I was reading what the Wizard had to say about the pitfalls that can happen when companies follow the siren call of data. He is absolutely correct. Data tells the journalistic story of what has happened. History. What occurred. What went right and what went wrong. Looking at data does not tell us why things happened, what could have happened or what is about to happen.
To hear that story you must listen closely around the edges of the data, because it is a story that is only whispered.
Data sprinkles clues about what is possible and why things happen, but only if you listen to the edges. The best data people on the planet are conductors that hear the missed note of the clarinet and ask, “What just happened there?” These conductors look at data as though it were a painting in the style of French Impressionism. Fuzzy edges. A picture worth exploring, a story being whispered in the background… below the noise. But you need to listen.
Let me give you two examples.
I walked into a national sporting goods store in early December to buy a balaclava for snowboarding. It’s a $30-$40 piece of clothing to keep your face warm. Often lost. Regularly replaced. I live in a ski community where 3.5 million people visit each year. The manager, a buddy of mine, told me that one of the KPIs they measure is overstocking. They want to eliminate need to discount product to move it at the end of the season. Well, on Dec 5th, when I went to make my purchase, they were already out of stock! And with no more coming. He hit his KPI perfectly. “No overstocking here.” Look directly at the data you see good news. “No overstocking.” What is the data whispering at the edges? What about the millions of tourists who are on their way to play in the snow?
Again, thee data says sold out. But a “conductor” of data asks, “On what date were we sold out?” As a Data Impressionist he asks, “How much more could we sell if we had the inventory?” He contemplates what could have happened.
What is the story whispered on the edges of data?
Here is what is happening in HVAC today. National brands are reporting a great year. Sales are up. The marketing is working. Better days are ahead. I am going to guess that just about every HVAC company is planning for the growth is to continue. “See, it is right there in the data.” But is it?
Data tells us what happened. Not why.
But there are clues on the edges.
In a normal year, most families are at work – not at home – during the hottest part of the day, 5 out of every 7 days. How about this summer? We’ve been at home. We noticed the A/C was falling behind. Do you think that could stimulate a bit of demand?
Next question: Have consumers reduced spending on bars, restaurants, entertainment and travel? Does that leave some extra cash for home improvement so that you make your castle feel less like a jail? Sprinkle in a little COVID stimulus cash and that rattling air conditioner is about to be replaced with a new one.
Ok, last question. Has it been really hot this summer? In most of the country – yes.
You are trapped at home, it is hot, you have extra cash and the AC seems to be falling behind during the hottest part of the day. Air conditioning repair that might have been put off is suddenly a top priority. The thing that we might have addressed next year or even the year after, we’ve decided to do NOW. Did we just rob Peter to pay someone else? Did future spending simply get moved up a year or two?
Let’s fast forward: Is there a chance that people will be back at work next summer rather than at home, sweating it out? (That COVID subsidy is gone. Now we’re spending money on entertainment, restaurants, travel, etc.)
If your business relies on snowbirds – will they be coming this winter?
HINT – no chance: they are staying home this winter.
The data “says” we are growing. Last year was good. This year was great. “Look at the trend line!” Extend that line and make projections for next year. More growth. Pop the champagne cork. Strike up the band.
Wait, did that clarinet sound funny to you?
That trend line assumes that history will repeat itself:
(1.) It will be unusually hot again and
(2.) everyone will be home during the hottest part of the day and
(3.) there’ll be extra cash to spend.
Knock just one of those things down and growth is harder to accomplish. Instead of a tailwind we’re facing a headwind. If you are in the south, add the snowbird factor and things get even more dicey. But the truth is in the data if you how to listen around the edges. Weather: data. COVID cash: data. Spending habits: data. Where people spend time:data. Tourism trends: data. Sold out in early December: data. But none of that is on the spreadsheet.
The important data is always at the edges, singing a silly tune.