I use an app to track the calories I eat and the more challenging ones I have to burn. One of the premium features of the app analyzes behavioral trends and provides insight into patterns that may (or may not) be helpful in achieving your objectives. One such insight recently flashed on my screen as an attempt to get me to subscribe to the premium version. It said something like this: “we’ve noticed that on days when you drink more coffee you tend to eat less fat and fewer carbs". It then recommended I drink more coffee as a way to lose weight faster.
Now, I’m not saying that coffee doesn’t help, but the app failed to recognize that this pattern usually starts developing on Mondays and abruptly ends on Fridays, precisely aligning with the work week. My reduced caloric intake during that time results more from a busy work schedule and a chronic lack of time than from my coffee consumption. Work simply prevents me from sticking to a regular meal plan. This constraint usually tapers off on week-ends when the caloric intake trend unfortunately reverses itself.
This is a good example of a conclusion that may be technically valid, but doesn’t tell the whole story or provide the best advice for moving forward. Correlation doesn’t always imply causality. More complete analysis would suggest a better plan: keep the coffee (I would anyway) but make time to eat and exercise every day. A much more effective and sustainable strategy for the long term.
The same carefulness in analysis and recommendation should be applied to the business world as well. When faced with challenging situations, many companies resort to across-the-board spending cuts. This may succeed at making the business look healthier for a while. But the long-term impact of such measures is likely to be less encouraging as all functional areas are impacted indiscriminately and irrespective of their relative contribution to the health of the company. More careful analysis may suggest a realignment of expenses and investments away from areas of inefficiencies and waste, and toward activities that create value and support long-term objectives. In other words, don’t starve the business, and instead build the operational muscle it needs to transform successfully and sustainably.
Over-simplified analysis based solely on pro-forma financials or superficial benchmark comparisons rarely allow for the real picture to emerge. Conclusions can be drawn quickly based on benchmarks and ratios that fail to take into account the specifics of the situation and the reality on the ground. Expert analysis will consider a variety of co-dependent factors - financial, yes, but also historical, cultural and other environmental and human elements - to recommend a course of action that makes sense and is uniquely relevant to each business situation.