Three things, interwoven, suggesting that Logic has died.

As Alan Alda once said, the world is running “like a car with square wheels.” Allow us then to mash together three separate occurrences – as evidence in our case to declare Logic clinically dead. Here goes:

Exhibit A: Fired by State Farm

State Farm fired us: my household was told that our homeowner’s policy was not going to be renewed. It was, at the end, an “underwriting” decision – but it was handled in the worst possible way, and it is a cautionary tale for businesses that want to fashion themselves as a “Social Business.”

And this is the first thing that tells me Logic is Dead.

First: The Background

My own relationship with State Farm goes back to when I was covered on my parents’ Auto policy. Since I got my license at the age of 16, and I’m now…well, let’s just say we have recently crossed the quarter-century mark in our business relationship.

When I moved to Chicago, in 1993, I took my policy with me and found a local agent to insure my 1993 Nissan Sentra. Then, we switched agents – but stayed with State Farm – when my wife and I got married. In 1995.

The cold, calculating letter

“Dear Policyholder(s):

“Thank you for allowing State Farm to provide your insurance under this policy. We are sorry that we cannot continue this insurance. Therefore, your policy will not be renewed…

“This insurance coverage is no longer acceptable to State Farm Fire and Casualty Company because of your overall claim activity. Our records show the following loss(es):”

What follows? One claim paid out in 1998. Before we even had homeowner’s insurance. Five claims filed that weren’t paid out, but at total of $561.25 paid on this policy.

What does THIS have to do with dying Logic?

Logic would tell you that, if someone has a long history with a company, the lifetime customer value of that customer trumps one $561.25 claim filed 13 1/2 years ago.

Logic would also tell you that, if someone has paid an estimated $40,000 in lifetime premiums, you may not want them to take their business elsewhere. OR, if they are a risk, you want to keep them – but jack their rates up.

The cold calculation of an underwriter about number of claims filed could have been countered by one look at some sort of CRM data. 17 years with the same agent. Number of policies (2) with the company. Even profitability or lifetime customer value.

I would have respected their decision had they told me that, in light of all the above about my loyal patronage, I was not going to be a profitable long-term client. That did not factor into the decision.

The reality here is this: we are in a “check the box” world – that’s a given, and you’ll see another example in Exhibit B. But in order to really thrive in this Logic-Free world, businesses are going to need to start asking the right Binary Questions before they check the boxes.

[You’ll hear much more about Binary Questions in the weeks to come; as Dave from Area 224 is working on a book called “The Binary Business.”]

Here’s a for instance:

“Does this client’s long-term history make him or her a profitable client?”

OR

“Does the client’s total amount of claims paid equal a percentage of his premium that is above our acceptable risk threshold?”

These are both Binary Questions – you can answer either YES or NO. A 1 or a 0. Those are your choices. But the way the questions are phrased on the front-end makes for profitable business decisions on the back-end.

More, in Exhibit B.

Exhibit B: GM Pulls Its Facebook Advertising (Right Before Facebook’s IPO)

First of all, I want to be fair – and, quoting a somewhat wise person I used to work with, “Everyone’s an Armchair Marketer.” It’s easy to say that GM is making the wrong decision from wherever you are: maybe you don’t see them engaging on Facebook like other auto brands (hint: Ford). Maybe you think they should be spending their money making better cars (like Ford). Maybe you think Facebook advertising doesn’t work (which is in stark contrast to, uh, Ford).

But the higher your profile, the higher profile your decisions become: add in the ultra-high profile of Facebook right before its IPO, and you get a headline that writes itself:

General Motors Pulls Facebook Ads Right Before Facebook IPO

Lovely. If you’re GM, you have abandoned all logic and made a decision right when it would make the most negative news for you. (You also don’t score any “social business” points either.)

Binary Question:

Will making the about a $10 Million “savings” in ad spend be done at the most inopportune time that the damage to the brand will offset the savings?

I’m reminded of another little Binary Question that was actually quite big in the annals of the auto industry in the US…

Did you take bailout money?

If you don’t think THIS question is being asked time and time again by people looking for a car, think twice.

