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Be Like a Weatherman and Find Out Which Way the Trend Winds Are Blowing

Mar 8, 2008
Companies can be slow to see the cause and effect relationship between a problem and an irresistible force that is creating the problem. In a budget shortfall, people search out cost cuts rather than the causes of the budget shortfall.

An excellent way to improve in this area is to change the organization's questions about what to do when problems are perceived. Instead of "How can costs be rapidly cut with little harm?", I propose these new questions. You will also find out some good data-mining steps to take, to use the valuable information that already exists in your enterprise in order to accelerate organizational learning.

How could irresistible forces be causing the unexpected problems and successes that our organization is having?

Peter Drucker's question (What is causing unexplained successes and failures?) is a good place to start our search for irresistible forces. The normal mind-set is to assume that more and less positive results are simply a function of management effectiveness. That may be somewhat true, but even if the causes are internal, the likelihood is strong that some fundamental shift in human behavior (such as customers' buying preferences) is involved.

You should pay particular attention to circumstances that repeat themselves, for the odds are high that these are linked to irresistible forces.

How can you determine if irresistible forces are the cause of your unexpected results?

You have to become an irresistible force investigator to answer this question. The first thing to check for is whether the variation could simply be a normal fluctuation around the average result.

A statistician can quickly help you determine that by seeing how many standard deviations (a measure of the meaningfulness of variations) are involved. If the statistician tells you that the standard deviations involved are significantly high, you are probably on to something.

Talk to everyone who is in a position to observe what might be going on, and ask them to describe any new and different behavior. If you think that the cause may be changes occurring with customers, go talk to customers about what is new in their lives. If you think that the change is with the distributors, do the same thing with them. And so forth.

A toy manufacturer's leaders noticed that orders from retailers were off a little. They ignored this occurrence for a quarter.

The next quarter orders were off a little more, but since retail sales in general were up the toy company thought it was just a matter of time until their toy orders picked up again.

In the third quarter of this problem, the toy company decided to look into the situation. It turned out that a competitor's product had become all the rage, and the retailers had been offering close-out pricing to move this toy company's product.

The retailers did not want to reorder any more of this "dog" having just spent a fortune to move it off the shelves. Had the toy company understood the source of the problem sooner, they could have produced a "new and improved" version and remained as an effective toy supplier in the face of the competitor's popular offering.

How can you detect if your organization is fooling itself?

Take the official answer to what is going on and see if all the facts support it. If someone has done a careful study, you should be able to find it, and read the material for yourself.

If the study's answer is simply a figment of someone's imagination, you will find a lack of data or poor analysis of whatever data are referenced. That should be a sign to dig deeper. You are probably about to learn something.

Find out what is different now from before that could be causing the change. For example, if the official explanation is associated with weather, then look at similar periods when weather-based disruptions occurred and see if the effects you experienced are similar. Check to see if companies like yours are having the same experiences at the same time in the same geographies. If others are doing better or worse, see if you can find facts that point out why that might be the case. A retailer might be having more weather-related problems in Chicago than competitors, for example, if the stores are on secondary streets that are unplowed during snow storms while your competitors are on main thoroughfares that are always plowed.

Here's another example. A restaurant chain found that its competitors did much better than the chain in central city minority neighborhoods than in the suburbs. The enterprise's official explanation for this central city weakness had been that the economies were depressed in these areas.

Further digging showed that the problem really related to poor service quality by the organization. Whenever service improved in a restaurant, sales increased by twenty to forty percent in a few weeks.

The chain's minority customers in the central cities had higher and somewhat different standards for service than the suburban customers did, in part because these central city customers were paying a much higher price as a percentage of their incomes. After the chain made the needed adjustments, the central city neighborhoods became the organization's best market, as well.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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