Wednesday, November 26, 2014

Of measurement and measures

You have to love the fact that we are obsessed with numbers and calculations.  Just about everything revolves around them and rare is a zikr that doesn’t mention a number and its significance. 

Since measurement is the business of attributing numbers to objects and events, it was no surprise that Moula advised us all to measure and be measured in everything we do in his waaz mubarak on Syedi Hasan Feer Shaheed’s urs, on Moharram 23, 1436:

Moula’s kalemat are meant for all walks of life but for now let us apply them to the world of business especially since we are witnessing a scramble to be data driven across enterprises of all sizes and kinds.  

The importance of measurement

First let us be clear that Moula is not talking about measuring because it is fashionable to do so these days.  Decades before the current data revolution our Moulas were advising and preparing us to profit from science and technology and to learn to be measurement-oriented to advance ourselves.  In an address to MSB on Saffar 8, 1427 Syedna Mohammed Burhanuddin elucidated:

As Burhanuddin Moula states, the use of modern tools and technologies––provided they are beneficial and in sync with our ethos––provides a solid and fitting foundation for an education system.  And that foundation, as Taher Saifuddin Moula underscored, includes the learning and use of exact sciences which, according to the dictionary, are defined as “field[s] in which accurate quantitative techniques are used and there are accurate means of testing hypotheses and repeating results.” 

It is hard to dispute that a foundation built using scientific principles and calculations is more robust than one that is built using approximations, anecdotal evidence, and untested beliefs.  Burhanuddin Moula illustrated this concept with an example addressing architects and engineers although the universality of the message will not be lost on anyone:

Similarly, a business in which fundamental decisions are made in a scientific fashion, i.e., using accurate assessments and knowledge derived from facts and data analytics, always perform better than businesses in which management relies on intuition, opinion, and unverified theories about customers, competitors, suppliers, products, emerging technologies, and so forth.  This idea is captured in the following infographic:


The business of measurement

For an entrepreneurial people, looking to start and expand our enterprises to capitalize on the relationship between risk and return, it is especially important for us to be data-driven as we assess the competitive landscape, evaluate new business ideas, introduce new business lines, launch new products, target new customer segments, and enter new markets.  In another bayan Burhanuddin Moula, talks about this:

Moula’s advice is timely.  We live in a world where the business landscape continues to get more competitive, businesses models are continually challenged, and businesses are adapting owing to globalization, disruptive innovation, and creative destruction. 

It is therefore more important than ever to realize that business does not have to be a zero-sum game.  A constructive and pragmatic approach is to productively differentiate oneself from the competition instead of in a cut-throat manner (for example through self-destructive means such as price wars or unethical activities such as spreading misinformation about competitors, etc.), and to take on calculated risks. 

Interestingly, being data driven achieves both goals simultaneously.  Businesses that employ data analytics to run themselves not only use that approach to differentiate themselves from their competitors, they also outperform their competitors as shown below:

On this topic world-renowned entrepreneur and philanthropist Bill Gates says:

A business has increasing profit as its primary goal. Management decides the actions—such as improving customer satisfaction or adding new product capabilities—that will drive profit and then develops a system to measure those on a regular basis. If the managers pick the wrong measures or don’t do better than their competition, profit goes down. Business magazines and business schools analyze which measures companies use and which companies have done particularly well or poorly. Other companies benefit from these analyses, learning from the performance of their competitors which tactics and strategies work and which don’t.

A natural corollary to the above arguments is that a measurement-oriented approach in business is forward-looking in two crucial ways. It (1) allows you to capture emerging opportunities and prepare for upcoming challenges, and (2) helps you learn from past experiences and mistakes to avoid them in the future.  As Moulana Ali said: 

Simply put, the role of measurement in business is to quantify and track progress, business opportunities, and potential challenges, and use those measurements to profitably grow revenues and customers and manage operations, costs, procurement, compliance, and in the process distinguish yourself from your competitors.

The measurement of business

It has been argued that not all businesses can be measurement-oriented because not all have either the data or the tools or the capabilities to analyze them. Unilever can spend millions collecting and analyzing its sales data to understand consumer purchasing trends. But how is Shabbir bhai Sabuwala selling soap at a corner store in Sidhpur to effectively collect data and measure his performance to forge ahead?

A few simple questions can help Shabbir bhai capture the power of measurement and data:
  • What are Shabbir bhai's monthly sales by soap brand?
  • What are his profits by brand?
  • What brands are most in demand? 
  • What brands does he not carry and why?
  • What brands are not carried by other stores in the area and why?
  • Are there months in a year when sales are chronically lower?  What can be done to boost sales during that time?
  • Describe customers who buy the brands that are (i) most (ii) least profitable?
  • What do customers consider when buying soap? Brand name, smell, color, size, ingredients, celebrity endorsements on packaging, shape of bar or bottle?
  • Customers purchase soap for personal nazafat. What other products can Shabbir bhai carry that complement and enhance this experience and allow the customers to more effectively achieve their objective of staying clean?

Answering the above questions will give Shabbir bhai a scientific and measurement-oriented view of his business.  The information gleaned will help him decide what soap brands he may want to focus on, what customer segments are most profitable, how he can differentiate his product offerings, and how he can expand his product portfolio, and use his knowledge to sell more product and more profitable products to his customers.

In conclusion

Moula’s timeless words in Denmal about measurement were a reminder that he aims to keep us in sync with the best that the modern world has to offer and to keep us on top of the game be it deen or dunya.    

Organizations across the world are investing time and money in using data to measure their success and counter their challenges.  The return on investment is that they always outperform their competitors.  Peter Drucker, one of the great management thought leaders of the twentieth century, couldn’t agree more.  As he famously said:

What gets measured gets managed.