Richard Thaler, father of “Nudge Theory” won the 2017 Nobel Prize in Economics. His achievement was to articulate and formalize, what successful leaders have always known, albeit often intuitively – That as a leader, one can influence and nudge one’s team to do better than “the expected/average outcome”.
The question is not whether its possible to nudge your team to increase revenue and reduce wastage (Obviously it is, and you are aware of it). Instead, what I want to explore is how do you do it and more importantly can it be done in a formal, measurable, and sustainable way?
Take target setting in sales as an example. While this should be a data driven exercise, there are organizations which take the conventional route of accepting organizational “aspiration” as the target for the next fiscal/quarter while ignoring ground realities. Often these companies end up burning cash in search of an elusive target & unsurprisingly create discontentment amongst work force. In addition, there might be product categories and geographies which remain untapped and sub optimally monetized.
Slightly more mature organizations rely on statistical forecasts, enforced top-down, which trickle down after multiple modifications at various levels. Although better, it is still problematic because by the time the targets reach the bottom of the pyramid they have been changed and influenced by multiple biases and subjective buffers.
To chart a marine analogy, such processes and decision making in the organization is like the movement of a convoy of ships, following the ship in front, with the lead ship tracing the north star using a 19th century sextant while the competing fleet is using GPS and Radars. Oh, and if the competitor decides to bring a submarine to do some reconnaissance (read ‘Data backed real time insights’), its just too bad.
Let me paint an image of how mature organizations work instead.
Mature organizations are data first enterprises, which have separate “Top Down” and “Bottom Up” forecast. While the “Top Down” forecast is glued in to regulatory changes and draws inspiration from macro phenomenon, the “Bottom Up” forecast relies on localized event and draws inspiration from ground level business inputs. Imagine the efficacy of the inputs available to stakeholders during consensus planning and S & Op meetings to come up with a harmonized strategy. Further, near real time weekly forecasts are made available to the marketing team to fine tune approach and step in as necessary.
SCOPT Analytics’ cloud-based Demand Forecasting platform (DEM-SENSE) enables organizations to scale the maturity ladder by doing all the above and more. Not only do we generate separate Top Down, Bottom Up and Middle Out forecasts, all these are available for the next Quarter, Month and down to the week level to facilitate need based intervention and strategy tweaking in real time based on tangible evidence. The platform provides a rich set of dashboards and a friendly UI as additional aids.
Further, the platform places significant emphasis on business inputs and local ground realities which it can capture & integrate into the forecasting engine.
If the competing fleet is armed with GPS and Radars its only fitting that you show up to the party armed with Machine Learning and Artificial Intelligence backed technology.