What value do you place on information?

For example, if you received a hot racing tip from someone ‘in the know’, how valuable would that be to you?  Perhaps the information might persuade you that this time it would be a question of investing rather than gambling your money.  Me, I always manage to select the 3-legged horse in the race so, being a cautious fellow by nature, this information might, just might, tempt me to have a little flutter.

To people parachuted into occupied Europe during the last war to work with the Resistance, some information would have been a matter of life and death.  It was their lives that were on the line, and those of hundreds, if not thousands of others who depended on the information they obtained.  Such people took huge personal risks and went to extraordinary lengths to get hold of information.  It was that valuable.

To the man who earns his living by buying and selling stocks and shares, good information is what will determine whether he does ‘nicely nicely thank you’ or simply scratches a living.  In this case, the efforts he’s willing to make to get hold of this information will be determined by how ambitious he is to succeed.

Let’s return to the original question: what value do you place on information?  

On a business level, how much is information about how your own mushroom business and the industry in general worth to you?  How far are you willing to go to get hold of it?  Perhaps a more important question to answer is what value should you place on it?  

The message coming from across the Irish Sea (this is the market I know best) is that we should all handle such information as if it were gold dust.  

If you’re not a confirmed Information Addict already, take a look at what the supermarkets in the UK have been doing in the last few years.  They have been fighting their way through an information revolution.

We are all familiar with the supermarket Loyalty Card.  At Sainsbury’s it’s called the REWARD CARD.  At Tesco, the CLUBCARD.  Over here, Dunnes call it the VALUE CLUB.  Some people think that these cards are simply hi-tech versions of the old ‘Co-op Divi’, or computerised Green Shield stamps.  The basic idea is similar: “For every Pound you spend, we’ll give you . . .” (normally the equivalent of one penny).

Loyalty Cards are good for us supermarket customers, but they are much more valuable to the supermarket itself.  That’s where their real value lies.

That little bit of plastic represents one of the biggest opportunities ever for retailing.  Why?  It’s quite simple, really, when you think what happens when you use it.  Before the advent of the Loyalty Card, all shoppers were simply Mr and Mrs Anonymous to the supermarkets.  I might go to the supermarket occasionally, or I might go more frequently, even regularly.  I spent money with them.  But they knew nothing about me, not even my name.  Now they know everything  -  well, not quite!  For example:  

· They know how many times I shop each week and what I buy each time.

· They know whether I take advantage of the various marketing ploys (Buy One Get One Free, 3 for the Price of 2, Buy X Get Y Half Price, and the rest).  And if I do, they know if my actual consumption of the product increases, or whether I simply buy more when the price is right.  

· At least one of the big supermarkets knows how long I queued to pay at the checkout on each visit.

· They also know where I lived.  They know it wasn’t part of Millionaire’s Row!  Profiling is the name of the game today.  They build up a picture of each customer, much of it from the card Application Form, and then fit that customer into one of the Customer Profiles.  The supermarkets use these profiles to test the success of their latest advertising and promotions with the different customer types.

All that, and more, from that little bit of plastic.

What value have the supermarkets placed on this information, and how far have they been willing to go to get their hands on it?  

The supermarkets have invested millions of pounds sterling on new computer systems for this very purpose.  They have been forced to construct what are called in ‘computer-speak’ Data Warehouses.   The supermarkets were suffering from information overload; literally they were swamped with data. There were millions of snippets of information coming in from their checkouts every day on what you and I and thousands of others were buying, but they had no way of making head nor tail of it.  They needed a new computer system that would take all this checkout data, analyse it, organise it, and match it to the Customer Profiles on file.  The system would then store it away in special ways so that management could ask questions about the business and get the answers based on all this information (this is what a Data Warehouse does).  That needed an investment of many millions of pounds to accomplish.

