Coping with too much information
Business thrives on a better understanding of what its potential customers want and like, what their competitors are doing and identifying the key drivers of profitability for its business.
A few decades ago finding vaguely relevant information was hard and time consuming, now a mass of potentially relevant information is available within a few minutes on the Internet or within your own company.
The challenge now is not analysing information, but analysing the right information in the right way, which is a very different discipline!
In the new world, three new disciplines need to be clearly adhered to:
§ First: Understand the Data. Most errors come from misunderstanding the nature, accuracy and relevance of the data. It is vital that information is not used beyond what it can rightfully be used for. For example in a questionnaire response, when a person selects a product preference, it is important to understand that this is only a preference and that the person’s actual purchase can change at the time of buying something.
§ Second: Do not analyse everything: This is called “boiling the ocean” in the trade. This is very time consuming and futile. You need to focus on understanding what is truly important, in order for you to be able to make real and right decisions. Often it means focussing on gathering “hard-to-find” information rather than analysing the mass of “easy-to-find” data.
§ Third: Be cautious of correlations and co-variance. In science and technology, analysis is only valid if an underlying real relationship (“causal link” in the trade) exists, and simple relationships between data is viewed as interesting. However this is not relevant unless such a link is found. Much “pseudo-science” exists in financial markets and business analysis based on links and correlations which is OK for proposing new products to clients but can be deadly when used to plan a business’ future.
Key to analysis is what is called the “Scientific Approach” by leading consultancies. This is shown in the Figure below.
Scientific Problem Solving Approach
This is simplified into a simple sequence which is shown in the following figure.
Despite its complexity, this disciplined approach has many advantages on the more data driven or organic approach. The most notable advantages are:
§ Focusing the analysis on resolving required questions: Analysis needs to resolve issues (or questions) that are of importance to the business. If they are simply there as information, the analysis is more likely to create confusion rather than to enlighten.
§ Forcing the right information to be used: Often businesses use easy to find information to address issues, if the issue is clearly and precisely stated then the required analysis and information is clear and therefore data gathering can be focussed on this information
§ Reducing effort: Much time and effort is spared by focussing effort on the important questions only
§ Making analysis relevant: How often have you said “so-what?” or “yes-but” when presented with analysis? This structured approach makes sure that there is a clear narrative and logic to the analysis, the findings, the conclusions and the recommendations
§ Ensuring that you cover ALL relevant analyses: If the “issue structure” has been done well then ALL questions and analyses to be able to go confidently forward will have been undertaken, allowing management to focus on implementation rather than reflection on the analysis.
Created: February 27th, 2014