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Surprise business result? Explore whether it is a hidden opportunity
June 18, 2007 | G&M pg. B8 | George Stalk Jr.

What does it take to capitalize on anomalies systematically?

For starters, you need to have metrics and information systems that are sufficiently refined to identify anomalies in the first place. Knowing the average margins and market share isn’t enough; look at the entire range of outcomes—across customers, geographies, products, and the like. This allows you to surface out-of-the-ordinary results for closer inspection.

The next step is to separate wheat from chaff: those anomalies that signal a potential business opportunity from those that are merely one-time events. The key is to examine the pattern of unusual performance over time. The customer who consistently buys high volumes or the market that outperforms the average year after year are, by definition, not random. Is there an underlying cause that can be identified and then replicated elsewhere?

Finally, you need to understand the precise mechanisms that animate the anomalies you identify. Why is the unusual pattern of performance happening? What specific features of the product or the local environment or the customer experience are bringing it about? Don’t accept the usual first-order explanations. It’s not enough to know that a particular customer has been loyal for years; find out precisely why.

It’s up to senior management to create the forum for asking why and to persist until the question is answered with genuine insight.
metrics  George_Stalk_Jr.  BCG  anomalies  growth  opportunities  customer_insights  surprises  systematic_approaches  quizzes  ratios  pattern_recognition  insights  questions  first-order  second-order  OPMA  Waudware  curiosity  new_businesses  one-time_events  signals  noise  overlooked_opportunities  latent  hidden  averages  information_systems  assessments_&_evaluations  randomness  5_W’s 
january 2013 by jerryking
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