The past two years have been eye-opening for business owners, to say the least. Some businesses had to close, some survived and some thrived. Even more, the business environment has changed so quickly that businesses that were thriving during one period may be struggling not even a few months later.
One thing is for sure — every business was impacted by the pandemic, supply chain issues, staffing shortages, ongoing threat of a recession, and more. The business community is resilient, and as long as leaders are keen to adapt and learn, they can benefit from applying the lessons learned in the pandemic era to emerge as an even stronger business for the remainder of the decade.
We will discuss four of those lessons in a four-post series. This post covers the third lesson of being nimble and trusting data.
Lesson 3 – Stay Nimble, Trust Real Evidence and Data:
With so many whiplash effects and sudden changes, firms that have been able to stay nimble and flexible have been much better positioned to take advantage of the future. The problem here is that there is a base requirement of having access to the right data and information in order to see what is actually occurring.
Invest in Analytics and Data If You Haven’t Already
For some organizations, this may be as simple as opening up a Google Analytics account and paying attention to it on a regular basis. For others, this may mean highly detailed cross-platform tracking and funnel optimization. Regardless of what your business is, odds are, there are many data points that you can be tracking if you simply invest in setting up the analytics infrastructure to do so.
And then by tracking these data points, it should be evident when consumer demand has weakened, or a competitor has taken market share, or prices have impacted conversion rates, etc. etc. Data allows us to make quick decisions with a much higher degree of confidence that we are making the right choice at the current time.
An additional perk of having access to your own data collection is that you can focus more on what is real and what is happening on the ground at the business you operate instead of reacting to the many headlines and narratives that are commonly thrown around without actual verification that these are representative of reality.
Whiplash effects in the economy have been a major headache for many business owners since the start of the pandemic. This is especially true due to the speed and magnitude of these effects, which has thrown off traditional seasonal cycles and trends that many businesses had traditionally followed to estimate supply and demand.
One issue that is a constant thorn in the side of forecasters is extrapolating current extreme trends into the future. While extremes can always get more extreme, prudent managers will recognize that extremes encounter more and more pushback and resistance the further from the average they go.
For example: supply shortages seen for automotive semiconductor chips caused production shortages for automakers in 2020 and 2021. While this caused extreme shortages in the supply of automobiles, the skyrocketing price of these chips incentivizes the chip producers to expand production and for automakers to search for alternatives. As a result, these incentives eventually result in an oversupply of chips and automobiles, causing the current extremes to correct, and potentially to reverse towards an opposite extreme.
Have Contingencies For Extreme Conditions
First and foremost, businesses owners need to recognize that extremes often beget more extremes, sometimes in the opposite direction. This is not to say that these extremes have to occur, but for anybody trying to form contingencies and plans based on various scenarios, it may be smart to at least have a plan in place for extreme conditions.
At the very minimum, having scenarios and contingencies pre-planned saves a lot of panic in the unlikely scenario that those conditions come to pass. But beyond this, it also helps business owners make better informed decisions on the fly as conditions change dynamically. Instead of guessing and reacting, being open to a very wide range of possibilities can help businesses stay ahead of their peers.