Acumen Partners

Don’t Let “Shiny” Problems Blind you to the Real Problems

“Got a headache? Take an Aspirin. It won’t cure your tumor, but it might help with the pain.” If a doctor were to suggest you treat a complex condition like a tumor with aspirin, you would quickly find a more competent physician (and possibly sue for malpractice). Why is it that so many professionals treat business symptoms with the same logic?

  • Falling sales = Increase Quarterly Field Incentives
  • Thin margins = Deploy cost cutting initiatives
  • Unhappy Customers = Expand focus on new customer acquisition

Short-term actions to treat business “symptoms” are sometimes necessary. But, unless they address the underlying cause, such actions only conceal the fundamental problem. To keep pain points from returning, you have to heal them at their source.

Businesses are complex systems not unlike the human body. They provide signals when something isn’t right. Employees grumble, sales fall, and reports show up late. Typical managers interpret these signs as employee problems and take action to address undesirable behaviors. Effective leaders see these signals as indicators and use them to correct the underlying source.

View Your Business As An Interactive System

Effective leaders are distinguished from common managers by their ability to see organizations as interactive systems. Businesses are comprised of people, equipment, and processes. Each component has its own strengths and weaknesses and interacts with other components in predictable ways. Positioning components and guiding interactions is how business leaders create competitive advantages.

Failing to see your business as an interactive system makes it very difficult to connect symptoms with underlying causes. Business plans are common tools used by professionals to design and communicate intentions. Unfortunately, plan writers often fail to account for the interactions of the business functions and instead create a description doomed to failure before it is begun.

Map Your Business

Just as a physician cannot diagnose ailments without a deep understanding of the patient, business leaders must work to understand the complexities of the organizations they serve.

Begin by identifying the core functions of your company and articulating how each function communicates with and impacts all other functions. Identify the following:
  • Incoming Good and Services: How do you obtain the raw materials or critical employee skill sets to create your unique offerings? How do you identify the quality of these incoming resources? What happens if inferior quality slips by early scrutiny?
  • Production/Operations: How do you combine these materials and skills to create unique offerings? How can you tell that these production efforts achieved the desired results? What happens later if inferior quality slips past this stage?
  • Outbound Logistics: How do you get your goods and services into the hands of your customers? How can you tell that your products were delivered as intended? What happens later if outbound problems occur undetected?
  • Sales & Marketing: How do you communicate with your market and facilitate transactions? How can you distinguish between slow sales caused by your sales/marketing team and those related to earlier functions?
  • Service: How do you maintain your relationships with customers? How do you connect their experience with your company to each of your critical functions?

Know Where to Look

An accurate mapping of your business provides an excellent blueprint for connecting visible symptoms of trouble with underlying causes. Sales falling? Before firing the VP of Sales, first double-check the factors that could contribute to problems with potential consumers. Costs running high? Before cutting staff, confirm that inputs and processes are optimized for success. One of those inputs could very well be your loyal staff.

More importantly, an accurate map allows business leaders to be proactive in preventing problems and quickly responding to external market factors. Input problems are addressed long before they can impact the end customer. Production inefficiencies are streamlined before costs can rise enough to become prohibitive.

Early Action Prevents Later Reaction

Mapping out the complex relationships within your business is probably not high on your things to do list. Most business leaders are too busy responding to the latest crisis to spend time on prevention. They are too busy putting out fires to remove the fuel source from the inferno. They will get to that during the next annual planning session…if that ever comes.

The only way to free yourself from putting bandages on symptoms is to begin taking preventative measures immediately. Step back. Create a quick map of your company.  And be honest — If you have tried to address an ongoing problem more than once, it is most likely a symptom and not the root cause you’ve been trying to address.

Peter HobertDon’t Let “Shiny” Problems Blind you to the Real Problems
Read More

Making Critical Decisions

CEO’s, CFO’s and especially CMO’s often rely on intuition when making critical decisions. But the fact is, executives dramatically increase their chances of success when they bring real-time data into the decision-making process.

Experience and instincts help executives make quick decisions. BUT fast decisions aren’t necessarily good decisions. At Acumen, we derive facts from industry data analysis. This information allows you to make more informed leadership choices.

Although intuitive decision-making is simple and quick, a lack of underlying data makes it hard to diagnose and correct problems when something goes wrong. Using Acumen’s data tools, we can drill down to find the root cause of problems and help you use factual analysis to set a new course.

Take, for example, the consumer move to shopping online. Big data has dramatically increased the market’s understanding of customers. Online retailers can track not only what customers buy, but also what else they viewed; how they navigated through the site; how much they were influenced by promotions, reviews, and page layouts; and similarities across individuals and groups. This data helped retailers like Amazon improve offerings and gain market share by advancing from strength to strength.

Today’s consumers expect digital companies to gather insights and develop offerings that business executives could only dream of a generation ago.

In fact, data can improve all our business decisions. Correctly understood, data allows us to competently drive or radically transform existing businesses when they are off track. Obtaining the right data and accurately analyzing it is key to every step of success, for every business regardless of industry.

Modern tools allow us to capture, measure, and compare data more effectively than ever before. As a result, today’s companies compete by managing processes with greater precision than has ever been possible. Accurate data allows us make better predictions and smarter decisions. We can target more-effective interventions. We can manage aspects of our companies that have previously been dominated by intuition with data-driven discipline and rigor.

Studies show that cumulative improvement is hard to obtain when executives react to problems instead of using facts to make prudent business decisions. And since most of your competitors are using data, companies that base decisions on gut feel or instinct are increasingly at a competitive disadvantage.

Data-driven decision-making is particularly effective at an operational or tactical level where risks must be managed. When aided by technology, data makes it easy to automate rudimentary tasks and decisions.

In fact, intuition-based and fact-based decision-making aren’t competing concepts. They actually complement each other. Acumen collects data across all business functions to project outcomes and validate the return on proposed programs or new products. We also use this data to guide leadership teams and build consensus using facts instead of politics and personal preferences.

Strategic decision-making requires risk taking. Success hinges on market timing, execution, and a certain amount of luck. Acumen Partners’ real-time industry data just makes your executives better gamblers.

Kamar ShahMaking Critical Decisions
Read More