Wednesday, October 24, 2012

The role of emotion and momentum in business

As I sit here watching my beloved Detroit Tigers get thrashed by a seemingly inferior Giants team, a lot of thoughts have gone through my mind. After the initial anger and disappointment subsided, I began to reflect on how this game represents a pattern that we often see in the business world. For the second time in 6 years, the Tigers entered the World Series following a sweep in the ALCS. In both cases the team that they faced was coming off a 7 game series.

Conventional logic would dictate that the Tigers would have the advantage in that situation, having had time to rest and set up their rotation. However, in both cases they were soundly beaten in Game 1, showing obvious rust due to the time off. In 2006, the Cardinals carried the momentum from that game to an easy series win. I, along with my fellow long-suffering Tiger fans, can only hope that the series plays out differently this year.

So what are the parallels to this situation in the business world? How do the same emotion and momentum that give one team so much advantage over another on the playing field affect competition in the business world? As a business intelligence professional, the question I ask myself is, "Can we come up with a way to accurately measure the momentum of a company or the emotion of its employees?"

Many in the business world consider momentum in terms of revenue growth. "Up and to the right" is the pattern that they are looking for. You hear terms like double-digit growth thrown around with regularity. Startups are trying to catch lighting in a bottle and make a big splash, while larger companies are trying to build market share and fend off competitors. Sales numbers tell part of the story but, at least in the technology industry, real momentum comes from creating innovative products and services. As a result, any accurate analysis must take a holistic approach looking at the company as a whole and extending out to the market in general.

Innovation within your company can only be truly measured by comparing to the other companies in your market space, and must provide ever-increasing value to your customers in order to achieve the desired result of increased profits. For software companies, the agile development methodology offers a myriad of key indicators to track innovation within your product based on the rate at which new features are being introduced. However, the true value of that innovation lies in creating features that entice new customers to purchase your product and add value for existing customers to increase their loyalty.

Emotion often goes hand in hand with momentum in both sports and business. Just speaking with an employee of a company with positive momentum will often get you excited about what they are doing. The energy of a growing company becomes infectious and encourages employees to put forth fanatical effort to keep the ball moving forward. Customers often feel this in their associations with such companies, noting that the employees are willing to do whatever it takes to create happy customers. On the other hand, stagnant companies often result in dissatisfied employees whose lack of enthusiasm for what they are doing is readily apparent to those with whom they interact.

In business, just like sports, the numbers often do not tell the whole story. The goal that we need to focus on is creating better metrics that take into account the idea of momentum and emotion. Such metrics would help us to quantify the elements that play such an important role in the short and long-term success of any company.

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