Data Euphoria – The death of Science, and parallels with business.

In a recent article, a postdoctoral fellow at Harvard medical school wrote of the concept of “data euphoria” where scientists are replacing conventional scientific thought & theory with large scale data experiments. The writer identified that the “….underlying problem with the whole concept of replacing the scientific establishment with a Google like data cruncher is that it misunderstand how scientific insight is achieved.”

While his Blog has a focus towards biological sciences, we see the same is true elsewhere, in science, and business. In research, it seems the world is moving from a ‘component’ approach (where we try to understand how the parts make the whole) to a ‘system’ approach (where the aim is to understand a perspective as wide as possible and then drill down).
Much of this change has been due to huge changes in how ‘science’ works, as currently, like never before, scientists have access to huge amounts of technology, capital and data, meaning that they now have the ability to a) fund massive experiments and research studies and b) have the computing power to understand the results.

To give you a flavour of this in action, you need only look at:

http://www.top500.org – a list of the fastest supercomputers in the world

http://www.lhc.ac.uk – the £3bn ‘large hadron collider’ experiment (which aims to recreate particle conditions at the time of the big bang)

A simple search on Google will reveal many other large scale ‘number crunching’ experiments and research projects which many, in the science community, question with vigour, doubting their merit as more than just ‘bragging’ exercises

If we take the basic tenets of the above, we see a great deal of similarity with the business world where, rather than creating enterprise from ‘component’ ideas and growing to large companies (as firms like GM, Unilever, and their counterparts have done over many years), the zeitgeist seems to be to deploy ever more prevalent amounts of capital (whether leverage or cash) to structure bigger and more complex deals, and fund increasingly ‘ambitious’ start-ups.

In 2007, the guardian reported news of the biggest over private equity deal (US$38bn). In the year since, even in the face of turbulent markets, we receive weekly news of mergers, acquisitions and deals with (to quote a friend in the industry), “almost comically embarrassing amounts of money involved”. (The merits of these large deals are somewhat outside the scope of this article, but will be discussed in more detail in future writing.)

If you were able to pause these scientific and financial beasts for a moment and ask, simply, “why?”, chances are that along with the pages of justification for their activities, one would be greeted with a slight undertone indicating their reasons for pursuing these budget-busting-projects are “because they can”.

That said, there are, for sure, ‘right’ conditions and upsides to large scale mergers (for example the Mittal Steel and Arcelor $33.6bn merger) but in these cases, it can usually be seen that creation of immense scale is an appropriate and savvy way of dealing with the market structure (method of product delivery, research and development costs, etc), steel and other commodity industries such as o&g, et al, are good examples for these.

In other cases, though, many mergers and acquisitions seem to take place to service a ‘perceived’ opportunity and to gauge efficiencies which may not, necessarily, exist (Airlines are a great example of where mergers may not often result in significant savings, hence code/route/aircraft share schemes). This M&A culture also creates a slight undertone of secrecy within different markets, as companies are more inclined to protect assets than share them, glowing with the thought of eventual mergers, this leads to some stagnation in markets, as IP and concepts are simply not adequately developed leading to a surge of ‘equivalents’ (driving prices down) or high cost new products (maximising revenue before IP is spread), the pharmaceuticals market perhaps exhibits this more than most.

Many may also perceive that the ‘city phenomenon’ plays a big part in this, as a potential oversupply of advisory, support and banking services can lead to these organisations hunting for deals to keep themselves in business (leading to the phenomenon of transaction-at-any-cost). To put this in perspective for the UK, from a population of only 60million, almost 2million are employed in the financial services sector.


Even in a ‘smaller’ context, I have seen many businesses within my own network where the owners have pursued a tactic of big-number-deal-making as a growth strategy not for any real ‘scope’ other than their view that one cannot grow ‘fast enough’ organically. For some industries (particularly those dealing with services or intellectual property) this kind of scaling is possible, but for MANY others (dealing in physical products), scaling like this can (while giving you a ‘big number’ business at the end of it) introduce an unreasonable amount of debt and complexity which can topple an otherwise healthy enterprise.

I would always ask entrepreneurs (often against the whim of their fee-generative-advisors) to consider the merits of big number deals before embarking on them, and would ask they take heed from the many otherwise successful firms that have collapsed because of this approach.

Doing something “because you can” doesn’t necessarily mean you should.