Rarely does the ouster of a company chief prompt such admiration for the ousted.
But when Groupon founder Andrew Mason got the boot last week and wrote a letter to his employees about it, nearly everyone applauded him for his candor. “I’ve decided that I’d like to spend more time with my family. Just kidding – I was fired today,” Mason declared, enumerating some of the company’s recent troubles, including its plunging stock price. He added that that “the events of the last year and a half speak for themselves” and that “as CEO, I am accountable.”
If there was one part of the letter that caused some head-scratching, though, it was a passage toward the end, about customers and data. “If there’s one piece of wisdom that this simple pilgrim would like to impart upon you: Have the courage to start with the customer,” Mason advised. “My biggest regrets are the moments that I let a lack of data override my intuition on what’s best for our customers.”
What did that mean, precisely? Lou Hoffman at Yahoo Small Business called it “muddy” and asked, “Is he saying the right amount of data should override intuition? Should big data override one’s intuition?”
While we agree that the passage is ambiguous—and will therefore refrain from guessing exactly what Mason meant—we did notice that he was referring to a phenomenon that Peter Drucker called “common” in swiftly growing businesses: lack of crucial information.
“Growth always requires data beyond those furnished by the accounting system—data on what goes on outside the business and especially data on what goes on in the marketplace,” Drucker wrote in The Changing World Of the Executive.
The trouble is, unless you’ve planned for that problem, you can be out of luck. Drucker cited the example of a rapidly growing consumer goods business that announced a pending price increase and saw its sales spike by 50% and then abruptly dry up the following year, forcing the firm into bankruptcy. The missing data? Consumers were buying at their normal rate, but “the distributors had stocked up in anticipation of the announced price increases and were holding back new orders until they had worked off their inventories.”
Perhaps intuition could have helped steer the company through such an information gap. But the better approach would be to avoid a dearth of data in the first place.
“The small- and medium-sized business that expects to grow therefore needs to ask, ‘What additional information do we need to have real control and to know what really goes on in our business? What are real results in the business and what are real costs?’” Drucker wrote. “And it needs to develop this information well before the time at which its absence can cripple it.”
What do you think caused Groupon’s decline in performance over the past year?