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I have had several ah-ha moments when discussing business strategy. Some of those have been about what the future might bring but many more have been about what clouds the forecast. The biggest moments have come from the simplest revelations and many of those moments have reminded me that even the biggest global organizations are still run by people. Behind each brand’s vast garden of successes is a bone-yard of human decisions replete with incomplete planning and missed signals.
Why do we miss these signals? One reason is we don’t have enough context (see my earlier post about Three Things Missing From Your Business Strategy). Another reason is due to proxies we use to fill in that missing context. My high school economics teacher often joked that higher education degrees like a BS, MS and PhD was a reflection of how many notebooks you had filled with increasing piles of profanity with those same initials that I have edited out here for decency’s sake. No matter what kind of degree we earn, our notebooks are filled with information filtered through our own experiences. Throughout our lives, the texts we read, the schools we attend, the places we visit and the people with whom we come in contact generally share just enough information to win and maintain a relationship. We then choose to continue (or not continue) with that relationship based on asymmetric information. Since we don’t know what we don’t know, we compensate, estimate, assume and substitute knowledge with our own experiences and instincts. In those gaps we miss signals.
“If you torture the data long enough, it will confess to anything.” — Ronald Coase, British economist
While experience is a great teacher, there is no syllabus for the absolute truth. No one has it. Every person has their own notebooks full of wisdom and where we lack it, Google can return billioooooooons of experts to us at a click. However, even if you did not pay much attention in econ class, you at least heard your teacher say “there is no such thing as a free lunch”. Every free lunch comes with a side of bias and trappings of data to support a point of view. These experts could be our partners, beloved brands, consultants, trade bodies and associations, even non-profits… effectively anybody who has an agenda and expertise to sell. For example, an extreme case like Argentina’s ‘official’ statistics are skewed to support a particular political and fiscal purpose. It is rare that numbers are intended to harm but it is even more rare for someone to share numbers they don’t want you to see. Most free figures we find published today are not neutral and like any good investigation, we need a reasonable balance of sources to get a better handle on the diverse environments in which we work.
“In an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it.” — Herbert A. Simon, American Political Scientist
While there is a lot more information available today than there was in the 1970’s when Herbert Simon made that statement, I have come to appreciate that a number isn’t really a number anymore. As the receiver of the information, we don’t always know what is included and what is excluded from a figure unless you have the chance to interrogate it. From talking candidly with executives over my career, I have heard various insights on the need for balanced information to inform strategy:
“There is no such thing as ‘perfect’ or ‘accurate’ information; it doesn’t exist.” — A Vice President at A Consumer Healthcare Company
“I look at everything else beyond our company’s core competencies. I need to understand all the possible things that could up-end our apple cart.” — Corporate Development Manager at a Media Conglomerate
“When we focus on our own industry so much, we are prone to miss some of the bigger signals.” — Head of Strategy at a Travel & Tourism Company
“We make perfume bottles but seeing what other glass packing is out there doesn’t help me innovate. Do you know why potato chips are packaged in a bag instead of a box? It’s to increase consumption. Think about it, bags are hard to keep closed and the chips will get stale if you don’t eat them. Therefore we consume them more frequently. Those are the kind of insights I want to see.” — R&D, Innovation Director at a Glass Packaging Company
“When it comes to the facts, no one is sole proprietor. Everyone has an angle. Everyone has a negotiation position. They choose what information to share and not share with me. I cannot afford not knowing what I don’t know.” — A Managing Director at an Investment Bank
“I like to have more information, not less. Even having two conflicting sources can tell me something important.” — Insights Manager at a Tissue and Hygiene Company
“I get a lot of my information from my distributors and suppliers however they only give me the information they think I need to have.” — Export Director at a Food & Beverage Manufacturer
“Here’s the problem with distributors, they are only going to do just enough work to keep my business. If he sells a lot of my product, he knows I am going to open an office and take over the business. If he doesn’t sell enough, he knows I am going to take away my business. Therefore he has no real incentive to do any more or any less than just enough.” — VP of International Sales at a Chemical Distributor
“I need someone independent to do this project because it is far easier for you to interview the people in my own company than it is for me to try and get that information myself. People don’t share, not when they think it could cost them their job.” — Finance Director at a Consumer Appliance Manufacturer
“Use the right market research tools for the right job. You don’t use an ax to do surgery and you don’t use a scalpel to cut down a tree.” — Director of Marketing at a Beauty Care Company
“I need my teams to get as smart as they can as quick as they can on the trends that matter most but we cannot be reliant on our clients for those insights. When it comes to a multi-million dollar pitch, we need to have our own insights and every extra edge counts.” — Head of Market Research at an Advertising Agency
“Some people and companies are so focused on painting the lines on the highway they don’t see the bus coming down the road.” — Head of Consumer and Retail Practice at a Big 5 Consultant
Download “The Art of Generating Insight: Differentiating ‘Must Have’ from ‘Nice to Have’ Information” to learn more.