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Specialists In Helping Enterprises
Utilise Data To Drive Their Performance.
DATA = OPPORTUNITY
Seven Common Failures To Utilise Data
And Great Ways To Tackle Them.
BY DAVID MAHER - DIRECTOR RBI
rightbraininsights.com
Failure #01.
NOT INVESTING IN DATA
The world is changing and shrinking. A converging
world represents a real and present iceberg to
those businesses unwilling to alter the course.
Technology is creating almost endless sources of
data. How you utilise, capture, store, and analyse
this growing resource will be key to ongoing
competitiveness.
Your data is an asset. Invest in it. That means ensuring it is
accessible, accurate, secure, timely, has history to it, and is detailed.
For many small to medium enterprises investing in their data is as
simple as ensuring they have accurate work records, precise and
timely financials, and a contact record. All of these can be found in
cloud based accounting systems such as Xero, and its associated
add-on such as Workflow Max.
Unfortunately, too many companies do not comprehend the power
that resides in being able to capture and analyse their full data set.
Without investing in your data, you miss the opportunity to put the
pieces of your puzzle together, thus relying on gut feel and (at best)
vague assumptions about past performance to inform your decisions,
ultimately compromising your long-term results.
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Tips To
Investing In Data
1. START NOW!
Just like weeding a garden, start early when problems are small,
and it will be a lot easier than when they are 6-feet tall and full of
thorns. The sooner you start organising, correcting, and cleaning
your data, the less costly the exercise will be.
2. CONDUCT A DATA AUDIT
DATA
DATA
DATA DATA
DATA DATA
DATA DATA DATA
DATA DATA DATA
DATA DATA DATA DATA
DATA DATA DATA DATA
DATA DATA DATA DATA DATA
DATA DATA DATA DATA DATA
DATA DATA DATA DATA DATA DATA
DATA DATA DATA DATA DATA DATA
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The easiest way to sink your company is to slam into an
iceberg you should have seen coming. The only way your data
can help you navigate around such challenges is if it is up to
scratch. Start digging into your data and see in what state it
really is.
3. FOCUS ON QUALITY OVER QUANTITY
Understand what is a ‘must have’ and what is a ‘nice to have’.
Focus on the ‘must haves’ and try to get them 100%, before you
start worrying about everything else.
The secret is to pinpoint the data that, when mixed with a
solid assumption or two, has the power to unlock other areas
of your business.
Failure #02.
NO INTELLIGENCE
INFRASTRUCTURE
It’s one thing to have the data in place, but
simply possessing the data is not enough. What
matters is the intelligence and decisions you
can pull from it. Anything else is just numbers
on a page.
You need to have an intelligence infrastructure
that can take whatever data you possess, analyse
it, and create clear, concise and compelling
insights.
An effective intelligence infrastructure is able to quickly produce the
critical insights you need on an ongoing basis-what you need to know
every day, week, and month.
Companies that fail here end up chasing their tails trying to figure out
what they should easily know. Instead of focusing on building the
business, they end up drowning ‘in’ it.
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Tips For
Building an
Intelligence
Infrastructure
1. UNDERSTAND YOUR MECHANICS
A mechanic will spend years understanding the complexities of
an engine so that they may skilfully apply their craft. Dig deep
and get curious.
Understand how your machine works, and it will be a lot easier to
drive it. Here is a list get you started:
- Where and how do you make money? Where and how do you
lose money?
- Who are your most important customers and why?
- Where do your deals come from? What does your sales funnel
look like?
- How does this compare with other players in your industry?
What are your conversion rates?
- What is your return on your marketing spend?
- What are our operational expenses? How has this changed
over time and why?
2. ASK BIG QUESTIONS
The finest businesses survive and thrive over the long-term.
They ask big questions that take a long time to answer. Where
your numbers really become powerful is in the context of a big
ambitious question.
What are your BIG questions?
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As an example, one client (a marketing agency) once wanted
to see how their pricing stacked up globally. Through some
rather simple research and analysis we could ascertain where
the agency sat in amongst 100 agencies from Asia, Europe
and North America. The results lead to a complete
repositioning of the agency.
Failure #03.
NOT TESTING
ASSUMPTIONS
Assumption is the mother of all screw ups.
If you want some really powerful insights to
drive your business and results then, yes you
need the data, and, yes, you need the intelligence
infrastructure, but make sure you test your
assumptions.
Be prepared to critically evaluate them.
5+2=3!
FACT - you will make incorrect assumptions. That is a given. But only
when you test them can you understand the implications of getting
them wrong. Anything less and you could end up flying blind and not
even know it.
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Tips To
Testing Assumptions
1. APPLY THE ‘SOUNDS RIGHT’ TEST
The most basic test to apply to your assumptions is the ‘sounds
right’ test. Simply take a breath and re-thinking what you are
thinking. For instance, one firm we worked with decided that $3M
in turnover would be a good goal for the next financial year, up
from $2.2M the previous year.
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2
%
?
||
OK? The problem is that for the previous 3 years turnover had
hovered between $1.6- $1.8M and circumstances were not set to
change in the coming year. Does it ‘sound right’ that the income
is expected to jump $1.2M with no change in the circumstances?
