Published in TDAN.com January 2007
With the turn of the calendar year comes the ages old tradition of making New Year’s Resolutions. As individuals we try to commit ourselves to making changes in our lives – giving up some
bad habit, doing more “positive” things with our lives or striving to achieve a long dreamed of goal. Despite the fact that most of us never actually live up to these well intentioned plans, each
year we make them again in the sincere hope that this time will be different.
So it is with businesses, particularly small ones. In business, however, we call these annual resolutions “strategic plans”. Small businesses need strategic planning just as much as large
businesses do, but because most small businesses are privately owned there is no stockholder constituency to which management must answer when the plans don’t come to fruition. It is very easy to
simply ignore the goals established at the beginning of the year because no one will be held accountable for their outcome.
So what does all this have to do with data management in the SMB market? Plenty, because data is foundational to any strategic plan. Let’s look at a few examples of New Year’s business
“resolutions”:
-
Increase customer visits – Management feels as though the business is becoming detached from the customer base. The Sales staff is in the office more than they should be
(versus being out with customers) and the Customer Support team hasn’t turned in an expense report for client travel in weeks. Customers are beginning to drift away and it is clear that
something must be done right away. The most obvious solution is to get back in touch with the customer base. In order to do that, however, each of the customer-facing departments must have access
to accurate and up to date customer information, especially data related to order and visit history. What happens to this initiative if the company discovers that it doesn’t have complete
information (e.g., Joe in Sales hasn’t updated any of his client profiles in months) or that the data it has is of suspect quality? -
Reduce inventory backlogs – A plant is producing at the same pace it always has but the warehouse is getting crowded with unsold inventory. The firm needs to reduce
production rates to align better with sales volume without putting the company at risk of not being able to meet demand should it suddenly increase. What is needed is better information sharing
between Marketing, Sales and Operations so that production levels can be tuned to expected sales, based on the historical response rates of various marketing programs. But the leadership team
realizes that it doesn’t have an integrated information platform that would support this goal. (It might have existed, but the project to build it was delayed by concerns about costs and
employee bandwidth). -
Increase net profits by X% – I love this one – it relies on so many factors impacted by data that it is almost a waste of time to talk about it unless everything else
is in order. To be able to increase profits it is necessary to know what kept profits at their previous level; was it purely a factor of sales volumes, did something change in the rate of new
business closing or did a specific product line have higher than expected costs associated with production? The list of potential impediments to increasing profits is virtually endless and all of
them are directly affected by the quality, availability and sharability of data.
So here is my suggestion for the ultimate New Year’s Resolution for small business – forget everything else and just focus this year on getting your information management house in order. No
other initiative can be successfully executed without the data component so it is a waste of scarce resources and unrecoverable time to work on “strategic” projects that don’t start with an
assessment and correction of the available data. I know what you’re thinking: “This guy doesn’t understand the dynamics of running a small business so he doesn’t get the fact that our business
must solve the critical problems it’s facing”. Let me assure you that I am all too familiar with the day-to-day pressures of operating a business because I have been in the management driver seat
for many years across a variety of industries. I can tell you without equivocation that the true nature of the data I needed to run those businesses was as strategically vital as any noble goal of
customer management or inventory control or profit improvement. When these seemingly obvious objectives failed to live up to their initial promise the post-mortem invariably showed a breakdown in
the information chain. It is academic, in my opinion.
So this is how I suggest you proceed on this data-centric strategic quest. First, as you would normally do, identify the top three challenges your business faces. But before you start to devise
strategies for addressing these issues you need to begin with an in-depth analysis of the processes that generate and maintain the data which drive the business function under review. Take the
function apart, piece by piece, and get to know what is really going on in your business every day. You will likely be surprised to learn that some of the things you simply took for granted as
being practiced by all employees aren’t happening the way you intended or, worse still, not at all. This isn’t a research science project so don’t get concerned that examining processes will bog
down progress. Get the people in the conference room who work in the department in question and get them to tell you what they do every day and why they do it that way. If you don’t think they’ll
respond to someone on the management team because they are afraid of reprisals for previously undisclosed mistakes, hire a meeting facilitator to conduct the sessions. You can seek out an expert in
business processes (very expensive) or rely instead on someone who is skilled at getting people to open up and talk freely (usually less expensive). Repeat this for each of the three challenges
you’ve articulated.
With the processes understood you now must analyze the common touch points for data across functions. Some are obvious while others are less visible. Draw a simple connected line diagram depicting
the ebb and flow of information so that you can graphically see how data requirements are concentrated in your business (typically it will be around customers, orders/products and employees). Now
you’ve got a basis for understanding where things break down in the management of information. With this knowledge your business can devise system fixes or process redesigns that correct the
failure points. With the solutions implemented you have given your business a fighting chance to actually meet the wider goals of the organization.
While it may seem as though I’m downplaying the level of effort involved with this make no mistake – this is going to take some time and resources. It doesn’t have to be a multi-year
project though if you focus on the fundamentals and fix those first. This approach can ultimately be the one New Year’s Resolution that you keep.
