What data drives all our decisions? Ranging from which companies to acquire, which geographies and market segments to expand in or pull back from, and how to allocate our resources? In a recent analysis published with the MIT review, we synthesized learning and ideas from work we’re doing with Fortune 500 CFOs, finance executives, PE firms, and top strategy teams. We found that your most important data is hiding in plain sight.
It’s easy to discover. Ask three questions close to home before you read our findings summarized below the questions:
- Question 1: For an important investment or a key project – what’s your own year 3 expectation for 5 key metrics? Example metrics could be the project’s expected revenues, earnings, and a few operational metrics, such as unit volumes, headcount or equipment needed (pick any 5 that most represent your project’s performance). For clarity, we’re not talking about the team’s consensus expectations for these metrics, rather your own independent view for what is most likely to come true in year 3 for these 5 metrics.
- Question 2: After the next meeting or update for this project, if you requested that team members (though sometimes scary, we encourage you involve as many stakeholders as you can) write down their own independent views for these 5 metrics, again for year 3 – how much variance do you expect to be in the numbers?
- Question 3: Is your independent, objective expectation saved somewhere electronically for other stakeholders to see and compare against each other? Do you have a way to see how individual team member expectations have evolved with time, or do you rely on guesswork and memory?
Overall, we found there is hardly any data more important for a project or an investment than your – and your team’s – expectations. When things go south, memories fade, history gets revised, and conflicting accounts appear. You don’t want that. You want to rely on data, measure how aligned you really are, accurately measure risk, and identify/remove biases.
We would love to hear your thoughts, especially disagreements, on our views synthesized from 30+ top company executives including CFOs, CEOs, and other top managers.
For questions, and to see how Trefis technology might be able to help your organization, feel free to email or contact us on email@example.com.