Data Makes us a prisoner of the past

 I would like to start this blog with a story that is often talked about in management sessions!

This is a story about two executives of a Multi National Footwear Company – Peter and Sam. One day, they both were asked to visit Uganda (located in Africa) and estimate the Market Potential. Based on their feedback, the company was to decide whether to enter Uganda or not? Peter and Sam reluctantly agreed as they didn't like the idea of visiting Uganda. They were to visit different parts of Uganda and make separate presentations on their learning. On their return, Sam started the presentation on return suggesting strongly that the company should not enter this country as there is no potential. Management was disappointed, but then decided to take the final call after Peter’s presentation. Peter’s Point of View was completely different. He strongly suggested entering the country, at the earliest as there was huge potential and he expected to have a profitable business. Management was in a dilemma, and so decided to deep dive in to both their Point of Views.  What was surprising was, that the reason both of them quoted was the same – “The country consists of mainly tribals, who do not use Footwear at all”. So, where Sam saw that usage in the country of Footwear was zero, he mentally calculated and based on previous trends, he forecasted the sales also to be zero. However, Peter saw a huge opportunity. He saw that the current usage was zero and the sales can be in multiples of the population of the entire country!

Whilst we can step back and laugh at Sam, isn’t this what we also tend to do, in our business. We, more often than not, mistake past performance as Potential and limit our thinking in terms of deliverables. As they say, “if you do what you have always done, you will get what you have always got”. So, it should not surprise us that results we are getting today, are not very different from the past, because that’s the limit we put on our imaginations.

We also tend to believe, that we will continue to sell what we have always sold. What we need to urgently realize that trends change with each passing day. Did you even notice that so many products from our households have vanished over a period of time? Now, a single device called mobile phone has replaced entire categories like alarm clock, transistors, even calculators! If Conventional TVs sold well at one point in time, it will now be difficult to sell one piece in a single month. Boot Cut was a thing of the past and now every single person on the roads wears fitting jeans. We need to mark the changing trends with every passing day, because “if we don’t move forward, we are not stagnant, we are actually moving backwards!”

I have also noticed that a lot of times, we see products with shortage as high potential products – which again is not necessarily true as we do not know and never bother to understand the actual sales lost at that point in time. Maybe that was the optimum number of units that product would have sold. Are we prisoners of the "yoy" syndrome? When "yoy" growth is expected, we try and put higher growth on the better selling product and lower growth on the low selling product. By this, I am not suggesting that past should be completely ignored and quantification should be done away with. Past, in that sense, will always help us have our reality checks. But we definitely need to delink the two and think of them independently.

Can we have some “past challenging” questions and even better answers?

PS: Look forward to your feedback. you can connect with me on twitter via @agrawalsanjeev