Guevara. Events are heating up. CIA is new and inexperienced. They are ignoring the feedback loop.

Bill Donovan is no longer around to advise the CIA. In 1958/9 the other side invades Havana. Castro consolidates his hold. The US government, ever pragmatic, invites Castro for a state visit: Eventually, the schism widens. Till his death in 2006, Castro survived over 100 assassination attempts. Castro and Guevara leave behind a legacy as a fashion icon. Castro’s beret and Guevara’s T-shirt became must-have fashion items. Feedback loop?

Data analysis

The data collected through feedback must be analyzed. Human errors abound. Love, hate, and passion, creep in. The correct way to analyze data is coldly, precisely, and clinically like Roger Federer. That’s why algorithms are taking over. Towards the end of WWII, the USA decided to nuke three Japanese cities – Hiroshima, Nagasaki and Kobe.

However, the American 3-star general making the final decision had spent his honeymoon in Kobe, before the war. He and his wife still cherished memories of that visit – the hospitality, the warmth of the Kobe residents. Two hours before the armed plane was to take off for Kobe, the General picked up his pen and drew a line across the name Kobe. Below he added two words “Mission aborted”. Perhaps he should have added, “for sentimental reasons”.

Ratan Tata of India. Early years of the 21st century

In my frequent trips to India as head of the Management Association of Pakistan (2000-8) I met Ratan Tata on two occasions. I occasionally wear the ‘TITAN’ wristwatch he presented me. The TATA group is synonymous with the Industrialization of India. Originally, they owned Air India. It was then nationalized. Now, once again, managed by the Tata Group. Revival is on the cards. An order for 500 aircraft is being finalized. To be split between Boeing and Airbus.

In the early years of this century, the Tata Group decided to launch a super-mini car. It was named ‘Nano’. Instead of relying on existing technology for small cars, Tata undertook to design everything from zero. The Nano was 3 years and US$ 2 billion in the making. The launch was a national event.

The end result, after a few insipid years, was a failure. An international disaster. Ratan Tata was emotionally involved in the project. He missed the feedback loop which essentially said “the aspirational Indian family wishes to trade up. From a two-wheeler to Branded, well-appointed budget car”. ‘Nano’ was somewhere In between. You ignore the feedback at your own peril – in this case US$ 2 billion and reputational damage was worth more.

The IPSOS Consumer Book’22

At long last a trade book worth reading. And keeping it as a reference point. IPSOS has produced a marketing/market research classic. I am not a salesperson for IPSOS. The book will help you reintegrate with the consumer loop.

Copyright Business Recorder, 2023