by Jonathan Monk, Managing Director at Most Consulting Group
The business world is a complicated place. At any given time, your company’s performance is influenced by various factors in both local and national economies. The business world’s inherent volatility is further exasperated in the cannabis industry – where opportunity always seems to be counterbalanced by excessive risk.
To find business success today, entrepreneurs pay careful attention to data related to consumer behavior, sales performance, and competitor analysis. While this logical approach to business seems like a surefire road to success, many people feel there is more to the story. Some of the most iconic entrepreneurs in history have followed their intuition as opposed to data.
Whether you are operating a new startup business or managing a well-established company, it’s always a good idea to reassess your approach to decision-making. In the cannabis industry and beyond, it is worth asking yourself: “should business decisions be based on data or intuition?”
Trusting Your Gut for Business Decisions
The notion of “trusting your gut” extends far beyond the business world. In fact, for time immemorial, people have trusted their instincts to ensure survival. As we have evolved into the modern world, people apply their gut instincts when making difficult business decisions.
Whether it be in the tech industry or the cannabis space, modern society celebrates visionary risk-takers who disrupt the norm. Of these impassioned entrepreneurs, there is perhaps no better example than Apple Founder Steve Jobs. The website Business.com quotes Jobs as saying, “You have to trust in something, your gut, your destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”
One of the exciting elements of intuitive decision-making is that this approach sometimes leads to excessive risk-taking. Importantly, in the business world and gambling, the mantra “the larger the risk, the larger the reward” rings true. Therefore, following your gut is an excellent method if you are looking to disrupt the cannabis industry with a game-changing product or service. This approach certainly paid off for Steve Jobs with Apple products such as the iPod, iPhone, and iPad.
Using Data for Decision-Making
As the legal cannabis industry continues to mature, we amass data on critical elements such as consumer behavior, business trends, and investor relations. Even more, as we carefully track the performance of companies around the nation, we uncover a good deal of data on what makes successful cannabis businesses “tick.”
Looking at the cannabis industry of 2021, there are near endless datasets that can be acquired in developing a logical roadmap to success. In an industry built on the unstable foundations of hyper-localized legalization and ever-changing regulations, this hard data often serves as a guiding light in the volatile waters of startup culture.
Data-driven decision-making also has its fair share of high-profile supporters. According to the Harvard Business School website, Google, Starbucks, and Amazon have relied heavily on data to develop their businesses’ essential parts. These fact-based business decisions have led to successful real estate acquisitions for Starbucks and industry-defining e-commerce practices at Amazon.
Unlike intuitive decision-making, using data to guide your choices often leads to less risky behavior. Yet, following the guidance of the risk/reward ratio, such conservative, data-driven decision-making will likely yield smaller financial rewards. Nonetheless, a stable cannabis business will continuously pay steady dividends far into the future.
The Hybrid Approach
While it would be nice to have a clear-cut answer on whether intuition or data is best for making business decisions, the world doesn’t work that way. To this end, there will always be situations where you should follow your gut. However, as a modern business owner, you will have difficulty staying ahead of the curve without paying careful heed to data.
To ensure the best possible course of action for your cannabis business, we recommend a hybrid approach to decision-making. With this synthesis of intuitive thought and logical analysis, you can develop a business plan that balances creativity with stability.
A great example of a hybrid approach to business decision-making can be seen with a new cannabis dispensary. This business should unquestionably follow as much data as possible with critical elements such as consumer behavior and product pricing. In turn, this hard data will inform conservative decisions that lead to sustained profits and increased stability.
After the dispensary has been operating for a while, it could be an excellent time to start thinking about more intuition-based decisions. Maybe you had a hunch that more grassroots marketing could set your dispensary apart from competitors? Or, perhaps it’s a good idea to try growing a new cannabis strain that nobody else has in your given market? Whatever your intuition tells you, it’s likely best to implement riskier business decisions only when you first develop some stability.
The business world is complex, and the cannabis industry is always changing. It’s impossible to implement one “blanket” solution for all decision-making scenarios. As such, we should pay careful attention to our predecessors to learn what types of solutions might work for our businesses.
Whether you are an intuitive risk-taker like Steve Jobs or a data-driven corporate entity such as Starbucks, you can always learn and evolve. In the end, the business world will always love and applaud those iconoclasts who overturn industries by shunning logic. Yet, we rarely hear about the thousands of entrepreneurs who’ve taken such risks and failed.
The cannabis industry further complicates notions of decision-making in the business world. With much uncertainty looming in the industry at all times, many cannabis companies value stability above all else. To this end, data-driven decision-making may veer beyond the realm of preference and into the realm of a necessity for most cannabis operators.
Jon Monk is the Managing Director at MOST, a marketing and consulting company that serves the cannabis, hemp, and related industries. He has a proven track record of leadership and business development in the marketing, finance, retail, and consumer products sectors. Jon can be reached at firstname.lastname@example.org for questions about marketing, advertising, and other aspects of cannabis business.