Stop thinking linearly!

We believe life is linear, that things happen in a sequence and in many ways there’s a partial truth in our belief system.  Time is a linear progression.  Typically we compare notes of activity, benchmark results  or  mark change relative to the stable backdrop, time’s constancy.

The graph below illustrates that every 12 months, Data storage efficiency doubles.  Ray Kurzweil singularity  now pervades our modern economy, but in spite of a nice linear curve, notice the vertical scale.  The analysts straightened the curve.  In fact, few phenomenon follow a strict linear progression, Most growth happens in a curvilinear way, which I’ve written about before.

Our challenge is to resist the allure of the linear, steadily upward sloping relationship and recognize the message.  Now in 2012 ,ever faster technology  cycles come with consequences, their speed outstrips our decision and corporate planning cycle horizon.   When companies like RIM or Netflix stumble , its time to scramble.  Jamie Dimon at Chase and his team could have noticed the $2 billion transaction before it became a problem and he’d be at his desk not answering to Washington.

 The Devil is always in the details

The following tips won’t help if you believe that the momentary dip or lapse in your own performance is beyond your control.  Look deeper and you’ll discover that it’s not just the economy.  In your last business review were you too lulled by the elegant,  lovely, upward sloping line, or perhaps the tone was more somber, humbling in the presence of actual data missing the forecast marks.

OK, here’s why and how framestretching can help you.  I suggest a good story warmup to get some of your critical thinking going, but there are some other more deliberate steps that will also spur new thinking.

Most organizations use their forecast and budget review process for practical planning.  The assumptions that drive a safe forecast  extend from data clusters or average experiences.  This may prove useful for managing against the normal fluctuations in your planning cycle,  but managing isn’t strategic.

Strategic thinking begs for the richness of the full data .  It should challenge everyone on your team to reach and think more fully about the interactions that are responsible for pulling the average down as well as finding opportunities to push it up.

 1.  Study outliers to help plan the future.

How well do you understand your margins? Every business has them and once you put your customers into the picture, you are on the edge of new opportunity.  Who are the outliers when you plot cost to serve or price by account size? Don’t let the aggregate story be the only one told or seen, or the average drive your forecast goals.

2. Stop thinking only about you.

Begin looking at other industries.  Break down the relative challenges facing them to find the parallels in your own industry or business.  Now stretch to see if you might be able to incorporate one or more of their solutions, action plans or strategies into your own industry.  I urge you to literally take a visit, go meet your counterparts and take a tour.  But be sure to take in the full sensory experience, the objective is to help you see, feel a little differently. Naturally you will begin to make comparisons, and when you do you’ll hit that point where you think…that seems pretty dumb?  why are they doing it that way?  That’s when you are on the edge of a new insight, don’t leave until you have fully satisfied why and how that is or isn’t working for them.  Perhaps in the process you can help them too.

3. Dig deeper into your Sales figures.

We KNOW, not all customers, markets and sales activities are alike. Yet for the sake of simplicity we roll up the numbers and present the aggregate perhaps with some additional indicators of variance (e.g the average, or the standard deviation from the mean).  Instead try a scatter plot and focus on those that are at the extremes from your average.  Look to see what sets them apart and what opportunities may open.  If you ask for it, it will be amazing how quickly folks down the line will start looking at this harder too, because they are wondering what you are looking for and hoping to see it before you especially if there’s a problem they might be able to correct.  So it’s a natural win-win.

4.  What are you measuring anyway?

Sometimes we overlook information because it’s just too hard to quantify or qualify, and we compromise our understanding of the problem.  What has been missing in your model? I’m not suggesting that you track everything, but chances are, the growth in your error term  may be costing you a critical opportunity.  What else  may be causing a loss of  customers or adding drag to your profits?

Summing up

This list may not be comprehensive, but as a surefire low-cost exercise in critical thinking, it’s bound to spur your team’s imagination! For all the implemented business intelligence and dashboards, looking beyond the summary and taking a deep dive to the underlying data, may save you time and prevent misfortune. Please, go stretch!

What have you discovered that helps keep your team thinking and alert?  Don’t let the data or an analyst clean up the details too much, use them as a way to chase new insights and hopefully you’ll be better prepared or, at least, better positioned with your customers.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s