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  • Annand Sharma

How to become the Billy Beane of business

Over the last few months we have been discussing how picking, implementing, and integrating modern software solutions can help you build a modern business engine. In our last blog post we talked about revving that engine. Now let’s talk about how to find improvements to the engine so we can keep it running at peak performance.

You’ve probably heard prognosticators claim that “Data is the new oil.” Well we know that engines need oil to run and you also have to check your engine oil level regularly. How often are you monitoring the performance of your business engine? Is your business instrumented to provide you insights? Did you know that with modern software your business should be generating new data for you to learn and grow from?

Data driven insights and decisions have changed the face of every industry. With the World Series between the Astros and Braves underway, we are reminded just how much Billy Beane and the Oakland A’s changed the 150 year old game. Using data.

Anyone who follows baseball closely, the game has always been rich with statistics, but stats are backwards looking rather than forward. Michael Lewis’s Moneyball tells the tale of Billy Beane, who was forced by budget constraints to develop a new approach for constructing a roster of statistical misfits that were undervalued relative to their ability to contribute to wins.

With this data driven approach, from the roster to the strategy, nobody was safe. The end result of this process was a team with one of the lowest salary costs winning over 100 games, and amazingly winning 20 games in a row. Data analytics in baseball not only drives front office decisions, but also increasingly strategy on the field as well. The new focus on data has led to new stats such as “wins above replacement” or “fielding independent pitching.”

Other sports were quick to follow and we saw the Houston Rockets take a similar approach to the Oakland A’s. They focused on efficiently scoring points. Players whose style of play made it easiest to score points.

In both of these cases we are talking about multi million dollar organizations with budgets to match. You may be thinking, “I don’t have time or money for research and analysts.” Well, we can still learn good discipline from the process.

So, what are we looking for? You need to understand what the key drivers of your business are. For example if you sell products, you probably know what your best sellers and your highest margin products are, but do you know how much it costs to sell each product? Obviously you want to sell products for a profit, but what if the lower margin product actually helps your business profitability the most? What is happening in the sales process that ends up taking margin away from that high margin product?

In other words, what are the workflows that go into making your business turn a profit? Work backwards from that profit and identify the various sales processes or other workflows. Be laser focused and disciplined as you conduct this analysis. It’s ok to start simple. For example, marketing may get people in the door, but for the first analysis start by looking at what happens once you have a prospect. How do you turn them into a customer? Is there a way to make that customer a repeat customer?

Once you have identified those key workflows, you need to understand how those workflows are performing. Unfortunately, unlike a sports team, all of your historical company performance probably isn’t available at the click of a button. Don’t let that stop you. The sooner you start using software tools to power your business, the more data you’ll have. When you start finding value, you might consider digitizing your previous records so you can learn even more.

As a side note, you may be tempted to start with Excel. After all, who doesn’t love a good spreadsheet? But when you really start getting into your business data, beyond just the financials, you’ll hit the limitations of spreadsheets fast. Even if you can figure out how to normalize, merge, and visualize data that isn’t purely financial in Excel, there are better tools for the job.

So what then? Lean on Silicon Valley startups for your R&D department. There is new, usually free or low cost, software being developed and released daily. That means there are dozens, if not hundreds, of exciting and innovative tools to choose from.

Most of those tools will have analytics and reporting built in themselves. Tools like Square, Jobber, and ZenDesk aim to solve specific problems but also provide you with access to the underlying data. They have built in analytics to show you how you’re performing. While these products do go together, it’s best to start with the most important problem first.

A tool like Jobber can help you schedule work at customer locations, and manage your workforce. If Jobber has the customer information, work order, and invoicing, it can create high level, real time income reports for your business:

If a key workflow you identify is around customer support or customer contact there are tools like Podium or ZenDesk that are focused on simplifying that customer communication. While their core offering aims to solve that communication problem with features such as customer support tickets and knowledge bases, as a manager you can get a new view into what customers are talking to you about.

As your appetite for dashboards and insights expands you may find that you want to mix and match the various data sources. Tools like Tableau are perfect for this task.

Whatever software you end up choosing, make sure you understand what data it generates and how you can access it. If you’re using the right software, you can build out your own business stat sheet longer than a baseball box score.

And just what do I do with all this new fangled data? The old way is just fine.

How often do you look at your business? A true look, not every 15 days when you run payroll. Or is it every quarter when you do your books? We hope it’s not every year when you’re filing taxes! What other key performance indicators (KPI) can tell you about the health of your business?

Modernizing your workflows with software can help you create data to identify new KPIs. With the right dashboards and reporting you can track more than just your sales. In reality, you may not need to see your business income statement every minute, but would it be helpful to see how many customer inquiries there are in a given day? A KPI could be the number of inquiries per sale.

The goal is to find trends before they become patterns and well before they become problems. If you can’t find a trend, you might be looking at the wrong KPI and evaluating those KPIs has to be part of your process as well.

Modern customer service, accounting, service, and delivery software tools can give you real time visibility into what’s happening. Tableau, and others, can help you bring data from different systems together and empower you to create your own custom reporting.

You wouldn’t try to drive, let alone race, a car that without a dashboard. In fact, modern racing cars have customizable, digital dashboards that give the drivers real time information about everything going on, from the car and what’s happening around them. Your business engine deserves a dashboard too.



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