The Reason Why You Never Want to Make Decisions Based Strictly on Historical Data

It’s a common standard to assume that good business decision making can be validated by obtaining data from current operations. Organizations often fall into a common scenario where they believe that they have made good decisions based because they have:

  • Good information is backed by an authority;
  • Defendable data leading to a reasonable scenario for how things will unfold;
  • A clear plan that works given past history;
  • A strong champion who can mobilize the organization.

For a more specific business example, consider launching a new product. Typically a company will:

  • Get market and customer data from analysts with a good reputation and customer-needs research;
  • Develop defendable assumptions for price, market share, cost, timeline, etc. and put them in a business case;
  • Create a business plan and milestones for executing to win;
  • Rally people around the vision and excite them about making it work.

While most of this is good, 70% of product launches still fail. Why? What we know about the past is not enough to predict the future.

To make great decisions about the future you need to identify the key areas where what you don’t know may impact you. By uncovering your areas of greatest risk and by analyzing them, you ensure better decisions. It doesn’t stop there, as you develop your product you must keep going back to your areas of risk and revalidate that they are decreasing and confirm that your decision still makes sense.

Learn how SmartOrg makes it easy for companies to evaluate their best product opportunities and drive maximum growth.