NUMBER THEORY

Years ago I read the science fiction book “The Hitchhiker’s Guide to the Galaxy” by Douglas Adams. It is a bit wacky but a lot of fun. In the book a computer churns for 7.5 million years to determine “the answer to everything” and finally arrives at the answer: 42. I think about this when I see people who spend most of their time delving into report after report, spreadsheet after spreadsheet to find “the answer”. Life is not one answer thick. It is multi-dimensional and the search by some for one solution to its challenges results in much wasted time, lots of frustration and a disconnection from the realities of the marketplace.
One of the many reasons companies fail is that the leaders lose their connection to the customer. They can become removed from the day-to-day interaction that is so crucial to understanding the needs of the customer. The further removed they become the more the leader may disproportionately rely on numbers. Analysis of this nature can become insular, two-dimensional and result in poor decisions.
There is no doubt that a sole proprietor has more contact and can be more responsive to the needs of the customer-that’s their differentiator. But the larger company with its scale and efficiencies loses much of its competitive advantage if the leadership loses contact with the customer. Indeed, if the leaders choose not to or are not able to spend time with the customers, then they must have strong people and processes in place to assure that they listen and heed the advice of those that do.
It is tempting when leading to discount those you don’t see and work with each day (this sadly can include the customer). This is a terrible mistake. The best way to grow a company is to hire great people, support them with processes and let them run their business. The result can be every company’s dream: Running the front end of the business like a small company and the back end like a big company. A multi-divisional company should take advantage of certain back end efficiencies but they should be kept to a minimum. The intangibles of a company: culture, their responsiveness to the market, their ability and inclination to take risk, the knowledge of their competition, the quality of their people, can all suffer if too much decision making is consolidated to the parent company. In other words, all the things that make a company what it is can be consolidated away and the company is no longer run like a small, entrepreneurial, focused entity. These variables do not show up on one line in a spreadsheet-they show up on every line buried beneath the numbers, good or bad.
Managing primarily by spreadsheet and not understanding the soft issues will cause any company to fail. If the leader judges performance totally on whether a number is achieved without proper consideration given to the circumstances, that leader will make many poor decisions and lose their best people. Meeting quarterly numbers is not a successful long-term strategy. It is a numbers driven strategy which in and of itself is misguided. It wastes valuable resources and adds no value to the customer’s experience, which ultimately is why any business exists.
Numbers are important but must be kept in their proper context and given appropriate weight in the decision making process. It is most critical that leaders understand the dynamics and intricacies of the marketplace and have control over the culture and positioning of their own company. Without this no company can succeed.
Great leaders spend more time listening to their customers and their people than plowing through spreadsheets searching for their number 42.