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]
&
2. RESEARCH AND JUSTIFY
You must clearly understand the basis of your assumptions.
Does it just ‘feel right’, or is there evidence behind it? For
example, you may believe a valuation multiple of 6 sounds right
for your business, but when a prospective buyer conducts due
diligence, they will form their own opinion. If you cannot back up
your original assumption, you could be left unable to negotiate
effectively.
3. CHECK FOR ‘WHAT IF’S?’
It is the age-old question ‘what if?’ The easiest way to check your
‘what if’ questions is through sensitising.
Sensitising means that you apply a margin of error over
something. For example, you assume that a new venture will
produce a net profit margin of 25% in 2 years. What if it was 15%
or 10%? Is this tolerable? Is this ‘game over’? At what point
would you walk away? What is your maximum? What is your
minimum? Knowing this informs your stress points and
watch-outs after the decision is made.
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Importantly, if your intelligence infrastructure or once-off analysis
is done correctly, it will incorporate the ability for you to sensitise
multiple variables across different scenarios, thus ensuring you
can test all of your options fully.
Failure #04.
RELYING ON
THE ACCOUNTANT
A frustration we encounter when first working with
many of our clients is the false hopes places on
an Accountant to come up with result driving
insights. Often they simply do not deliver the
goods. It is not their fault. It is just not their
area of expertise.
Someone studies for years to be an Accountant.
They may know complex tax codes inside out and
back to front. If you have a tax bill you want
that person!
However, when you are attempting to analyse your customer
segments, understand the potential of a new market, explore a new
idea etc… your Accountant may not be the best person to explore this
with. They can certainly plan for the outcome with regard to taxation
and compliance issues, but assessing the high-level opportunity may
not be their strong point.
Not all specialists are bad, but often when it comes to generating
insights, it is a particular skills set of itself. If you want to get it right,
you need someone who can look at the issue and think creatively.
Creativity is not limited to pure design (how something is presented).
It has a role to play across the data, analysis, and design stages.
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Tips For
Taking The Load
Off Your Accountant
1. FIND SOMEONE YOU TRUST
When someone is providing advice to you, no matter how big or
small the decision, you must be able to trust them. Do not settle
until you find someone who knows what they are talking about,
can deliver, understands your real problems and can relate to
you, and only has your best interests at heart.
The benefit of finding someone you can trust is that they become
your sounding board. You have the benefit of open and honest
conversations where you can bounce questions freely.
2. LOOK FOR CREATIVE GRAND MASTERS
The finest advisers in the world not only have rock-solid trust, but
also operate like a Grand Master chess player: thinking moves
ahead and assessing possible risks and opportunities.
Creativity is important as it concerns how efficiently and
effectively a problem is overcome. A great adviser will come up
with a creative solution, but also conduct the analysis around the
solution in a creative way.
3. SET HIGH STANDARDS
Remember in school, the teacher that was harsh sometimes, but
somehow always brought out the best in you. They knew you
could do well in their subject and they would not let you slip. You
want the same approach between you and your specialists. You
need to hold them accountable, but they should also be holding
you equally accountable.
Look for people and companies who set high standard for
themselves and their clients. Do not be swayed by the cheapest
offerings in the market. Like so many things in life – you really do
get what you pay for.
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Failure #05.
FAULTY DESIGN
AND COMMUNICATIONS
Insights need to do one thing - inspire you to
act. They need to get you to make a decision, and,
therefore, drive your results and value.
Therefore, how an insight is presented becomes
critically important. Here is where creativity
plays a real role. How do you design your analysis
so that it communicates clearly, concisely and in
a way that is compelling? Just like a great piece
of art or a beautiful piece of music, you see it
and you are inspired. It does not only look
beautiful, but it shows a clear course of action
and that something needs to be done. Now!
This can be a problem with data visualisation. Visualising large data
sets is a trend right now, and for a good reason. As we mentioned
earlier, there is immense power in data. However, too often, data
visualisation goes too far into the art side and you find yourself
looking at a beautifully depicted piece of data, but left wondering,
“so what.?”.
The point is that you can have the best data analysed through an
incredible intelligence infrastructure. An amazing specialist is
engaged. But if they cannot communicate to the leader in a way that
s/he understands, their work is null and void.
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Tips To
Creating Clear
And Compelling Design
1. FIND OUT WHAT WORKS FOR YOU
What is it that you easily understand? Do you prefer pictures and
charts over words and tables of figures? What naturally makes
sense to you?
In our work with creative entrepreneurs our design often has a
heavy visual element. For instance one cash flow model we
developed used a single line on a page. No figures at all.
Simple, effective, clean and it made perfect sense to the reader.
2. FOCUS ON THE STORY
Data and its analysis will only take you so far. What really
matters is the story in the numbers. One law firm used their
people utilisation numbers not as a wrist slapping exercise
(typical for large firms), but as an opportunity to target training
and development.
The other factor here is to remember, especially when it comes
to forecasting, your figures will not be 100% accurate. Rather
than pinpoint accuracy, focus on the story: what is the trend
relative to last year, what are the averages, what is the direction,
etc..?
