Thursday, June 21, 2007

Doing Something With the Data

I’m observing an executive meeting which has been considering avenues for penetrating the growing Hispanic market. The group has been poring over market research which has highlighted data about demographics, consumer attitudes, financial trends, and such. One vice president has called for the next round of research, in particular some “gap analysis”, and there seems to be a general consensus with his suggestion. The senior executive, who’s been quiet during this discussion, clears his throat. He’s not happy. His message goes thusly: How much more research do we need? We’ve been analyzing data for months. When do we start doing something with this data? Isn’t there some low-hanging fruit? Aren’t there some quick wins we can get in order to build momentum? If we have to do more research, can’t we do it at the same time that we’re launching some initiatives? His questions shocks the group, and take me back to two related incidents in two other companies. In one, an executive confesses to me the reason why his company is so risk-averse, slow, and unimaginative.: “We study a good idea until it becomes a bad idea.” No wonder earnings have been flat for the prior five years.In the second incident, an executive of a fast-growing $300 million firm tells me his success secret: “Ready. Fire . Aim”. His message to me is this: A lot of companies use Ready.Fire.Aim as a slogan, but we take it seriously. Sure, we get ready. We gather data—fast. We do due diligence—fast. We do basic planning—fast. Then we act—we fire. Then we quickly get feedback, spread it around, and use it to aim for the next round. I’ve written about the P40/70 rule in Break From the Pack. Briefly, it goes like this: Imagine the total universe of data that’s available for a decision. If you gather less than 40% of that data, your decision might be premature, even reckless. But if you keep on gathering data after the 70% level, you’re increasing your risk. It’s not just that your returns on your research dramatically diminish after 70%, it’s that you’re vastly increasing the probability of analysis paralysis in your corporate culture. Optimally, you want to gather sufficient data to be in the 40-70% arena, and then combine that knowledge with your experience, hunch, and gut—in order to finally make a decision and get the ball rolling. The executive in the meeting I described above instinctively knew that his team had already passed the 70% level, and that’s why he spoke up. The cool thing was that the group responded. Energy spiked up. Focus heightened. Projects crystallized. Goals and timetables emerged. The vibe in the room was a lot more satisfying and productive than had the group left the meeting with the charge of “Let’s study it some more.”
Posted by Oren Harari at 11:20


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