Perceptions of Data Adequacy Vary Across Managers

 

In the final article of our 4-part series on the results of our 2014 Survey of Use of Data in Barbadian Organisations, we delve deeper into managers’ perceptions of data adequacy. The first article in this series looked at The Relationship Between Data Practices and Financial Performance; the second considered Attitudes Towards External Information, while the third analysed How Companies Use Available Data.

In this final instalment, we looked at how the perceptions of data adequacy varied depending on managers’ levels, roles and functions. We found that there were noticeable differences when assessing their level of satisfaction with data availability and data usage, but there was little variation when considering their level of satisfaction with the perceived impact of data on their operations.

To read the entire article, click here.

If you’d like to see more of this type of research, join our AE Group of Influencers and let us know.

How Companies Use Available Information

In Part 3 of our 4-part series on the results of our 2014 Survey of Use of Data in Barbadian Organisations, we investigate the extent to which corporations use the data available to them to inform decision making. The first article in this series looked at The Relationship Between Data Practices and Financial Performance, while the second considered Attitudes Towards External Information.

In this third instalment, we found that respondents focused largely on internal financial and sales data, and there was significant room for improvement with respect to the use of economic, industry and online data. Furthermore, there was a noticeable difference in the data preferred by large companies versus small companies.

To read the entire article, click here.

If you’d like to see more of this type of research, join our AE Group of Influencers and let us know.

Attitudes Towards External Information

In Part 2 of our four-part series summarising the results of the 2014 Survey of Use of Data in Barbadian Organisations we investigate the attitudes towards information on the external environment. For the first article in this series please click here.

In Barbados, the main sources of external information are Government institutions and industry associations, with only limited information available from third party suppliers.

We found that respondents were, in general, dissatisfied with available information.

The financial and energy and renewable energy industries, however, were relatively more satisfied with their market information. Respondents were also willing to pay third party providers to improve their access to information on and their understanding of their external environment.

To read the entire article, click here.

If you’d like to see more of this type of research, join our AE Group of Influencers and let us know.

The Relationship Between Data Practices and Financial Performance

The results are in!

During the second quarter of 2014, Antilles Economics conducted its first Survey of Use of Data in Barbadian Organisations and the results are ready! The survey had three objectives:

  1. Provide a baseline assessment of how both internal and external data is used within Barbadian organisations
  2. Determine if there was a relationship between data practices and financial performance
  3. Determine if there were differences in how data was used in different industries and types of organisations

In our first of four articles summarising the results we discuss the Relationship Between Data Practices and Financial Performance. We have been taught that our products and services should be designed to meet consumer demands, and that our analysis of our environment should consider all of the external factors impacting our business. But we often fall short of this ideal.

Our survey results suggest that these failings have a bottom-line impact and that improving our access to and usage of data can improve our performance.

To read the entire article, click here.

If you’d like to see more of this type of research, join our Group of Influencers and let us know.

No One Invests in Companies Anymore

I’m sure that you have heard entrepreneurs in the Caribbean complain that they have a very difficult time sourcing financing. In fact, a World Bank survey for Barbados found that 41% of small businesses stated that access to finance was a major obstacle for their business, compared to 30% of their counterparts across the world.

Over the years we’ve done a number of studies looking at this problem and I’ve come to believe that no one invests in companies anymore. Does this mean that investors are no longer lending money to businesses? Of course not. Corporate loan growth remains a substantial portion of all loans in the Caribbean. So if investors aren’t lending to businesses, why are corporate loans growing? The answer: investors are lending to people.

Lenders of all types have noted that the main determining factor behind whether a loan application would be approved is their management team. Equity prices have long moved in response to changes in senior management personnel, clearly demonstrating the value that investors place on people.

Yet, small business owners frequently pitch their products and develop business plans that spend very little time demonstrating why their management team is capable of executing the plan. We hire our teams out of convenience, preferring to bring in people who we know rather than taking the time, effort and money to hire the best people for the job. We often don’t develop our own business skills, focusing instead on product development. It is no wonder that investors don’t part with their money, we have not demonstrated that we, not the product, deserve it.

Solving Problems With Insights

I believe that often to solve a problem we need new insights. But what are insights? I’ve looked up this word in a number of different sources and this is what I came up with:

Insights are the hidden nature of things; the cause and effect relationship that is not obvious to the naked eye.

insights

That’s a bit abstract, I know, but my main takeaway from all of my research is that for someone to have had ‘insight’ into something, they must have seen something that the rest of us don’t see when looking at the same situation. What they see may not necessarily be the insight itself, but the situation may be sufficiently puzzling to warrant research until you discover the underlying cause: the insight.

I found that Freakonomics presented a good example of this. The authors described a situation where juvenile crime was declining despite experts’ beliefs that it would increase. The experts concluded that crime was declining because the economy was booming. The authors, on the other hand, studied the same data and concluded that the economy had boomed before and juvenile crime did not decline so something else must be at work. What they found was that years prior, legislation was passed that allowed women to have abortions. This was particular important for women that were drug addicts, or were social outcasts for other reasons, whose children often were the ones becoming juvenile criminals. The country had now reached a point where these children would be juveniles, but since they were never born, there was a significant decline in potential criminals. Without this insight, we may have believed that the solution to crime was to grow the economy.

So how is it that experts looked at the same data as the authors but did not get the same insights? My theory is that sometimes we see what we expect to see.

Consider this example: profits in your business are declining at the same time that the economy is in a recession. All over the news everyone is blaming lower profits on the decline in economic activity. So, you conclude that we’re doing the best that we can given that the economy is tanking. You looked at your data and you saw what you expected to see: a relationship between lower economic activity and lower profits. Unless the economy improves and your business does not, you may never dig deeper.

