Business is sometimes described as a (black) art, but in many ways I'd propose that it's more akin to science. Consider the following method described by renowned physicist Richard Feynman - when explaining how a scientific law is established (freely)
1. Guess the law
2. Compute the consequences of the guess accordingly and its implications
3. Compare computation results to experience or nature (observations)
4. If the law disagrees with observations, it is wrong (sic!)
Similarly, business reality - your scientific law - is what you measure in and adequately can confirm as correct in your business, the foundation for how to direct your investments, and base your decisions on. Perhaps, at some point – even automate decisions on.
Fail to measure - measure correctly, and the right things - and you will fail to manage your business.
Recent events seeing flash drops in the stock (DJIA) and currency markets (Pound Sterling) give evidence of what can happen and go terribly wrong, when autonomous decision and trading systems act on incorrect data and algorithms.
The old management adage "You cannot manage what you do not measure" rings true in many ways.
(For physics aficionados; the fact proven through different experiments that when observed on the quantum level, reality doesn't seem to actually manifest before we attempt to measure (observe) it, is even more intricate. Luckily, business operations aren't that capricious.)
Secondly, failing to connect incentives to the right and balanced set of measurements, will inevitably yield some very unproductive behavior from the employees in the organization.
One of my favorite examples - urban myth or not - is the software company who wanted to minimize the occurrence of bugs in their application suite, and ingeniously incentivized the R&D department through rewarding the discovery of bugs in the code / functionality.
- Needless to say, as the cynics of you will have figured out at the start of the example, the number of bugs in the software didn't seem to go down, at all ..
How can one go about to accurately observe, measure, and direct ones business and organization? Depending on its current state - it may be a lengthy journey, but there's ROI and reward to be had at every step along the way. Though there may not be a pot of gold at the end of the journey (in reality it truly never ends, you just become better - as an organization, Customer, and supplier) there are some business benefits enabled in the process which are not only financial – it builds capabilities which enable business development, in a positively reinforcing upward spiral. Similar to machine tooling; we can’t assemble a production line without a basic spanner or screwdriver at some point, and automation & robotics is a step further down the line of maturity, rapidly becoming a major driving competitive force regardless if you’re in the service or manufacturing business.
From an IT perspective, there’s a similar dependency between data, information, knowledge, tasks/activities, processes, and the level of accuracy and control that can be asserted over each component across the business. With every step and level, small discrepancies can amount to major inconsistencies towards the end of the chain – making checks and balances, and (automated) mechanisms to confirm data accuracy over time extremely important.
It’s these building blocks that make up the digital dimension of your business, the Digital Customer Experience - harboring the potential of getting closer to- and gaining a better understanding of what your Customer really wants/needs, and leveraging that knowledge into market position or industry partnerships (or both).
Speaking of automation - something tells me that we’ll struggle to explain to coming generations what came first – the 3D printer, or the 3D printer factory – but until we get there, let’s focus on the next step that can be improved in your business for starters.
Fredric Travaglia, Business Development Consultant at Enfo
P.S. On a side note Mr Feynmans life and adventures are brilliantly captured in two books anyone with a slight interest in nature, reality, physics or just life will enjoy – The Pleasure of Finding Things Out, and Surely you’re joking Mr Feynman. Regardless if it’s the ins and outs of your business, or the fabric of nature, they highlight – as the first title states – the pleasure of finding things out, because you can!