Our businesses are full of smart people, and we are supported by even smarter technology.
This has opened a world of possibilities for the organization. Real time on demand information that tells us everything that is going on with our business.
Real time sales, financials, analytics, and a world of other reports. Where you want it, when you want it.
These tools can all be great for business. However, the keyword here is “Can.”
From the time I was a child my father used to always tell me, “The numbers don’t lie.”
He was an entrepreneur. One that pulled himself up by the bootstraps and built a successful business out of sheer grit and determination. With little formal education beyond high school he became convinced the numbers were the story.
I’m pretty certain now that I’ve gained a bit more experience that much of what he said was correct. The numbers do not lie. In fact, they are the most completely accurate representation of what is going on in a business.
However, the fact that the numbers don’t lie, doesn’t necessarily mean that they are useful. The numbers that are spit out at us via ERP, CRM, EDI, and a vast array of other systems are the words that tell a story. This story requires deciphering via a word key that is generated by the organizations people. Every report, the balance sheet, the income statement, the revenue analysis; all of them tell a story, but how do we determine what that story is.
Here is where better businesses set themselves apart.
For business is not determined by the answers because we all have them right in front of us. Business is determined by the questions we ask.
With the right questions we are able to recognize trends, identify plans and strategies, create KPIs, and execute to our plan. The continuous flow of data to our inbox allows us to continue shaping our visions and determine what the next question should be. It is from those next questions that we continue to arrive at better outcomes. In short with the right questions we can control our circumstances.
However, if we ask the wrong questions, or perhaps worse yet no questions we become constrained by our situations. Moreover our circumstances begin to control us.
Take for example a three year revenue trend. Let’s say that the report shows sales rising by 5%.
For some companies they will look at that and assume that everything is good. Revenue is up, and life is grand.
Here is another way it could be looked at and I suggest this method as a way to begin asking the right questions.
- Big Picture Question: Why is revenue up?
- Second Level Questions: Is it related to new customers (Width), more business from current customers (Depth) , Did margin increase or decrease (Profitability), or was there one or two significant (perhaps beyond normal) large deals that created the higher revenue (One Time Deals)?
- Third Level Questions: What trends can we identify (External, Internal Environment)? What if there are no giant deals next year (Risk Assessment)? What customers fell off (Opportunities)?
The depth of questions could go on and on, but with the “Right Questions” comes better business insight which propels an organization forward.
With this in mind, let’s talk a bit more about the example above…
If the answers to those questions showed that the business growth was related to one extremely large deal from a current customer that is highly unlikely of happening again. You may come to realize that your run rate business was actually down year over year and that you need to generate a plan to off set this. Further you may have realized that several large customers saw significant drop off in business and that they need some attention because they may have moved a portion of their business to someone else.
And with that lies the foundation of the story and the root of better business execution.
Everyday we are bombarded with data that can be used to help us run better organizations and drive more desirable outcomes. However, do not be fooled about the path. The results do not lie within the data you are provided, but rather within the questions that this information drives.
Smart systems and smart people can give you all the tools you need. But only smart leaders know they must ask great questions.
So Dad, you were right when you said that the numbers don’t lie; however I hope you realize it was the questions you then asked that made you a success, and not just those numbers themselves.