Or what about tourism in Barbados? We were told back in 2009 that the tourism industry was declining because of the global economic slowdown. We said okay, that makes sense. But here we are in 2014, the industry is still struggling and the global economy is not. What now?

So how do we know that what we believe to be the cause of a situation really is the cause? Test your assumptions. You may be right, in which case you can speak with more conviction. You may be wrong, in which case you dig deeper.

The unfortunate thing with this solution is that it assumes that you have the data you need to test the assumption. In our business example, if your business does not collect information on revenue by product, location, sales agent, etc. it may not be possible to see if for example you lost a key sales agent and that is why profits are falling. And if you only collect information on tourist arrivals by market and there is no further segmentation into customer preferences, you may never discover that closing a key hotel was the main reason why the number of tourists declined.

The data challenge is not only what is collected, it is also the length of time for which it has been collected. Few companies can boast that they have detailed customer and accounting data from the time they started the company. Some systems simply do not allow that type of storage. It’s hard to pick up patterns with short histories. Suppose your company existed back in 2002 when the world’s economic growth slipped in the wake of 9/11 but you have no data from that far back. How would you be able to tell whether profits slipped during the last recession too?

And so, here are my conclusions:

  • ‘Insights’ can only be ‘insights’ if they are correct
  • We can only prove that they are correct if we conduct the necessary tests
  • We can only test our assumptions if we have data
  • And that brings me to my fundamental challenge: how do we get new insights in the Caribbean with no data?

Barbados Tourism: Changing Seasonal Patterns

As a tourism-dependent country, understanding the demand for the Barbados tourism product is key to developing strategies to keep the industry vibrant. One aspect of that demand is seasonal patterns, i.e. when tourists visit Barbados.

If you take a poll and asked random people on the streets of Barbados which months tourists visit, they will probably make fairly accurate guesses. After all, Barbados is a small country and you definitely notice when there are more tourists on the island. But when you run a tourism-dependent business or you are a national tourism planner, even fairly accurate guessing can cost you millions of dollars.

For example, suppose you believe that there is an increase in tourists between December and April so you charge your highest rates during that period and drop them thereafter. Wouldn’t it pain you to know that more tourists are actually coming in November than in December and you were potentially losing out on all of that income? Or you work at the Barbados Tourism Authority and you timed your marketing campaign to ensure that potential tourists considering a trip in December were exposed to ads for Barbados, only to find out that they have already booked because they prefer to travel in November. And let’s not even consider the potential disaster of having all of the country’s attractions in renovation mode because you assumed that the country was in an off-peak period.

Seasonality matters. And it changes. But when last have we checked? Furthermore, have we ever checked by market? Suppose all of the British tourists are coming in December, all of the Americans in January and all of the Canadians in February? The total would reflect the expected pattern, but the source market behaviour would be very different.

So, in our typical curious fashion, AE had a look at seasonality patterns for Barbados. We found that for the four main source markets – UK, USA, Canada and CARICOM – there have been changes in seasonal patterns over the last 33 years. These changes would have implications for the timing of major expenditure such as marketing, staff count and renovations.

To find out more about how seasonal patterns have changed, click here.

If you’d like to see more of this type of research, join our Group of Influencers and let us know.

AE 2014 Research Agenda

Research is a big part of what we do at Antilles Economics. It is also one of the least understood areas of our business. In this post, I’ll provide more details on our 2014 research agenda.

We have split our research agenda into two categories: research for clients and research for knowledge building.

Research for Clients

Our research for clients falls under our Research Service and caters to clients that require more in depth, customised research. Prospective clients would outline their research needs and we would form a team and determine an approach to answer their questions. Clients therefore drive our output. I’ve noted below a sample of past topics researched for clients:

  • Determining the optimal organisational structure for a non-profit organisation
  • Determining the impact of legislative change on demand for pharmaceutical products
  • Estimating the economic impact of climate change
  • National financial stability analysis

To learn more about how to become a client, you can contact us at 246-253-4442 or

Research for Knowledge Building

Our research for knowledge building attempts to add to the body of literature on a topic of interest. Our usual outputs are journals and other peer-reviewed articles. But in 2014 we have decided to also make reports available to the general public on our website and via email to our followers. We have three main themes in our 2014 research agenda: Green Business Opportunities, Exploring the Use of Data and the Evolution of the Demand for the Caribbean Tourism Product.

We’ve been researching on the green economy and the economic impact of climate change for years. In fact, Winston has published a number of papers on the topic and was one of the main contributors to the Green Economy report for Barbados published in 2012. In 2014, we will switch our focus from the national impact of a green economy to the business opportunities inherent in shifting towards more environmentally conscious economic activities.

The second big theme for 2014 is the use of data in organisations. Every organisation collects statistical information, but not all optimise its use. Furthermore, many organisations do not systematically source external data. We thought it would be insightful to determine the extent to which data informs decision-making and prevailing attitudes towards data.

When we were developing our tourism forecasts, we noticed that in some markets, seasonality and demand have evolved. This shift has implications for how organisations dependent on tourism structure their operations. For example, maybe the timing and/or focus of large marketing campaigns should be adjusted. Or maybe temporary increases in staff are required at times outside of the traditional winter season. Once we observed these shifts, we were determined to understand more.

For this type of research, we would also welcome partnering with other organisations on topics of mutual interest.

AE Group of Influencers

You can also let us know what you would like us to add to our 2014 research agenda by joining the AE Group of Influencers. In keeping with our goal to be responsive to the needs of our clients and followers, we introduced the group in our first post of 2014. It’s a fabulous way to direct the reports produced by AE. Not only is it free, but it gives participants a confidential way to ensure that the questions they have on their market or profession are answered.