Recently, my team and I were faced with a major challenge that required a herculean analytical effort. The project was the type that any data junkie such as myself dreams about (new, exciting, big challenge and big visibility) and is deathly afraid of (huge risk, big challenge, big visibility), all at the same time.
We were asked by our CEO to project market performance for our brands in the upcoming quarter. My team and I got to work, derived a great model with high correlation values and proudly presented our insights to our executive office. Big bust! Our CEO had over a dozen questions about how our projections tied to other pieces of our business. How did it correlate with our inventory position? What about account sales? Should the company expect a slew of new orders in the coming quarter as we were projecting a very healthy growth in market position?
Although our sophisticated model commanded 93% accuracy, we did not have any answers to our CEO’s questions. We had done the job we were asked to do very well but ultimately we had failed in providing business-worthy insights.
I spent sometime reflecting on where we had gone wrong. We knew what to look at qualitatively and measure quantitatively. We definitely had clarity about our signal (market position). We understood very well what the signal was telling us (25% lift in value market share in less than two months). All good, except we failed to ask “So What?”
As it turns out, a snapshot market position does little for lifting our business performance in a given quarter. In our business, there is a sizable lag between account orders and consumer purchase and hence, our business has already realized the revenue for the product purchased by the consumer.
I was fortunate that our CEO gave me a second chance and asked me to come back with a more comprehensive analysis. This time around, I reminded myself of the steps to take for data to generate meaningful insights and action. I brought a cross-functional team together, comprising sales, account management, forecasting, finance and inventory management. Collectively, we agreed on all the different data points and sources to examine. When everyone came back with their results, time and time again, we asked ourselves and each other: “So What?” This critical examination of our story only added to the robustness of our collective insights.
As we methodically peeled the onion, we learned that due to a large order two months prior and the softening of the market, our inventory was healthy enough to support the market demand for the quarter although our consumer sell-through continued to be healthy and growing. In summary, even though our market position continued to gain strength, our account orders remained the same as previously anticipated.
With this insight, the business was able to better forecast for the upcoming quarters and become more accurate in financial projections (the Now What piece).
Viola! Eureka! I redeemed my credibility and perhaps a bit of my ego!
I enjoyed the challenge immensely. However, the most valuable part of this experience for me was the reminder to follow my own recipe:
- Know the Signal from the Noise
- Ask So What?
- Ask Now What?