bMighty

Strategy Matters: How To Gather Facts For Tough Decisions
November 14, 2008

By Nilofer Merchant, CEO of Rubicon Consulting

In bad times, it’s tempting to slash costs and cut head count. But acting blindly on those impulses can damage your company more than any economic downturn. Business owners should use their company strategy as the foundation for tough decisions, and making good choices means gathering hard data.

During an economic downturn, consumer product companies often react first and predictably: they cut spending. Such cuts are rooted in fears that customers will stop buying and the conviction that it’s better to cut quickly and hunker down for the rough road ahead. It’s the business version of “fight or flight,” and it causes problems that result in severe difficulty.

First, across-the-board cuts slash everything equally. This makes no sense. Why would you reduce the profitability of your best products by cutting your strongest market segments? Second, though you may cut your weak market segments a bit, you’re not eliminating them, so they’ll continue be a drag on revenue. Tough times are the best time to cut weak products and services, the business version of “survival of the fittest.”

And while some business owners mortally injure their business by reactively slashing and burning, taking a “wait and see” approach can inflict just as many wounds — bleeding out slowly or quickly both have the same result. In either case, business owners abandon their strategy and squander the objective identification of strengths that can carry their company through bad times.

Rather than being reactive, business leaders should take a proactive stance and that requires data, which means fact-finding. Fortunately, there’s a methodology that can help you know what you need to do, and quickly, so you can craft a strategy and get moving: a fact-gathering process framework for thinking about what you learn, so you have the context you need to make better decisions.

The four components of fact gathering:

  • Inquiry
  • Interview
  • Confidentiality
  • Categorize and verify

Though it’s tempting to skip ahead or over some steps — the urge will be strongest for internal groups familiar with a situation or organization — skipping steps will result in a strategy that’s not aligned with the real issues facing your business.

Inquiry

Focus on asking questions. Treat fact gathering like a discovery process and remain open to what you might find and don’t assume you know the answer. Don’t try to find answers; that can limit the discovery process. These questions can help start a fact gathering session:

  • What do we know about what has been done before?
  • Who has been involved?
  • What results did they generate?
  • What do we need to know about why this worked or didn’t work?

Capture the results of these and other questions and be sure to note the source of each fact. For instance, if you identify the 2007 Consumer Software TAM was $X million, it’s important to know where that data came from as you may need to re-evaluate that fact later or gather more information. Tracking sources also increases team credibility in future discussions.

Interview

Gathering information and insight are important steps in the fact-gathering process and interviews are a good tool for soliciting this data. Plus, they also can help you build support for your strategy. Whenever possible, conduct interviews face to face, especially when you’re discussing a complex problem. The additional cues you observe during an in-person interview can provide insights on the factors that influence responses and give you exposure to people across the organization.

Interviews can be a gold mine for discovering things you didn’t know you were looking for. Asking crazy off-the-wall questions signals interviewees that you welcome a wide-ranging discussion and that’s when you’ll get the really interesting input — the interviews may take longer, but there’s a payoff.

Asking for help also can be a productive interview technique. Ask people to help you understand what’s happening. Ask them to share what they think you should know. Ask them what matters most. Asking for help will open doors and that extends to identifying other interview candidates. Ask every interviewee to suggest other people for other interviews and keep track of them — you’ll see patterns that will tip you off to key people within the organization.

Confidentiality

Make sure that everyone you interview understands that you will keep the information they provide confidential. This will free them to speak candidly and give you more opportunities to discover important information.

Maintaining confidentiality does require that you scrub your materials before sharing them beyond the fact-gathering team. It is crucial that everyone on the team respect the pledge of confidentiality and contribute to enforcing it.

Categorize And Verify

You can gather great information, but without a framework to organize it, you won’t be able to use the data, much less share it with others to build toward a coherent strategy. Dividing the data into the following four categories will make it easier to understand and determine what you’ve discovered:


What you know and can confirm — This data will come from many sources, but should only include items that the fact-gathering team believes to be accurate. Anecdotal data provided by multiple sources might be in this category, but a single-source anecdote would not. And make sure the data is current — last year’s numbers won’t do you any good.

What you believe but can’t confirm — Typically, this category includes personal experiences, single-source anecdotes, and subjective impressions. This data is often powerful and persuasive, but unless you can verify it, don’t be swayed from keeping it in the unconfirmed category.

What you doubt — During the fact-gathering process, you’ll unearth bits of information that aren’t quite believable. From strange sets of numbers to goals that don’t sound right to conflicting information, this data should be tagged as questionable. But questionable doesn’t mean unvalued — this data can often help you identify gaps in people’s view of the issues.

What doesn’t fit — This category is the catchall for red herring and corporate myths like the huge sales deal from five years back that became a benchmark for closing deals, but doesn’t have anything to do with the problem you’re trying to solve. Data in this category should be set aside so it doesn’t get dragged into every conversation and bog down your progress.
Key Findings Framework

After you’ve categorized your data, you need a framework for understanding it and communicating it the organization. To prepare your findings, follow these steps:

Set aside time to reread everything in your four categories (everything!)

Create an outline as your reread the data that asks:


  • What did I learn?

  • What does it mean?

  • From the outline, draft a list of key points from your findings

  • Identify at least three supporting facts for each key point

  • Review the sources for the supporting facts — reconfirm and document so you know they are solid

  • Review your key findings with the fact-gathering team to identify any gaps

After you’ve filled any holes in your key findings, share them as a part of a discussion about the “state of the organization.” Report the facts you discovered with specific details; this will minimize dissent about your key findings and may lead to discovering additional data that augments what you’ve already learned.

This fact-gathering phase is a precursor to crafting the strategy that will propel your company forward — the diagnosis that leads to cure — and provides a platform for you to make important decisions.

The original publication can be found at this link.

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Practice: Deliver