To scale, a company needs to use its resources most efficiently and improve usage of information available to further increase productivity. These days, every company and professional enthusiastically talks about data, insights, and process rigor. But if we take a deeper look, is it true that small- and mid-sized companies are generally strong in this arena? There is a huge opportunity to get beyond the basics.
Objective & Analytical Culture component of the Growth Framework is the single biggest opportunity for maturing companies. Many companies face challenges around defining and setting strategy, planning, and operational execution due to an immature analytical culture. It doesn’t require more investment; it just needs an open mind to internalize the true nature of process, data, and objective analysis. While the Leadership Approach component advocates concepts senior executives should drive to set organizational behaviors, this component recommends topics that every employee, should internalize and embrace.
The Maturity Model
The Turnaround Science Objective & Analytical Culture Maturity Model is shown below. As a company scales, it has to evolve from the left side to the right side. It is critical to note that this evolution just doesn’t happen automatically; nor does it happen because senior executives and employees talk about it. Moving from left to right involves senior executives and employees internalizing several core principles; demonstration of behaviors associated with those principles moves a company from left to right.
An organization matures from ‘Undefined’, which is a very poor way to run an organization, to ‘Strategic’, which is an aspirational state for small- to mid-sized companies. The optimal level companies should reach quickly is ‘Insightful’ because the underlying principles are prerequisites for sustainable growth. The more time an organization spends on the low end of the maturity model, the harder it will be to improve because the company will have to spend exponentially more time digging itself out of past sins, which include broken processes, bad data, and lack of company-wide understanding of analytical principles. These are extraordinarily hard problems to solve as the scale of an organization increases.
During early stages of growth, an organization can grow strongly by remaining an immature analytical culture because linear scaling tactics can work on a very small scale; but this is a recipe for future challenges. What does linear scaling tactics mean? Further explored under Commercial Strategy: How to Sell, these tactics throw people and money at the problem. Organizations can scale to a relevant amount of revenue and number of employees while masking major gaps in its analytical culture. However, this is analogous to quickly picking the longest obvious path of a maze, hoping to reach the prize at the center, which is sustainable growth. Often, such short-cuts get us lost in the maze and only make it harder to work methodically towards the center.
Critical components that are foundation of analytical behaviors are detailed in the articles listed below.
Objective & Analytical Culture: Core Principles
- Process Culture: Without one, growth will stall.
- Process Design Principles: Organizations should get beyond myths about process cultures and embrace a few simple principles to develop processes to scale effectively.
- Technology is not a substitute for process: Technology always follows process. The reverse is a lazy attempt at organizational design.
- Understanding Data: Ignoring information biases and broken underlying processes often mislead organizations when interpreting data.
- Analysis vs. Reporting: Analytically mature organizations will dedicate its resources to forward-looking analyses and limit decision-making paralysis due to overuse of reporting.
Many other critical topics need attention and discussion. Examples include:
- Leading vs. Lagging Indicators: Consistent use of leading indicators is a sign of a company with “Insightful” maturity level.
- Developing a Streamlined Analytical Organization: Increasing analytical maturity has high return on resource investment.