"I've been in this business for 20 years and I've never seen anything like this before. Our revenue has decreased with over 90% and it's uncertain when and if it will go back to normal again. What should we do?"
We received a call last week from one of our clients, in which they expressed their concerns about the current market situation. As we are all being affected by the spread of covid-19 in many ways, it is easy to relate to the unfortunate and distressing situation that many businesses are facing today.
Six months ago, climate change and extreme poverty were two of the major global threats on the world agenda, however the world is currently facing another enemy, which is the global pandemic caused by the fast spreading coronavirus called Covid-19. Not only does this pandemic pose a threat to many people’s health and lives – it has also turned out to have big ramifications on the global economy, on politics, societal functions and the livelihood of countless people, resulting in mass unemployment.
Companies and business leaders are currently faced with a great level of uncertainty and are forced into quick decision making in order to survive, why access to relevant and accurate information is necessary. The stakes are high, and decisions made today may impact many employees, customers, owners, suppliers and business partners for months or even years to come. How we deal with information is therefore crucial for making well guided decisions.
How can we ensure that information is being processed correctly in order to maintain a balanced perspective, when we are overwhelmed with information from different sources, often influenced by a high level of fear and urgency?
When analysing information it's important to be aware of potential biases and data gaps. The book Factfulness: Ten Reasons We're Wrong About the World - and Why Things Are Better Than You Think, written by Hans Rosling together with Ola Rosling and Anna Rosling Rönnlund in 2018, describes the pitfalls of interpreting information and the principles presented in the book are relevant for supporting fact-based decision-making.
For instance, there are three key things that are emphasized in the book to help us maintain an accurate view of the world:
- Realize that we don’t see the world as it is.
- Recognise what types of stories trigger our dramatic instincts.
- Use simple rules of thumb to resist over-dramatic stories.
One of the core messages in Factfulness is that it's easy to misinterpret information about the world, leading to an overdramatic worldview. The reason for this is not necessarily because the information we receive is wrong, but rather because it's taken out of context or only one side of the story is being presented. It is true that the situation we are currently facing is serious, but it is in uncertain and frightening times that it is even easier to make hasty and drastic decisions based on misinterpreted information.
Given our experiences from working with data-driven organisations and decision-making, it's very clear that our instinctive behaviours as humans and the way our minds function sometimes get in the way of drawing accurate conclusions based on data. Even organisations that have processes and tools in place for utilizing data effectively, experience challenges in interpreting data and turning it into fruitful actions.
If we revisit our client, who experienced a dramatical stagnation of revenue due to the current Covid-19 crisis: how could they implement a fact-based approach when deciding what actions to take? Here are some thoughts and suggestions:
1. Look at your options
No matter how grim the situation, there are always options. What are your options, and what are the implications? Developing and analysing different scenarios, not forgetting to take several perspectives and consequences into account is a good starting point. It is easy to make the mistake of only considering a problematic situation from a certain perspective and therefore disregarding potential consequences in other areas.
2. Check your information
What information do you have right now and what information do you need in order to make an informed decision? How can you bridge the gap? How reliable is the data you have and where does it come from? Does your organisation have access to data and analytics tools that can provide a new perspective? If you do not have it in-house, can you get the support or analysis externally?
Are you generating valuable insights to lay the foundation for better decisions? How do you connect the dots? What context are you putting the information in? It's important to keep in mind that the situations we're facing today are extreme and not necessarily the new normal. That doesn’t mean inaction is the way to go, but it is also crucial to maintain the long-term perspective of what to do when the circumstances stabilize again. Advanced analytics can support in providing actionable insights.
Information should lead to action, otherwise you’re doing something wrong. If your insights are not actionable, the analysis may not be right. Sometimes more information can leave you feeling confused, but that is when data analytics and methods to interpret and present information can be useful.
5. Rear-view mirror
What do you see when looking in the rear-view mirror? Was the decision you took right? Have your received new information which should lead you to change the decision you made? If so, do that. When working in a data-driven way, the key is to continue to evaluate and measure success. What effects did the actions you took have on your business and performance? Feeding these insights into the loop are crucial for future decision-making and to improve the process.
At Cartina we help clients improve their decision-making processes. We do this by means of advanced analytics and digital transformation (e.g. with BI, AI, agile ways of working), information management, as well as understanding changes in customer drivers and behaviours to plan for future scenarios.
Do you want to discuss your plan to counter this crisis?
We’re here for you!
You can find more information about Factfulness and the 10 Rules of Thumb to keep your dramatic instincts in check here: Gapminder.org