Models Are Useful Until They Are Not
Matt Church of Thought Leaders Global recently stated “Models are useful until they are not.” This comment has provoked some thoughts for me.
This statement is probably best illustrated by the financial services industry which has lead to the global financial crisis of 2008 and 2009 relied on some investment models, but unfortunately could not see when they were of no use.
In business (be it small or large) we can get trapped into relying on a model of business, a model of how they service their customers, a model of how what services and products they provide and don’t realise when they are no longer useful.
Within a business people can get trapped with respect to their understanding of various aspects of their business eg. customers. They may have three years ago had an exact picture of what their customers looked like, where they shopped, how they shopped, how they behaved, what the decisions were that they were making, but is that model of their customer still the case today? Or have the customer’s behaviours changed and altered in some way that the business needs to adjust for?
Models are useful until they are not.
When do we recognise when the model that we are operating under is no longer useful? The business needs to have a culture of constantly looking for new information that would enhance their way of operating or mean that they need to change what they are doing. The management of the business needs to have the attitude of being able to be willing to explore all possibilities, to watch the information, but they need to be willing to measure and review the necessary information. If the information that you are looking at is the profit and loss statement and balance sheet, then that’s useless; it gives you no understanding of whether the model under which you are operating needs to change. You need to have a complete and detailed understanding of your customer and exactly know what they are doing to determine whether the model you are operating under is useful.
So models are useful until they are not. Is the model that you are operating under still useful?
By the way I am a Mentor at Thought Leaders Global. If you want to know more individual or organisational thought leadership then please contact me.
Photo:- by woodleywonderworks
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