It’s illuminating to examine the way businesses make decisions. Based on our studies and collective management experience over several decades here are a few of the top methods;
- You go with a “gut feeling” because you lack relevant information, and it feels right.
- You use internal reporting information and data.
- You consult with others in the organization in a formal, or even informal way, to arrive at a decision.
- External events or customer and competitive pressures force you to react, probably in an unplanned fashion.
At the same time, with the easy access to the internet, with faster and more accurate IT platforms and the ready availability of information that can assist in decision making, it stands out as a surprise that so many CEOs and Presidents do not avail themselves of this. Of course there is the risk of obtaining too much information or information that is not relevant to your business. There has been a growing need for information that is specific to the internal and external needs of the business, as opposed to more generic externally sourced knowledge. One way of doing this is to invest in business analytics.
What is the real point here?
Let’s face it, the fundamental purpose of business is to satisfy customers and make a profit. This implies that you need to know the needs of your target customers, and also align your business to this purpose though people, strategies, systems, processes and plans. In our experience, over 80% of companies may have good internal information systems and reporting processes. However, in all cases, this information is not readily communicated to all those who need to know, there are knowledge silos, and the most telling consequence is that management and staff are not aligned to company goals. A business assessment, or diagnostic, proves an immediate, objective, and accurate illumination of the strengths and weaknesses of all aspects of the internal and external capabilities of the organization. It usually includes all aspects of business functions and operations, customer marketing capability, values and culture.
The benefits of doing this will be multiple:
– Increased competitive advantage
– Revenue growth
– Higher profitability
– Increased business value.
The big benefit of identifying the Unknown Unknowns is that you can optimize the allocation and deployment of resources and proactively go after the opportunities for increased competitive advantage as well as get internal consensus on the areas of the business requiring attention. The smart CEO knows that once information is available, that is only the beginning of the beginning. Employees will be expecting something to happen, and is really crucial to involve everyone. It is critical to develop an implementation plan that focuses on the priorities.
The ROI results from effective implementation.
Now that you have salient visibility into your internal and external performance, the next strep is to prioritize the areas for attention, and where the new knowledge will have the most impact. The implementation plan must be a collaborative company-wide effort, and ownership and accountability is essential. So are regular and ongoing internal and external reviews of progress and KPI’s or other metrics. Early and sustained attention to quick wins, successes as well as performance quality and are important. Regular check-ins and celebration of success fuel performance optimization and drive growth.
Intuitive vs. Knowledge based decision making.
Uncertainly leads to inaction or guesswork at best. The next 5 years will see increased pressure on companies to find growth opportunities, to combat greater competition, to even survive. Statistically the majority of them will continue to do what they are doing, and may well achieve success. Less than 20% will become what Malcolm Gladwell termed outliers, they will exceed all other on delivering exceptional revenue and profit growth, and this performance will be based on business intelligence, and especially the knowledge that sharpens and enables winners.