Written By Brendan Barrow
There has been much talk about big data and how valuable it is.
Analysing vast volumes of data can show historical behavioural trends that can be used to make future predictions.
While some businesses can exploit big data and use it effectively, the majority of Small to Medium Businesses (SMBs) cannot.
They can, however, exploit their small data and win big.
Digital solutions dominate our business thinking as over the last decade, the digital channel has become completely dominant. Digital is not just a media channel; it is the channel for virtually all information.
Our mindset seems to be that all our problems have a digital solution, and they do not.
One of the most valuable pieces of knowledge in business is Pareto’s principle, which is that roughly 80% of outcomes come from only 20% of likely causes.
This relationship means it is possible to make approximately an 80% improvement by often solving only a few causes.
Busy owners, CEOs, and managers can put this to use every single day.
Cost of inefficiency
The cost of inefficiency in a business is often estimated to be 20-30% of company turnover. That is not a typo!
The wasted resources of cash, time, materials, human labour, and overheads can dwarf a company’s net profit.
This hidden inefficiency represents a massive opportunity for SMBs.
What is the small data?
The “small data” is information you probably have or can get very quickly in your own business, with little or no cost.
It is data that can very quickly point you in the right direction and indicate if you are improving or not.
Small data is readily available, easy to generate, cheap, and usually very reliable because it is simple.
It doesn’t even have to be digital; for example, in a warehouse, a simple tally chart might quickly illuminate what’s happening.
Small data does not need a Digital Transformation initiative to access it.
“Small data is pretty much the opposite of big data!”
How to use small data
Use small data to identify those problems that increase your costs or reduce your customer’s experience. Selecting issues that will improve your cash flow are also an excellent choice.
A quick Pareto analysis will show which problem you should pick.
Small data will continue to show whether you are improving or not.
Typical persistent irritations
Here are some typical issues:
- shipping things to the wrong address,
- using the wrong version of a document,
- issuing credit notes that destroy your cash flow,
- shipping the incorrect item,
- waiting for another department,
- people waiting for things or information
Business improvement sprint
Forget elaborate ideologies or highly structured business improvement systems that require in-depth training plans and a large budget.
These are for big businesses and may not be suited to the resources and dynamics of SMBs.
Your improvement tactics need to fit your business culture and size.
You need some knowledge and skills in a few simple techniques that can enable significant business improvement.
Pareto applies here too-20% of improvement tools and techniques will cover 80% of possible needs in an SMB.
Focus some smart, internal management on short sprints to solve specific issues.
Conduct a more guerilla-style business improvement approach, such as:
- Pick an issue to resolve quickly.
- Find or collect data only for a short period to identify the causes.
- Solve the top cause(s) only.
- Check it worked with a simple KPI or data collection.
- Move on and pick the next item.
- Avoid issues that become protracted or over-complicated
- Big projects still need tackling, but not in this sprint way.
10 Tips for success based on experience
- Do not try to solve all the problems; you will quickly get bogged down.
- Keep it quick and simple- aim to identify and solve a problem in 28 days.
- Think of improvement as a guerilla approach using a sprint method.
- Avoid teams dragging things out and over-complicating issues.
- If you have the resources, get multiple projects going.
- Use team members from different functions, experience, and seniority. Mix up team members to get the best results. People with no prior knowledge of a problem often come up with the best solutions.
- Solve problems where they occur, not in a manager’s office.
- Short, stand up meetings where issues happen are the most effective. Keep a quick tempo.
- The goal is simplicity, speed, and effect.
- Nothing is perfect, so accept gains where and when you can get them and keep moving on.
Hard and Soft Gains
Improved profit and cash flow are the “hard” evidence of progress. Enhanced customer experience, staff engagement, team dynamics, and more creative culture are excellent “soft” gains as well.
Don’t wait for big data; you already have all the data you need!