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The Virtues of Pattern Matching for your Business

Pattern Matching is about more than crunching data in analytics applications.  It’s about looking for opportunities in quantitative AND qualitative data and personal interactions and then acting on your insights faster and with better execution than your uninformed competitors.  Apple, Uber, and GE are Masters of Pattern Matching.  Your company should be, too.

As a professional strategist, I am obsessed with pattern matching.  Not the kind where you avoid wearing plaids with stripes, but the business kind that lives inside of terabytes corporate data, the personal interactions between people, and the behavior of customers and competitors towards a company.  The companies that do the best job of combining operational discipline with relentless pattern matching almost always win big for three reasons:

  • More and better info earlier. They gain access to better data earlier on market conditions, competitive behavior, customer wants and needs, and internal operational successes and challenges.
  • Organize, organize, organize. They organize information so that they can make good decisions.  There might be 3,000 “facts” in the first few days.  The key task of pattern matching is finding the three things that are most important and then organizing the other 2,997 “facts” underneath. Then a company can make real progress.
  • Act on facts, not assertions. “He said, she said” arguments are all too common.  Ask anyone who has been married for a long time.  Pattern matching solves this problem, because it puts all of the facts in a big sorting hat (yes, there is a business version of that, Harry Potter fans), and delivers an organized, rational data set to make decisions.

Some Examples
Let’s go through two, simple examples:

  • orig ipodApple iPod, iPhone, App Store, and Tablets
    Apple is a world champion pattern matcher.  After resurrecting the Mac, Apple set about making the first iPod. Creative and Rio already built very good music players.  Legal and illegal downloading services introduced the world to digital music. Record labels built their own digital music formats, and PC makers started shipping computers that could “burn” DVDs and CDs.  There were big brands chasing a big opportunity, but only Apple was able to see the pattern in the opportunity and bring together the right products (iPod + iTunes), content sources (record labels), and distribution (the first Apple stores + the web).

Apple organized its resources better than its competitors.  It figured out that the market already existed in the form of substandard solutions from Napster and Real Networks. The bet was that consumers would like to go legal in the quest to buy new music for their new portable devices.  It delivered a beautiful product in the iPod that put 1,000 songs in your pocket – bright white, elegant, durable, and integrated with the Mac (and, later, Windows).  And it figured how to price, package, and deliver new music to consumers in a way that record labels could embrace – albeit grudgingly in some cases.

Apple has taken pattern matching to a new extreme by finding new, huge markets inside of existing ones several times since since the birth of the iPod:

Smartphones – displacing Blackberry by completely changing the definition of what a cool smartphone is.

The App Store (excellent article from Re/code on the App ecosystem) – by looking at how users accessed their applications on the iPhone 1 and on old style smartphones and then creating an app store that now provides over 1 million apps to end users for fun and profit. Beyond the great design of Apple’s phones, it’s the app store that keeps users coming back for new phones.  Every Apple hardware product is now linked to an App Store.

Tablets – rebirthing a category where several companies had failed with reckless abandon since the early 1990s.

  • Uber
    uber
    I used to use taxis almost daily, but now I use Uber, which exists because it identified the bad patterns in the taxi industry and attacked them using technology and great marketing.  Here’s the taxi industry’s bad pattern:

    • The drivers are grouchy and complain constantly.
    • Fares are high.
    • Service is unpredictable.
    • Buying is difficult either because dispatchers can’t take an order correctly or the voice recognition systems don’t work.
    • Taxi company owners care more about the medallions they have under management than their drivers or the people that ride in their cars.
    • Travelers have to learn the ins and outs of different taxi companies in every city. There’s no national brand.

It’s quite a pattern – there in plain sight for anyone to see, except that no one did until Uber came along. Uber is cheaper, the drivers are pleasant, the buying process is efficient and easy, it’s highly predictable, and it’s all available through my smartphone in over 300 cities across the globe.  Plus, if you have a problem with a driver, you can write to them, and they fix it pretty much immediately.  Uber gained first mover advantage and has kept it by building up scale globally and by constantly improving its product.  Now Uber is looking at other transportation-focused markets – like local meal and product delivery – as a way to expand its offerings.  Uber is not simply riding on the success of its first solved pattern.

Pattern Matching and Your Company
Most of my clients are small to mid-sized companies.  They are going a mile a minute, and, in the interest of speed, often ignore the patterns in their own data and daily operations.  Here is a list of simple questions that every business should ask itself – at least monthly and preferably more often than that:

  • Where are my prospects and customers coming from? It goes beyond what’s in Salesforce.  You need to talk to the members of your sales force about the sales cycle and competitive pressures in closing the deal, and you need to look for common tendencies across accounts.
  • What are my customers buying in terms of features, configurations, support, or anything else that’s on the price list? The things that you think are hot might not be.  You need to know what’s most important to your customers in a purchasing decision and in daily use of your products.
  • What are my customers complaining about? Is it a slow drip or a big river of complaints, and what categories do these complaints fall into?  Customers can generally like your products and, as a result, develop workarounds to deal with the more annoying features.  You need to know those workarounds and put fixes in the product roadmap.
  • Internally, how are my key processes working? Am I getting things done faster, cheaper, and with higher quality as my product, processes, and markets mature?  One of the biggest challenges small companies face is moving from brute force, where managers and employees divide and conquer, to systems, where things happen the same way every time for the benefit of customers and the bottom line.
  • Are my managers and employees working well together – particularly across organizational lines? Suppose you have a senior manager that other employees avoid.  Maybe that employee is very good in some technical areas but has the communication skills of an angry badger.  How does this effect the performance of your company in terms of time to market, productivity of other employees, or adding extra costs?

This last question was an interesting one.  I worked for GE during the Jack Welch era.  We seemed to reorganize our division every 12 to 18 months.  One day, I asked the head of HR when he knew it was time to re-org and how it was done.  He said:

Well, I look for patterns in how the business is operating.  Eventually, things get out of alignment.  Market conditions and internal processes change over time, and, all of the sudden, the people we have don’t match up with the jobs we need to do.  That’s when we decide to re-org.  The key thing is to think about the positions and processes we need first.  We have the position descriptions written and put the position titles on the whiteboard. Then we fill in the people and try to make sure that each person matches a position description.  It’s all about the jobs, not the personalities.  If someone is an 80 percent fit, we’re probably okay.  Generally speaking, if you organize around personalities, not jobs and processes, your re-org will fail, and you’ll be at it again in six months.

Yes, we did pattern matching on people, too, and it usually worked out for the best.

Categories: Blog, Business Planning, Strategic Planning

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Peter S. Buchanan
30 Sep, 2015