January 7, 2014 | Dr. Stephen Timme
To kick off the year with a bang, we're excited to have our own Heather Beckham writing this blog post. In her spare time, she writes case studies with a number of Harvard Business School professors and has some great insight into translating numbers into actionable information. Quantitative metrics are perfectly transparent and unquestionable, right? Wrong - there is a great amount of danger in blindly interpreting hard data. One of the biggest mistakes sales managers can make is underestimating the ambiguity of market indicators or financial metrics. Relying solely on quantitative figures to inform decisions is a recipe for failure. It is important to remember these are just data points and the story behind these numbers can lead to very different conclusions. I recently co-authored a Harvard Business School brief case study which delves into the thorny issues of interpreting quantitative test market data. One of the key lessons in the case is that we often underestimate the vital role of judgment in the interpretation of “hard numbers”. We need to dig deeper to not only understand what really happened, but why. Taking it to the next level, we need to correlate a variance or trend with what is actually driving those results. Before you draw conclusions about your client’s situation from trend metrics or financial benchmarks, there are a host of questions you should investigate. For example:
- What is the company trying to accomplish (e.g., what is the company’s strategic focus? what are short-term initiatives, long-term goals, etc.)?
- What kind of internal factors could be causing variances (e.g., strategic trade-offs, different business models, outsourcing strategy, etc.)?
- Are there external factors to consider (e.g., economic cycles, industry-level developments, regulatory changes, etc.)?
- Is the issue the result of a one-time event or will the condition persist (e.g., impact from acquisition/divestiture, reorganization, legal issue, etc.)?
Quantitative analysis is an invaluable tool for consultative selling and decision making, but we must be careful to couple “hard” data analysis with “soft” knowledge and client research. Only then will we have a clear picture of the numbers to support meaningful conclusions. About the Author: Heather Beckham is a Director at FinListics, responsible for curriculum development and facilitation. She has co-authored over a dozen Harvard Business School Cases with Harvard Business Press. For more information on the case referred to in this blog, you can visit http://cb.hbsp.harvard.edu/cb/product/913574-PDF-ENG
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To kick off the year with a bang, we're excited to have our own Heather Beckham writing this blog post. In her spare time, she writes case studies with a number of Harvard Business School professors and has some great insight into translating numbers into actionable information. Quantitative metrics are perfectly transparent and unquestionable, right? Wrong - there is a great amount of danger in blindly interpreting hard data. One of the biggest mistakes sales managers can make is underestimating the ambiguity of market indicators or financial metrics. Relying solely on quantitative figures to inform decisions is a recipe for failure. It is important to remember these are just data points and the story behind these numbers can lead to very different conclusions. I recently co-authored a Harvard Business School brief case study which delves into the thorny issues of interpreting quantitative test market data. One of the key lessons in the case is that we often underestimate the vital role of judgment in the interpretation of “hard numbers”. We need to dig deeper to not only understand what really happened, but why. Taking it to the next level, we need to correlate a variance or trend with what is actually driving those results. Before you draw conclusions about your client’s situation from trend metrics or financial benchmarks, there are a host of questions you should investigate. For example:
