How to Avoid Death Spirals in Your Small Business
Why trusting data over your intuitions can be life-or-death for your company
Recently, I came across this article in Air & Space Magazine.
“On June 26, 2007, while on a training exercise off the Oregon coast, Major Gregory D. Young of the Air National Guard flew his F-15A fighter into the Pacific Ocean. The $32 million aircraft was destroyed and the pilot killed. There was no distress call, no attempt to eject, and no apparent aircraft malfunction. Young, 34, had 2,300 hours of flight time, more than 750 hours of it in F-15s.”
What had happened? How did Young, with all of his training and experience, crash his plane into the ocean at 600 mph?
It turns out what Young experienced was something pilots call the “death spiral.” Also referred to as the “graveyard spiral” or “suicide spiral,” it describes what happens in an aircraft when the pilot latches onto a false horizon (for example, a cloud bank) instead of the true horizon. The pilot begins to trust their own feelings and intuitions over their instruments. “This is what feels right,” they say to themselves.
This happens even with the most seasoned, experienced pilots, especially when they’re in bad weather conditions that obscure any visual points of reference.
According to an investigative report, the spatial disorientation that Young experienced “caused him to misperceive his attitude, altitude, and airspeed. As a result, [he] was clearly unaware of his position and impacted the water.”
This is what happened on July 17, 1999, when John F. Kennedy, Jr. went into a death spiral and flew his plane into the Atlantic Ocean off the coast of Martha’s Vineyard, Massachusetts.
The Air Safety Institute has a video dramatization of what happens in a typical death spiral. It’s called “178 seconds to live,” based on a University of Illinois study that found it took on average 178 seconds (just under 3 minutes) to lose control into a death spiral.
Losing Your Horizon
Why am I talking about death spirals in the Humanlytics blog? Well, because as a business leader, you are the pilot (or at least a co-pilot) of your business. And driving a business without monitoring analytics is like flying a plane in bad weather without monitoring your instruments.
I know that sounds dramatic. But deciding whether or not to be a data-driven business can literally be a life-or-death decision for your business.
At this point, we’ve talked to more than 100 small businesses about why they aren’t as data-driven as they’d like to be. Many of these business owners will say something like, “I’ve been in this business for a long time. I don’t need data to tell me how to run my business. Our strategy is good enough, and I have more urgent things to think about.”
Well, our intuitions often fail us, no matter how real they feel. This is exacerbated for early-stage small businesses and startups, which operate in what Eric Ries calls “conditions of extreme uncertainty” — not unlike the cloudy or inclement weather conditions when it is most critical for pilots to trust their instruments over their intuitions.
In this article, I will outline how the principles of piloting a plane in bad weather conditions using flight instruments apply to driving a business using data analytics tools.
There are 2 ways data can help you fly a plane or business:
1) Knowing Where You Are: An instruments panel or dashboard helps the pilot stay in touch with reality
2) Adjusting Your Course: Flight computer systems continuously tell the pilot how to correct their course
(1) Knowing Where You Are
An instruments panel or dashboard helps the pilot stay in touch with reality.
The first, most basic way data can help a business is the same way an instrument panel helps a pilot — by telling them what’s really going on out there.
The instrument panel is like a metrics dashboard. It tells you mission-critical information about the state of the aircraft: fuel, altitude, airspeed, direction, etc. You need to know these basic metrics just to avoid crashing the plane and to keep it in the air.
In the same way, a metrics dashboard tells you the essential data points for keeping your business afloat every day: profits, gross revenue, cost, new customers, churn rate, NPS, etc.
In both cases:
- You must check your instrument panel constantly. In fact, in cloudy weather conditions, you have to fly the plane solely by looking at your instruments, not by trusting your eyes or sense perceptions.
- As such, the data has to be updated in real-time. Knowing your direction and altitude from one hour ago is not very helpful in steering the plane.
If you’re not checking your dashboard, you’re out of touch with reality, no matter how how much experience or subject matter expertise you have in your industry. Specifically, you need data to stay in touch with:
1) Your customers: if you’re not in touch with your customers and your market, you’re at risk of building products and solutions that nobody will pay for. This is possibly the most common pitfall for new entrepreneurs.
2) Your industry: not staying up-to-date with your industry means that you’ll fall behind your competitors. How do you know if your KPIs are doing well without comparing them to industry benchmarks? How do you know you’re doing well compared to competitors if you’re not tracking how your market share and market size are changing? How can you identify strengths, weaknesses, opportunities, and challenges in the next 5–10 years without doing quantitative research about new trends, innovations, and best practices in your industry?
3) Your company: Do I have a sustainable business model? Am I building the right product or service for the stage my company is in right now? Should I pivot my product strategy? You need data to answer any of these questions in an evidence-based and logical way.
Only when you look at the cold, hard numbers can you be truly honest with yourself and your team. That’s the only way to avoid the “death spiral” of self-delusion.
Check out this past article if you want to learn more about how to steer your business using lean analytics and OMTM (the one metric that matters right now).
(2) Adjusting Your Course
Autopilot systems continuously tell the pilot how to correct their course.
A small business owner must be as methodical and intentional about adjusting their course as a pilot. In order to do so, you must constantly iterate through the following 3 steps:
1) Decide on your destination: set clear, specific goals in the form of OKRs (objectives and key results) and KPIs (Key Performance Indicators). You must track these OKRs and KPIs on a regular, recurring basis with your team. Learn more about setting measurable, trackable, and data-driven team goals here.
2) Check your instruments to see if you’re on course: All airplanes are off course 99% of the time. As Brian Tracy points out, the “purpose and role of the pilot and the avionics is to continually bring the plane back on course so that it arrives on schedule at its destination.” You should do the same.
3) Constantly make course corrections: Just as a pilot faces uncertain weather conditions, from thunderstorms and turbulence to headwinds and wind shear, you will face unexpected situations where you need to adjust your course.
This is essentially Lean Startup’s build-measure-learn cycle applied to aviation.
Having a dashboard to know where you are and where you’re going is necessary for steering a plane or a business, but it’s not sufficient.
In order to effectively adjust, having, accurate, up-to-date information is the first step. However, you also have to know how to adjust your course based on that information. In other words, you don’t just need insights — you need actionable insights.
Past instrument panels only offered basic metrics such as altitude, airspeed, and cardinal direction. But now, with advances in aviation computing, most of the calculations and data processes are abstracted away from the pilot and performed on the back-end.
This allows modern Electronic Flight Instrument System (EFIS) to display only the most actionable information to pilots. The role of the pilot has shifted — and continues to shift — from driver to systems monitor (i.e. troubleshooting to make sure nothing goes wrong).
As the FAA explains regarding the information design of Electronic Flight Deck Displays:
“To enhance pilot performance, a means should be considered to de-clutter the display. For example, an attitude indicator may automatically de-clutter when the airplane is at an unusual attitude to aid the pilot in recovery… by removing unnecessary information and retaining information required for the flightcrew to recover the airplane.”
This is why we’re building the first iteration of our Google Analytics web tool. Essentially, we want to build the modern EFIS (Electronic Flight Instrument System) of web analytics for SMBs. We want to abstract away as much of the analytics and statistics as possible, so that what’s presented to the end user is actionable insights.
This tool will not only give you the right information. Like a GPS or navigation system, it’ll also tell you what to do with that information; that is, how to get from Point A (where your business currently is) to Point B (where you want your business to be based on your KPI goals).
Autopilots and Self-Flying Planes
But beyond more sophisticated dashboards, the real innovation of modern flight systems is the “autopilot.”
Eventually, we want to use AI and machine learning so that our tool can effectively automate digital marketing consulting.
Yes, our tool will tell you how your business is doing, and also deliver actionable business insights through a guided user interface for analysis. However, the future iteration of our tool will use all our data from past business cases to automatically decide which analyses to run. In other words, it’ll know where to look and how to “slice and dice” the data for the most high-impact insights.
But before we get ahead of ourselves, we are focusing in the next few weeks on releasing, testing, and perfecting the first iteration of our prototype. Please shoot us an email at email@example.com if you’re interested in testing the tool with your website data for free!
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This article is produced by Humanlytics. At Humanlytics, we build tools for SMBs that not only help them answer their business questions and track metrics in real time, but also tell them what questions they should be asking in the first place — all with the goal of teaching them how to implement solutions.