Trend Spotting: Getting Beyond the Facts
In the late 1960s, the great management guru Peter Drucker wrote that one of the dangers of technology was also its greatest selling pointthe computers ability to quickly and efficiently analyze large volumes of factual data.
IT often lives and dies by fact-based reporting, generating sales reports, accounting reports and reams of transactional reporting. Many would be shocked with Druckers
contention that facts are not where its at.
Not Just the Facts, Maam
The problem with a fact is it is based on a proven or captured historical. If I give you $50 today, tomorrow the transaction is a fact, the proof being the crisp fifty-dollar bill in your wallet or purse. If I continue to give you $50 every day next week, a fact-based analysis will show that, according to the current trends, I will be handing you a bill every day.
While the facts are indisputable, and the trend analysis is mathematically correct, what happens when the $50 stops coming each day? While trend analysis is all well and good, management insight comes when changes in the trends are identified and acted onbefore the new trends settle into the world of the factual.
Some of the greatest innovations in history were early reactions to changing trends, or ideas that created entirely new trends. Rarely has an industry-shaking innovation resulted from a calculated reaction to proven facts.
The Peril of Facts A Prime Example
Consider for a moment the subprime loan debacle that is roiling the global economy, and that many point to it as the beginning of a global economic recession. How could bankers and investors around the world be fooled by such a shoddy investment vehicle? Part of the answer lies in the assumptions that were made on facts and historical trends, rather than looking at how the trends were changing.
Credit rating agencies around the world looked at reams of historical data about subprime mortgage-based investment vehicles, and everything was factually sound. The trend of low default rates and predictable returns bestowed these instruments with impeccable AAA credit ratings. What the ratings agencies did not notice was the new trend of building several investment instruments on the same pool of risky mortgages, essentially manufacturing additional risk.
Looking beyond the facts in this case could have saved banks and investors billions. It may have even prevented a possible global economic decline.
Beyond the Facts
IT is often seen as a bastion of facts, capturing reams of data and issuing reports that number into the tens of thousands across a corporation. While reporting on the past does provide some insight into the future, the savvy CIO should look beyond the facts. Rather than investing in additional storage or increasingly complex dashboards and analysis tools, look for ways to spot changing trends, rather than delve ever deeper into the morass of the factual.
CIOs are uniquely positions to spot the changing trends due to the universal presence of IT in most companies. The CIO may spot a changing trend that is shaping a new reality for Marketing, and can bring this to the attention of Finance or Manufacturing well before the changing trends become facts.
There is untold value in this ability, and it is independent of data warehouses, analytics or dashboards, and can catapult the CIO out of their safe yet boring harbor of facts, into the adventurous waters of navigating trends and outmaneuvering competitors.
Patrick Gray is the founder and president of Prevoyance Group, and author of Breakthrough IT: Supercharging Organizational Value through Technology. Prevoyance Group provides strategic IT consulting services to Fortune 500 and 1000 companies. Patrick can be reached at email@example.com.