Monday, March 22, 2010

March madness lessons applied to business

I like the NCAA tournament and I try to fill out a bracket every year. Brackets make the games a bit more interesting. A few years back, I decided to try a little experiment: I changed my bracket approach from guesses and gut feelings to pure data and analytics.

If I looked at nothing but data and based my picks on how each team matched up statistically, what would happen? I gathered all the stats for every team in the tournament and created a formula based on the data to predict the winner of each game.

The results: While the data did predict some close games and upsets, it failed spectacularly. Probably the worst bracket I’ve ever completed.

Believe it or not, my little experiment is remarkably similar to some businesses. I’ve met business leaders who run their companies exactly like I filled out my bracket. They rely solely on data, caring little about the inner workings of their business. They couldn’t tell you who does what or how things work. They care about data.

Now, I am in no way saying business intelligence and data should be replaced with gut feeling. A good business intelligence solution is crucial to the success of a company. What I’m saying is this: Don’t rely solely on data. Don’t lock yourself in your office with your data and ignore everything else. Don’t get so lost analyzing your business on paper, that you forget the business itself.

Let’s look at my bracket example again: For my bracket to have been successful, I would’ve needed to actually follow the teams in the tournament beforehand to get a good feel for how they play. Then, I could complement my knowledge with data to get a deeper look at each team.

So, to business leaders, I say this: Don’t hide in your office and run your business solely with statistics, though they are important. Get out on the floor for some actual business experience. Learn more about your employees and what they do. Costco’s CEO (#4 on the list) does a great job of this. Zappo’s CEO sits in a cubicle with the rest of the employees.

How about you?


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