Trust your gut!
What else can you do in these times of huge global turbulence and uncertainty? Not that, according to Daniel Kahneman, Nobel laureate, in Thinking Fast & Slow.
Even in less complex times, the vagaries of a global market have too many moving parts to be predictable so trusting your intuition is very risky.
Kahneman says that Executives’ gut feel is an important data point. The challenge is to remember that such intuition is far from infallible. Therefore, when making big decisions, assumptions need to be tested against appropriate data.
“Common sense” is a proxy for intuitive takes on things that come out of experience. Data is the thing that teaches you when those intuitions are inaccurate. David Hazony, author
Typically, reported outcomes reflect what has happened in the past. But often the levers that need to be pulled to influence future outcomes should happen 6-12 months in advance. Of course, the 1st step is looking in the rear-view mirror, but if that’s the only view then companies are following, not leading results.
Even when Leaders know what’s occurred, they often struggle with the ‘why’ and what to do about it and therefore rely on gut feel. The real information that Leaders want to understand is why outcomes happened, where the business is trending towards and the likely outcomes going forward. They can then start making decisions about how to adjust for that situation.
The gradual uptake of advanced analytics is allowing more CEOs and CFOs access to ‘why’. But many companies are still at 1st base, not having a clear picture of the data that matches the key KPIs required to achieve the business objectives. Company reporting often reflects activities that don’t greatly affect the current business objectives or when they do, the data isn’t trusted and is subsequently ignored.
The panacea is to align business and data strategies, KPIs and key business outcomes and collate and analyse the data that supports those activities … in that order. Technology and tools then support the plan.
Ammonite engage with C-suite of SMEs that are at 1st base or returning to it. They want to understand their business better, are ambitious to grow, maintain market share or adapt to regulatory change. Typically, there is a lack of clarity or data driven detail about where their business is now and how they got there.
Through our consulting services, we help our clients understand the ‘why’ in their business; giving them a platform to make data led decisions, rather than relying on ‘gut feel’.
I’d like to share with you two cases, to summarise where they were and where we have helped them reach to date.
Consulting Case Study 1 – Growth: A successful healthcare product company who manufacture and distribute products. The CEOs key objective was growth, to replicate the company’s national success internationally. But conflicting sales and customer information meant growth strategy was disproportionately based on gut feel.
We questioned; what ‘growth’ meant; what success looked like; intended growth methods; biggest challenges; greatest opportunities.
Our role was to make it easier for the CEO to make informed, data led decisions about how to grow the business. To do this we helped change the way senior people understood and used data.
We worked with the CEO to develop a data strategy and reduce the priority list of actions to a more manageable level.
Major data projects set in motion to identify, define, acquire (data), collate, analyse and report.
The reporting pack was paired back to exclude irrelevant data and focus on key growth indicators.
Whilst still in transition, initial feedback showed;
Consulting Case Study 2 – Cashflow: A fast growth, on-line, automated consumer platform providing insights to the international retail sector. In the current tough climate, the CEO’s key objective was to manage costs and cash flow efficiently without suffocating the business, but he didn’t trust the data he received. He needed to know how to protect his business.
Key questions needed answers;
It transpired that the Board didn’t have confidence in the people who produce the numbers. We mentored the data leader twice a week to build expertise, provide a sounding board and generate new ideas.
As a result, the data leader became more confident, was better able to provide credible insights and was able to rebuild trust from the Board.
In 2020 and beyond, as we all learn to deal with the new normal, is your money on gut feel or data?
To find out how we can help you achieve ROI and gain competitive advantage from your data, contact Ammonite.