Many years ago, as a young district sales manager, I attended a sales meeting at the national headquarters of the company I worked for at the time. One of the executives held up a new guitar multi-effects pedal, and proclaimed “gentlemen, I just ordered thousands of these, and you’re going to sell them at $199.” A collective groan was heard from the assembled team, as the market for this type of product was moving at $149, and there was nothing ground-breaking in its feature set to warrant such a price premium. I raised my hand and politely asked what the rationale would be for making such a large commitment to our supplier. The answer was telling – this seasoned veteran of the musical instrument trade rubbed his belly in a circular motion and proclaimed, “I feel it right here.” Six months later the market had moved even lower – we were forced to blow them out at a loss, to be sold at a $99 street price.
The three elements of good decision making…
This experience helped form my own theory of good decision making, which combines data, observation and experiential knowledge. Clearly the example above was based solely on intuition, a “gut feeling” so to speak, but not much else. As the expression goes, even a stopped clock is right twice a day, so when I hear someone proclaim how their decades of experience are the primary reason for a business move, I cringe and think back to that day. Later in my career when I was promoted to a senior sales position, it was revealed that other similar circumstances had occurred, and the liquidation of aged inventory ensued.
Data is a rear-view mirror…
I am a proponent of being data-driven; after all it is helpful to know where you have been to chart your course. But data alone, by definition, only looks backward, and none of us can tell with any certainty what the future holds. If you doubt that, just think about 2020 for a minute. Data mining and analysis are a key component of developing a sales and marketing plan but must not be used in isolation. Observation is imperative, meaning that you “listen to the channel,” talk to customers and end users, and utilize market intelligence to understand the competitive landscape. Experience is valuable, but to me it is more about understanding pattern recognition than simply “been there, done that.” If you have lived through years of product lifecycles, from launch to closeout, this is an example of experiential knowledge.
Putting it all together…
Depending on the objective and risk/reward of any business decision, using a combination of these three elements will guide you, and ideally protect against catastrophic results. It is not necessarily an equal third of data, observation, and experience; rather an adjustable blend depending on the situation at hand. One should not ignore data, disregard what is happening around you, and simply decide something because it “feels good.” Fortunes have been lost, and companies brought to their knees by such folly, so please keep that in mind during your next sales planning session or product purchasing meeting.