Was it worth that size of investment?  Undoubtedly yes.  Some analysts attribute the change in the UK Supermarket League Table a few years ago in part to the slowness of one particular supermarket to introduce the Loyalty Card.  This supermarket chain was not able to move quickly on this because (I understand) their checkout computer systems were of an older vintage than those of their main rival.  So while the rival introduced the Loyalty Card and started to capitalise on the marketing information coming out of its Data Warehouse, this particular supermarket was left months behind.  That cost them market share.  As a result, they moved down the Supermarket League Table and their rival steamed past them.

If you’ve stuck with me this far, you might be wondering what all this has got to do with you, a mushroom grower in Co Wherever?  Small fry in comparison to the big boys!  

Small fry you might be when compared with the supermarket boys, but I would suggest that that is the only significant difference between you and them: you’re small, they’re big.  If you can forget the question of size for the moment and just compare business with business, your mushroom business needs to be managed just as well as the supermarket’s if your business is to survive, then thrive and grow to maturity as theirs have.

To manage any type of business you need to know what’s going on inside that business.  If you don’t really know what’s going on, how can you do anything about it.  Gut feeling, scribbles on the back of fag packets, these are not ideal tools for managing a business today.  A manager needs real facts and figures, not if’s or maybe’s, to manage a business successfully in the global markets of today.  What happens in France today or Poland tomorrow affects you and your business.  It wasn’t too many years ago when you could almost ignore what was happening on mainland Europe.  Now you can’t.  

With the introduction of the Loyalty Card the supermarket management teams have found a hugely rich source of detailed, factual information about their business and their customers.  They don’t have to guess; there are hard facts to go on when making business decisions:  

· Did that 3 For The Price Of 2 Offer work last month?  What was the percentage increase in the sales of that product during the promotion?  You don’t know!  Then ask the Data Warehouse.

· Did the average waiting time at the checkouts improve last month?  So was the checkout staff training scheme a success or not?  Who is now the Weakest Link at the checkouts?  The Data Warehouse will be able to tell you.

This is where you can learn from the supermarkets. Information is seen today by the supermarkets as absolutely key to their success.  They use it to drive their businesses forward.  Like the supermarkets, your business is either going to grow and mature, or it’s going to slow down.  It certainly won’t stand still.  If it doesn’t develop, it is going to start to slip behind other businesses that are forging ahead.

One thing is for sure.  The mushroom market itself isn’t going to stand still over the next few years.  It is going to develop and change as market forces change. Will EU consumption of the mushroom expand over the next few years as the EU expands? Are we going to see downward pressure on prices in the next 12 months? What impact will the labour market have?  What about the long term prospects for oil and how will that impact the business?

Questions, questions, questions!  Like an athlete, a business needs to be fit and lean if it is (a) to cope with whatever the market might throw at it and (b) be in a position to capitalise quickly on any opportunities the market throws up.  

Enough!  I think we’ve reached information overload ourselves!  Perhaps it might be a good idea sometime to take this a step further and consider what information we should be gathering, how to go about gathering it and how to use it once we’ve got it.  Till then, it’s worth writing down on a piece of paper exactly what you know about your business, and on another piece what you don’t know but would like to or need to.

If you’re not already an Information Addict, why not become an Information Convert  -  for the sake of your mushrooms!


Postscript

Can you imagine going along to the Finance Director of a large supermarket chain and asking him for £6million for a new computer system!  His first reaction might be “I thought we had enough of those computer things already”.  His second would certainly be: “If I spend this £6million, what will I get in return?”  He is talking money, not airy-fairy things!  

If the person asking for the £6million told him that the whole purpose of the exercise was to raise the average customer spend per visit by £1 sterling, do you think he’d be happy to spend the £6million?




Brendan Howling, a Computer Consultant to Small Businesses, is based in Holycross, Co Tipperary.  He has been working with mushroom growers in the area for the past two years to develop new management computer systems for independent mushroom growers.
  
Telephone: (0504) 43067 or 087 786 0665.