The below post was originally shared by Mark Rupert (Head of Business, Atlan) on LinkedIn.
There is a heightened focus on profitability at a lot of companies right now, so I thought I would share this story. It’s about how an insanely talented analyst found that our company threw away over 100 miles (yes, miles) of wood in one year.
1. Sometimes it can be really hard to get good insights
2. You get what you measure
3. Great analysts are worth their weight in gold
The company I worked for sold art, and I took over the framed art business in 2008. Worries about a recession led to a hyper-focus on profitability. Our investors encouraged us to act quickly on cost cutting and layoffs. About half of the GTM team was let go. Those of us who stayed took on more responsibility.
Sometimes it can be really hard to get good insights
Our framing analyst started looking into cost. What made this especially hard was we had all of the data about our website, our sales, and the art that we sold in one system. But the data for our manufacturing operation was in a different system.
Eventually he found a way to bring the data together and the results were astonishing. We wasted over half of what we bought. You could lay the moulding that we threw away down on the freeway from San Francisco all the way to Sacramento.
How could this happen? Industry best practice is 90% utilization. Why did we throw away half of our wood instead of just 10% of it?
You get what you measure
About a year before I took on this business, the company had hired a very senior leader of quality. This leader was able to make traction quickly. We established processes for measuring NPS and driving quality improvements in the warehouse. And we saw results.
In addition to NPS, the head of our manufacturing operation monitored and reported on labor hours regularly. But nobody was doing the same for COGS. We couldn’t even measure it – it was in a different system! So, when the workers on the floor were given a choice between 3 things: going fast, making great quality, and using moulding efficiently – they chose the first 2. And if it was just easier and faster to throw away wood, nobody would ask them twice about it.
Great analysts are worth their weight in gold
In addition to stitching together 2 data systems and doing some brilliant work to analyze the data, this analyst faced another hurdle: internal politics. The analysis made one of our executives look bad, and he immediately put FUD out there that it was wrong. Sound familiar? This is not always in the analyst job description but unfortunately, it’s often part of the job.
This is why the main takeaway is that great analysts truly are worth their weight in gold. They are unbiased, honest, insanely curious, and relentless in their pursuit of insights and the truth. Thank you! (You know who you are.)