Pattern Matching = Big Wins

As a professional strategist and business planner, I am obsessed with pattern matching.  Not the kind where you make sure that you don't wear plaids with stripes, but the business kind that lives inside terabytes corporate data, the personal interactions between people inside of a company, and the behavior of customers and competitors towards a company.  The companies that do the best job of combining operational discipline with relentless pattern matching almost always win big for three reasons:

1. Mo' better info earlier.  They gain access to better data earlier on market conditions, competitive behavior, customer wants and needs, and internal operational successes and challenges.  
2. Organize, organize, organize.  They organize information so that they can make good decisions.  When I meet the CEO of a company for the first time, I'll learn many things - what the company does, how it's organized, who its customers are, and how much money it makes, for example.  I might learn 3,000 "facts" in the first few days.  The key task of pattern matching is finding the three things that are most important and then organizing the other 2.997 "facts" underneath. Then I - and the company - can make real progress.  
3. Act on facts, not assertions.  "He said, she said" arguments are all too common.  Ask anyone who has been married for a long time.  Pattern matching solves this problem, because pattern matching lays facts on the table, puts them in a big sorting hat (yes, there is a business version of that, Harry Potter fans), and delivers an organized, rational way to make decisions.

Let's go through some simple examples:

The Capital One Vikings

• Capital One - has become a credit card and banking behemoth, not because of a great tagline, but because it used data better to find the perfect credit card customer - the guy or gal who almost always carried a small balance but periodically paid it off.  Low risk, dependable, and not quite perfect - a difficult customer to find and a big winner for credit card companies.

Creative Zen Nomad

Original Apple iPod

• Apple - is a greatly admired company, but it wasn't always that way.  After Steve Jobs and his team resurrected the Mac, they set about to make the first iPod.  Lots companies in the consumer electronics, recording, and computing industries had the same idea.  Creative and Rio built music players.  Legal and illegal downloading services proliferated,  Record labels built their own digital music formats, and PC makers started shipping computers that could "burn" DVDs and CDs.  There were big brands chasing a big opportunity, but only Apple was able to see the pattern in the opportunity and bring together the right products (iPod + iTunes), content sources (record labels), and distribution (the first Apple stores + the web).  Apple organized its resources better than its competitors.  It figured out that the market already existed in the form of substandard solutions from Napster and Real Networks, The bet was that consumers would like to go legal in the quest to buy new music.  It delivered a beautiful product in the iPod that put 1,000 songs in your pocket - bright white, elegant, durable, and integrated with the Mac (and, later, Windows).  And it figured how to price, package, and deliver new music to consumers in a way that record labels could embrace - albeit grudgingly in some cases.  The idea was a great inspiration, but the execution was great organization by hundreds of people over many months and years.  Apple is now the largest seller of music in the world and sells 75 percent of all portable music devices worldwide.
• GE - I worked for GE for almost six years in 1990s.  It was a highly factual company.  We were guided by a few key metrics that varied by division but basically fell into five categories:
• Sales performance.
• Profitability.
• Relative position versus our competitors.
• Market size and drivers.
• The performance of our people.

These metrics were clear.  We all understood them.  Every year, GE rolled out one or two metrics or qualitative objectives and took one or two away.  Our bonus plans were largely tied to these simple metrics, so most people felt like they were rowing together in the same boat.  You could connect your job to the performance of your group, division, component, or company as a whole.  15 years later, many multi-billion dollar companies haven't mastered this trick.  Sometimes, simple is better than complex.  

Most of my clients are small to mid-sized companies.  They are going a mile a minute, and, in the interest of speed, often ignore the patterns in their own data.  Here is a list of simple questions that every business should ask itself - at least monthly and preferably more often than that:

• Where are my prospects and customers coming from?  It goes beyond what's in Salesforce.  You need to talk to your human sales force about the sales cycle and competitive pressures in closing the deal, and you need to look for common tendencies across accounts.
• What are my customers buying in terms of features, configurations, support, or anything else that's on the price list?  The things that you think are hot might not be.  You need to know what's most important to your customers in a purchasing decision and in daily use of your products.
• What are my customers complaining about?  Is it a slow drip or a big river of complaints, and what categories do these complaints fall into?  Customers can generally like your products and, as a result, develop work arounds to deal with the more annoying features.  You need to know those work arounds and put fixes in the product roadmap.
• Internally, how are my key processes working?  Am I getting things done faster, cheaper, and with higher quality as my product, processes, and markets mature?  One of the biggest challenges small companies face is moving from brute force, where managers and employees divide and conquer, to systems, where things happen the same way every time for the benefit of customers and the bottom line.
• Are my managers and employees working well together - particularly across organizational lines?  Suppose you have a senior manager that other employees avoid.  Maybe that employee is very good in some technical areas but has the communication skills of an angry badger.  How does this effect the performance of your company in terms of time to market, productivity of other employees, or adding extra costs?

This last question was an interesting one.  We reorganized about every 12 to 18 months.  I would always ask the senior HR people how re-organizations were built.  The answer was:

We put the position titles on the board and then fill in the people and try to make sure that the people match that position description.  Generally speaking, if you have to work around too many weaknesses to accomplish the function, the person or group won't succeed.

Yes, we did pattern matching on people, too, and it usually worked out for the best.