Does your Insight team make up the numbers?
Of course if doesn't! We're all professionals! We pride ourselves on disciplined research and rigorous analysis.
But is it always as straight forward as that? And do corporate Insight teams lose something by placing a premium on precise calculations?
At the March Insight forum in London, and again at the online forum we held in April, the IMA's Julia Joskey talked about the trade off we all have to make between perfect insight and agile decision-making.
We would all love to have perfect data on how and why consumers in our market become customers of our organisations. But that's often not possible, and our business leaders need to make decisions using the best opinion we can provide.
How can we bridge the gap between perfect data and agile decision-making?
We believe there are 4 key aspects that every Insight team should explore:
1. We need to understand the difference between accuracy and precision
As a society we tend to put a lot of faith in precision. We have seen lots of examples of this during the coronavirus crisis where statistics such as the number of people tested, infected or hospitalised have been quoted in very precise terms.
And precision is often valued above everything in our companies as well, and rightly so in departments like Finance, Operations and HR. We wouldn't want our salaries to be estimated, would we?
But some customer and market issues do not lend themselves to precision, and we need to decide when it’s better to quote a less exact figure than supply a spurious level of precision. This is sometimes because of the issues themselves: how consumers feel, for example, why they act in a particular way, the likely size of a market for a new product before it’s launched. But it can also be because of the partial or imperfect data available to us to solve problems.
In many instances an accurate range of outcomes is far more useful in Insight than a precise number that will almost certainly never be right.
2. We should become experts in ‘back-of-an-envelope’ thinking
Before we do any analysis or research, it’s helpful to do some rough calculations to understand the size and scope of what we’re dealing with. The IMA’s founder, Steve Wills, calls this the BOEING technique: Back Of an Envelope INtelligent Guesswork. It relies on facts (where we have them), assumptions (where we don't), and a logical way of combining the two to produce estimates.
The key thing is to be completely transparent about our assumptions, and to encourage others in our organisation to challenge them.
3. We have to learn how to handle big numbers
Human beings do not handle big numbers very well; after a certain number of zeros our brains find it diffcult to visualise the size of the number. But Insight is so often all about perspective: if we can understand the context, like an even bigger number, then we can find the best way to interpret new information.
Every day we face situations in our organisations when we see people react to numbers without having an appropriate perspective and sense of scale. I think this is particularly the case for customer and market data, because Insight teams tend to be the only functions within many companies that look at these. So let's never provide our stakeholders with a big number without also providing some useful context.
4. We have to practice our mental maths skills and find shortcuts
People commonly make mistakes in mental arithmetic. It’s pretty easy to get a decimal point in the wrong place or miss a zero off somewhere. But the good news for all of us is that it gets easier the more you practice, especially if we focus on getting to a reasonably accurate answer, fast, rather than a really precise one.
One technique for making our mental maths easier is explained by Rob Eastaway in his great book, Maths on the back of an envelope, which Julia recommends.
How do these approaches help Insight teams to have more impact?
They help us to develop better perspective, enhance our agility, and give us greater confidence and credibility with decision-makers. They are an invaluable aid to problem solving,
So does your Insight team make up the numbers? If it doesn't, it should. It's a key skill for all corporate Insight professionals.
Would you like to know more?
Julia Joskey has recorded a 30-minute presentation on this topic which members can watch by clicking here. There is also a 10-page Insight leader guide, IMP103: How to make up the numbers, which is now available on our website. If your employer is an IMA member and you have an online account then you can read it now.
If your organisation is not yet a member, or if you are not sure if you have an account with us, please click here to contact us. Corporate memberships are now available for as little as £179 a year.
Chief Executive, IMA