GM does deserve a little credit here – as they did say that the reason for their moving their ad spend off of Facebook is that “it isn’t helping them sell cars.” And we can surmise that this was a numbers-based decision of some sort.

Or was it?

Are there television ads? Radio ads? Newspaper ads? Are those selling cars?

Once again, the right binary questions – ones with yes or no answers – can make all the difference.

Do we need to maintain a presence on Facebook because those are the “table stakes” that will help us compete?

OR

Do we have something else up our sleeves that will be a more calculated marketing spend that will help us sell cars?

I want to think that GM is doing some of those SAT-style questions, like: “If Sally spends 10 million dollars in advertising but doesn’t measure the ROI of the advertising, how much is she wasting?”

Hang tight, here comes Exhibit C. Also from the automotive world.

Exhibit C: The Air Bag Light

We drive a Hyundai in Dave’s house. (Not IN Dave’s house, as that would be illogical.) We enjoy our Hyundai, but we don’t get warm fuzzies. It has been reliable, it’s a fine machine, etc., etc.

We took it in yesterday for a routine oil change AND to have them look at the “Air Bag” light. (Take a look over there.)

It shouldn’t be on, and we want to know why it’s on. Leading us to the following exchange with the service person.

Service: “In order to find out whether the Air Bag light is covered under warranty, I’m going to need to charge you $120 to look at it.”

Me: “What?”

Service: “We need to know whether or not it’s covered, so we have to have an electrician look at it. The minimum service charge is $120. If it’s covered under warranty, you won’t have to pay the $120.”

Me: “No. Just the oil change.”

[Time passes. Oil Change complete. Time to pay for the oil change.]

Service: “The Air Bag light is probably covered under warranty. $120 is a standard charge. You can ask other service stations. I don’t want you to be upset.”

Me: “I’m not upset. I just want to know why I would be charged $120 to figure out whether or not it’s covered under warranty.”

I left upset.

Here’s the thing; and, again, this appears to be a rather binary question, or a series of binary questions:

Is the Air Bag light broken? (Yes or no.)

Is the Air Bag itself broken?

Is whatever is broken covered under warranty?

Even better – how bout offering to pull up my warranty information? You should have it right there. On your computer. Thanks.

Critical thinking. Snap judgments. Taking a step back and figuring out “if A, then B, A is bad, B is bad, let’s not do A.”

These are the types of logical decisions that aren’t happening at very rudimentary levels. And it’s symptomatic of a larger problem in business – in “Social Business” – that we’re all going to have to head off at the pass, lest we see some major trouble.

The Takeaway: Logic is Dead. And the “Social Business” might die, too.

In each case, logical thinking went by the wayside. In its place – old thinking. Formulae. “That’s not how we (used to) do it.”

In Timothy Ferriss’ brilliant “The 4-Hour Workweek,” he talks about a time he empowered his customer service team to take care of any problem that doesn’t cost him more than $200 to solve.

Where’s THAT thinking in these scenarios?

I’m not saying that you should put a dollar value on every big or little decision – what I am saying is that Mr. Ferriss’ focus on asking a very binary question – is this worth my time? – came about from first valuing his time and then thinking that his time had an actual dollar value, that dollar value was at least $200 an hour, and it made more sense to spend the money and use his time another way.

And the root cause here may be the Social Business Conundrum: How do you do what’s right, what makes sense, what’s logical, what you would want the other person to do (being “social” as in…the opposite of “anti-social”), when you have so many gosh darn polices and rules and crazy illogical thinking driving the organization you work for?

State Farm’s agent could have picked up the phone, called us, and tipped us off that corporate was trying to cancel our policy and they were going to fight it. They didn’t.

General Motors could have called Facebook Headquarters, said that they really want to work with them to maximize the money they spend on the platform, and they want to figure out how to do it better, faster, smarter. They didn’t.

Hyundai’s service guy could have said “hey, let’s see what your warranty does cover before we scare you away with mumbo jumbo about gambling your $120.” He didn’t.

Logic is Dead. Social Business: Dying with it.