It was a defining moment in my career. We had been asked by the vice president of manufacturing how late he could accept orders for shipment this quarter without any degradation in quality. This guy had 34 plants and over 40,000 people working for him all over the world. Our answer could affect quarterly revenue by a few hundred million – not a trivial question.
Unfortunately, all too often our eagerness to make this quarter’s numbers inadvertently increases our costs for next quarter. For instance, the customers might not appreciate last-minute substitutions. Then we’d have to accept returns and give them what they had wanted in the first place.
All kinds of problems could result from the 11th-hour fun and games, and we had a chance to prevent as many of these as possible. This was back in the ‘80s. Although we had PCs, we still had to get IT to provide the raw data. They gave me one of their best programmers, a real cracker jack. After a few days, we had the data.
I took the data home to plug them in without interruptions. As I created the graphs, I became horrified; they were exactly the opposite of what we had expected. Instead of the latest orders being the dirtiest (i.e. shipping with the most problems), they were the cleanest.
We “knew” what happened at the end of the quarter, but the data said otherwise.
We went to the manufacturing staff the next morning. There were about 60 high-level managers in shock as we presented our findings. The VP was delighted as he realized he wouldn’t have to stop accepting orders for shipment this quarter. This was the first in a series of assignments to characterize the order fulfillment process. Now that we had a taste of what real data could do, we wanted more.
“My gut feel” didn’t carry much weight anymore; there was a better way.
Since then, I’ve been particularly careful about “knowing” what was going on before getting and analyzing whatever data were available. My, how my knowledge of the world has changed. Being right isn’t all that hard when you take the trouble to get the answers. “Data-based decision making” is a popular term, but I’m always amazed at the number of folks who claim to do it and routinely skip the data step.
Breaking the cycle
Admittedly, obtaining and analyzing data correctly doesn’t always yield “the answer.” Even so, it dramatically reduces the margin of error.
Let’s say you’re trying to make your numbers this quarter and you’re having problems. Your people have outlined five different strategies or tactics that might help (e.g. pull orders in, authorize partial shipments, allow substitutions, etc.). How do you know which one(s) to pick?
Too many managers use personal preferences or their “gut” reactions. In fact, it’s not unusual to see them making the same mistakes over and over, quarter after quarter.
Asking for a little research, as our VP had done, is really the way to go. Are there any historical data on the use of any of these strategies in the past? (As much as we hate to admit it, very few tactics and strategies are really new.) Let’s say you can get data on three of the five, and the data rule them out. You’ve broken the cycle of repetitive errors!
Additionally, you’ve taken 60 percent of the probability of making an error out of your decision. Even if you had to guess on the remaining 40 percent, which you probably wouldn’t, you’ve got a much better chance of being right.
Managers get paid for doing a lot of very important things, but decision-making is the most important. Develop the habit of using data, properly analyzed whenever you can, and see what it does for your career.
If you’re already inundated with graphs and spreadsheets, you’re not necessarily already doing this. Ask yourself if the data really answer the questions you need answered. We seldom measure what we really need to know; we often measure what are easiest to measure, and there are a lot of very impressive graphs that are completely irrelevant to the decisions at hand.
Get the right stuff. It’s like magic.
Ronald J. Bourque is a consultant and speaker from Windham. He has had engagements throughout the United States as well as in 12 nations in Europe and Asia. He can be reached at 898-1871; fax 894-6539; email@example.com; bourqueai.com.