The two best reasons to become an academic are July and August. I am taking advantage of both this summer. My posts will recommence at summer’s end. Stay tuned.
People use mental maps to guide action. In turbulent markets, however, these maps quickly grow outdated. To update their maps as circumstances change, leaders need information that has four critical characteristics. My last three blogs have discussed the importance of real time, unfiltered, and shared data. This post argues that holistic data is critical to spot opportunities and threats in volatile markets.
Holistic data integrates information from multiple sources, functions, or perspectives to present a
Execution begins with a mental map to guide action, but these maps represent the underlying competitive terrain imperfectly. Turbulence, moreover, renders once useful maps outdated as market conditions shift. Leaders must update their mental map as circumstances change. They require the right type of data to do so,
I recently spoke to the FT’s Adam Jones as part of his series on entrepreneurs who sold at the top of the market (follow the series at www.ft.com/smartsellers). Adam’s series focuses on entrepreneurs who timed their sales well, but our discussion covered some interesting points on timing more generally.
We need mental maps to guide action in an uncertain world, but these maps are always imperfect. They reduce complexity to simplicity, omit critical variables, underestimate rivals’ ingenuity, and tend toward stability in a volatile world. The more turbulent the market, the faster maps grow outdated. Keeping a map fluid requires the right data-i.e., real time, unfiltered, and shared. My last post discussed real time data, while this one describes the importance of unfiltered information.
Many organizations deluge employees with more data than they could possibly read, let alone digest. To
Execution starts with when a team or organization forms a shared understanding of the overall market situation. A start-up’s business plan and an established company’s strategy are both examples of what I call mental maps, shared models that represent reality and serve to guide action. Mental maps can range from detailed plans in thick binders to a simple insight sketched on a cocktail napkin. Differences in form should not obscure similarity in role–all mental maps represent the environment, highlight important variables, and suggest a way forward.
During the boom, many companies invested heavily in enterprise resource planning (ERP) systems to consolidate all of their organization’s information into a single data base. In the retail sector, for example, an investment of $100 million for an SAP installation would qualify as modest. A single integrated data base sounds great in theory. In reality, these systems rarely lived up to their advance billing. Senior executives blame the shortfalls on buggy software or flawed implementation. Heads roll, often the manager who championed the new system or oversaw its implementation.
Firing a scapegoat satisfies the corporate need to pin blame on an individual to exonerate everyone else. It does not, however, address the deeper issues of why ERP systems disappoint. These systems fail to meet
In many companies, the global economic crisis is taxing information systems to the breaking point. To spot opportunities and threats in turbulent markets, managers need reliable and granular data quickly. Shrinking demand, price pressure, and scarce resources reward companies that excel at execution, and flawless execution likewise requires supporting information. Facing these demands, many executives asking themselves which acronym (e.g., BI, CRM, ERP) is right for us? Which enterprise software provider should we work with? How much should we spend? Will it work?
These are the wrong questions. Instead, Chief Information Officers, Finance Directors, CEOs and outside