3. GET CURIOUS!
If there is so much ‘bad’ design out there, what does good (or
even great) design look like? What are you missing out on?
One top-shelf resource for data design is the book authored by
the head of production at Right Brain Insights, Brian Suda. His
book, A Practical Guide to Designing With Data is accessible to
those not trained in statistics or design.
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Failure #06.
FORGETTING
THE HUMAN SIDE
We live in a data-rich world. While data is
being created all the time, there is an element
to business and life that cannot be measured:
the human side.
The fact is, when you are making critical,
long-range, expensive decisions there will be
considerations and effects that data will never
be able to capture. You need to recognise this.
You find this effect most prominently when it comes to people,
especially in the corporate world. Someone is retrenched for no
apparent reason. The person was respected by their peers.
Subsequently, when they find a new position they end up bringing
their old team across with them, thus, eroding the basis of the original
decision.
Alternatively, there are also issues that can fall upon the decision
maker. 50 years ago, decisions were made collegially. Today, there is
more pressure on leaders than ever to make the calls and get them
right. People are watching them, and they can end up being too
frightened to address the real problem. It is the Titanic ignoring its
circumstances and not changing course.
.
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Tips To
Embracing
The Human Side
1. NEVER LET DATA ALONE
RULE COMPLETELY
Data is only ever going to take you so far. Yes, it may take you a
long way, but consider what cannot be measured. What are the
emotional impacts of your decision? What will this do to the trust
you hold with your clients? Is there a cultural impact to your
decision? Does this new direction for your business contradict
the very reason you set it up to begin with?
While the data and the analysis may indicate several courses of
action, ultimately the final call should be made only after taking
such considerations into account. These questions may be
personal and hard to answer, especially if your decision affects
people you know and love, but the very fact they are hard to
answer often highlights their importance.
2. INVOLVE PEOPLE RELATED
TO THE DECISION TO HAVE A SAY
The easiest way to never forget the human side is to include it
from the start. Involve people and give them a voice.
A great example of this is the Porsche production factory in
Germany. There is a staffwide policy that states that if you can
come up with an idea that saves us money without compromising
quality, and we execute it, you get half the savings in the first year.
One low-level cleaner came up with the idea that a robotic broom
could be installed to reduce time and risk. They calculated that the
robot saved close to 90,000 euros in the first year. Porsche held
their promise.
3. RIDE THE ELEPHANT
Ask yourself - what is the real problem here?
If there is an Elephant in the room have the courage to ride it.
Courage is not about being not afraid, it about acting in spite of
the fear. Fear canparalyse your decision making and destroy your
results. Upon seeing problems for what they really are, they often
become less scary than they seem.
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At Right Brain Insights, we aim to work for at least 12-24 months
with our clients. During this time, we pride ourselves on saying
things how we see them. Unfortunately, we have too often had to
deal with the aftermath of failing to do so.
Failure #07.
BECOMING
PARALYSED BY FEAR
Fear works two-fold when it comes to data. Fear,
and the subsequent paralysis it causes, can arise
from having:
a) a lack of data, or
b) too much data.
Whichever it is, they both result in the same
outcome: you freeze, decide not to act, or end up
leaping into a decision.
If you have a lack of data, this can mean decision makers have
questions that they simply cannot answer. They know the question is
important but they are left to make a blind choice: effectively flipping a
coin. You might be able to pull that off once or twice, but imagine a
roulette table. Eventually the house is going to win.
On the flip side, the same situation arises when you have data
overload. Picture a computer when it freezes. It is overloaded by the
task at hand and simply refuses to work. It has reached its limit.
Human beings are no different. They are going to focus, or they are
going to crash.
If they are given a whole table of data or insights and are unable to
ascertain what it is exactly they need to do, or where to focus, they
could very well arrive at the same action as having no data or
insights: effectively, ending up back on the roulette wheel.
.
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Tips To
Remove
The Paralysis
1. FOCUS ON WHAT YOU NEED
If you are faced with a mammoth decision, and you are not sure
how to break it down, try to focus on what you really need. Ask
yourself ‘what is the real problem here?’
Is this about survival and just managing cash flow until the big
invoice comes? Is it about how to position the business for sale
over the next 12 months? Is it knowing if next month, or next
quarter, will be good, bad or indifferent?
By pinpointing the need you allow yourself to cut out the noise.
There is so much data and infinite ways to analyse it. But you
have a decision to make and limited time to make it in. Think
about what you really need to know, and this will focus all other
efforts.
2. EYES ON THE PRIZE!
If you ever feel a decision is becoming overwhelming stop, take a
step back, and remember to think about where you are heading.
Go back to 30,000 feet and remember where you want this
business/ project to be.
Focus on ‘why’ over ‘how’. If you can become clear on the ‘why’,
your specialists will look after the ‘how’.
3. GO EASY ON YOURSELF
You are only human. We ALL make mistakes (admittedly some
sillier than others). Endeavour to do the most you can with the
resources you have. At the very least you can always justify your
decision. Even if your decision is a mistake, we are all always
learning. Seek to make new mistakes, rather than repeating the
old ones.
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