It’s All In The Numbers: Thinking Objectively In Business
Math makes my brain want to cry....
Thinking Rationally Can Be Exhausting
For most of us, it is just plain tough to think about things logically and analytically. From an evolutionary perspective, this is a newly developed ability for humans. For the majority of existence we have relied on senses and base brain functions to keep us alive, and they did a pretty good job. Therefore, we fall victim to habitually still relying on these systems even though in the modern world they tend to create more problems than solutions. For instance, we are prone to either want to "fight or flight" when faced with even a potential threat, physical, emotional, or mental. Needless to say, in the business world we are not allowed to just punch an opponent in the face when they have challenged or frustrated us. Even if we could, and get away with it, really it would not help us to further our long term goals at all. Strategic planning and well thought out plans require a certain level of discipline, and sticking to the hard data can be tedious, confusing, and worst of all terrifying at times.
You Cant Hide From The Raw Data
Realising that our emotions need to be set aside to proficiently handle business affairs, one must then attempt to break everything down into the purset numbers possible. Analytics is the newest trending topic in business right now and there a host of software products out there to help you gather the proper information from the relevant sources and to then put them together into an easy to understand format. The thing is, garbage in equals garbage out. You have to first collect the right data to input into the system, and this alone requires a drastic change in the current process that you have in place. For example, are you tracking lead sources to find out what advertising campaigns are effective? If not, you are going to have to firmly instill the importance deep within yourself so that you can convey the message to all of your employees with some conviction and enthusiasm. Then comes the real fun, constantly reminding and reinforcing that behavior with your employees. For various reasons, they may end up fighting the change and you must figure out a way in which to subtly manipulate their behavior. Every employee is different, some will respond to threats while others to positive reinforcement. Again, the most important part is to honestly apply and believe in the changes yourself first.
That A Whole Lot Of Information, Now What?
Now that you have made all the necessary changes so that you can collect all the pertinent data for your business, it is time to take the next step. Just looking at this collection of numbers can be quite daunting, so take a deep breath and start with one small section first. Make sure that it is all properly organized, and if you are feeding it into any separate software you have to make sure it is properly formatted as well. Go section by section until it is as orderly as you can get it. Now start asking yourself the important questions. What does the general data say to you? Are there any obvious outliers that need investigation first and foremost? If nothing jumps off the page you need to make a list of all the potential questions you need answered about your business. Good example are: closing ratios, numbers of leads on average, profit margins, labor or material costs, etc. Many people at this point in the process are exhausted and don't have the creative energy they need to piece everything together and make those intuitive leaps to connect the seemingly disconnected information. Take a break and come back to it later if you are feeling like this. Just make sure not to shove it aside and attempt to forget about it. More often than not, this is just your unconscious mind attempting to distract you because it is aware that you are not going to like what you find once you have untangled everything.
Last But Not Least
The data has been collected, organized, and relevant conclusions extracted. Lastly, you will need to draw further conclusions from these conclusions. To clarify, if your overall costs are coming in consistently high with one supplier or subcontractor, and you have figured out that it is a problem with both their labor and material rates, you are going to have to first decide if this type of behavior is malicious or not. If they are supposed to get paid on a similar scale to everyone else you have working for you, are they then stealing from you or padding their bills some how? Or is it more a problem that they are not very good at what they do and thus prone to using more material than others? You may not know the answer 100% but you need to decide immediately what you are going to do about the situation. Whether it is digging further into specific jobs in order to figure out exactly what is wrong or sitting down with the employee to try and talk it through. Each and every aberration needs to be identified and a plan of action put in place to rectify the issue. This can be the most difficult thing to accomplish, especially if the ultimate conclusion is that the problem lies with nobody else but you.