In the bestselling book “Moneyball,” Michael Lewis explains how the Oakland A’s built a winning team using only statistics. Yet more than 10 years after the book’s publication, few organizations follow this example of metrics-driven decision-making.
Many executives still let emotions or intuition guide their decisions, even when thousands or millions of dollars hang in the balance. As a leader, you can’t afford to make decisions based on somebody’s gut feeling.
Fortunately, you have the information to make the unknown a little less murky. Metrics aren’t like a crystal ball—they’re more like a neon sign pointing you in the right direction. The right numbers can reveal potential problems, help your team clarify goals, and add credibility to your argument when explaining strategy. You just have to know how to use them.
Here are four ways to use data to create effective business strategies:
1. Pivot Products or Ideas
Metrics can act as a guide for all sorts of business decisions, from tweaking an email subject line to deciding which product to launch.
For instance, The Huffington Post split-tests headlines and uses reader data to determine the time of day certain articles should be published. Chipotle tested its shredded organic tofu for a year before rolling it out nationwide. The fast casual chain only moved forward with the rollout when data indicated that the menu items were a hit among vegans and carnivores alike.
If you launch a new product and the market isn’t responding as you’d hoped, take it as an opportunity to either abandon your work or redefine your vision. If you’re engaging with your customers, they will tell you what they want, and you can make changes based on that information.
If your data reveals that your product is a hit, congratulations! You may not need to pivot now, but pay close attention to what is changing and what is stagnant. Look for patterns to help predict future market developments and stay ahead of the competition.
2. Set Realistic Goals
Metrics also allow you to measure performance, both within your company and against your competitors. Numbers make goal setting simple because they’re completely objective. They allow you to create a clear vision for your company and break goals down into team or individual components.
Determine the realistic changes you want to see, and work backward from your end goals to identify the milestones you need to hit.
3. Direct Discussions With Leaders
When you have concrete data in hand, you can translate it into fact-based discussion points. This gives you credibility when meeting with board members or other stakeholders and helps facilitate decision-making.
Amazon is famous for using metrics to make decisions that please the customer and increase revenue. The company has 500 measurable goals—nearly 80 percent of which relate to customer objectives. Meetings in which “the best number wins” can be grueling and usually involve challenges from colleagues.
According to Manfred Bluemel, a former senior market researcher at Amazon, “If you can stand a barrage of questions, then you have picked the right metric.”
Throughout this process of turning numbers into strategies, just make sure you’re focusing on metrics that matter.
4. Communicate Changes to Your Team
After using data to support major company decisions, make sure you clearly communicate the changes to the people whose efforts are reflected in the numbers.
When dealing with a large group, the fewer numbers you address at once, the better. Avoid overwhelming everyone with information by prioritizing a few important metrics. This will ease communication and help you clarify your big goals.
Prepare yourself in advance for how your team members will react to the changes. Is this a minor change or a complete overhaul that will come as a surprise? Get a clear vision of how you will react to people’s responses, and dig up the relevant data to support the reasons for the change.
Allot significant time for questions and discussion, and err on the side of over-communicating to help ease the transition.
Metrics can be useless numbers, or they can be your greatest assets when creating a business strategy. Big decisions are stressful, but if you’ve done the research and let the numbers tell the story, you can clear the fog and move forward with confidence.
This article was originally published by Under30CEO
Author: Asha Saxena is the president and CEO of Future Technologies Inc., an international data management solutions firm. FTI’s Center for Analytics Services (CAS) provides data management and analytics solutions through business strategy and technology development. Through a pre-built data model, FTI CAS takes complex information and helps crystallize KPIs into user-friendly dashboards. FTI CAS also specializes in healthcare, analytics, and higher education consulting.
Published: October 24, 2014