July 6, 2011

Agile businesses don’t predict, they respond

It’s easier to be flexible today with access to real-time data

David SparkHere’s some of my coverage from the Future of Web Apps in Las Vegas. I was covering the event for Dice and Intertainment Media.

As much as you plan, as much data you collect and analyze, and as much as you predict, you never can be 100 percent correct. Heck, you’ll probably be correct just a small fraction of the time. As more variables are out of your control are part of your business and solution, the less you can predict the future.

‘Everybody has a plan until they get punched in the face.’
— Mike Tyson

Instead of trying to predict the future, why not have a business and production model that can respond in real time, asked Tony Haile at the Future of Web Apps conference in Las Vegas. Haile is the general manager of Chartbeat, a real-time web monitoring application.

Don’t pour all your money and effort into trying to create better prediction models. Make the problem of an uncertain future not matter, Haile said, quoting Taiichi Ohno, the father of the Toyota Production System.

You can make the future not matter by being able to react quickly in real time. It’s possible to do this now with easy access to and filtering of real-time data.

Haile used the example of the clothing industry that has a six month production cycle from concept to being available in retail stores. The whole industry is trying to predict what people will be wearing in the future. That’s a costly process (research and analytics), and risky (they still have lots of misses, which means it costs a lot more).

Conversely, clothing manufacturer Zara realized the way to conquer this problem is to simply stop predicting and rather have a faster production timeline. They reduced their process from the industry standard of six months to 15 days. So they no longer have to spend money on predictions nor do they have to take gambles. They simply just look at what people are wearing, and produce that.

Monitoring real-time data is a great idea, but you actually need to have a production plan in process to actually take advantage of it. Real time data isn’t worth a damn if you can’t respond in real time, said Hale.

Personally, I’ve seen way too many companies have this chain of command for any kinds of communications. For certain industries, like securities, there are rules and regulations that prevent quick responses without official reviews. If you’re in a non-review-required industry, not a self-imposed-review company, then you must have a real-time response plan in place. You do that by giving your staff the authority and responsibility for making decisions in real time for themselves.

As Mike Tyson said once, “Everybody has a plan until they get punched in the face.”

Don’t predict. Simply have a better system to respond.David Spark, a partner in Socialmedia.biz, helps businesses grow by developing thought leadership through storytelling and covering live events. Contact David by email, follow him on Twitter and Google Plus or leave a comment below.

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