A few weeks ago I was lucky enough to attended a talk by the Bank of England providing an overview of the UK, its economy and outlook.
Now whilst the discussion itself was very interesting (the latest report here), what I also found illuminating was the process the BoE uses to gather its information for forecasts, and the lessons we can learn in the rest of the business world.
The Bank of England process
As you would imagine they have teams of statisticians gathering data from multiple sources, with this data being fed to bank economists to explain performance and forecast trends.
However they also have a team of regional agents, who roam the country observing economic conditions directly. These agents speak with businesses, systematically recording what they hear and gathering ’the word on the street’.
It turns out that these indicators are actually excellent ‘leading’ indicators of economic changes, often providing information and insight before there is sufficient data to be seen in official statistics.
True in the rest of the business world
We also have teams of data analysts gathering data from multiple sources, presenting this information to management teams to explain performance and trends. It is often the role of the Business Intelligence team these days.
However, how many of us also have ‘agents’ in each department, ‘systematically’ recording information that doesn’t come from these traditional data sources?
Expanding on traditonal measures
Unfortunately for many of us we continue to largely remain reliant on traditional metrics and forms of measurement. We are left analysing this historical information to make data based decisions, trying to divine future performance. Yes, we may hear customer feedback, but this is often anecdotal rather than robust systematic data input.
Just like the Bank of England, conversations with customers, suppliers and employees, recorded correctly, can provide additional valuable insight… and aid in this decision making process on a more timely basis.
An easy place to start
Whilst many companies do already have customer listening programs, these are typically targeted at improving customer satisfaction levels.
However structured correctly these can also provide an insight to economic conditions, changes to the market, competitor product development, outlook on future sales. They should form part of your leading indicator metric suite.
Setting up your process
The BoE uses a points based system, however the key is ensuring that the program is defined, structured and supported.
Once you have support and the data has started to be gathered it needs to be reviewed not just in terms of what has happened or customer satisfaction, but also the wider view of what could this mean for the future, as indicators for other areas of the business.
Gathering anecdotal data and building leading indicators is never easy. It feels there is a suspicion; an air of disbelief in the approach and it is always easy to return and retreat to the world of traditional metrics.
The value add
Whilst these traditional metrics are undoubtably invaluable, developing these additional data sources can yield valuable actionable data to help stay ahead.
After all if the Bank of England can do it, is there value to ‘double down‘ on a similar approach for us all?