How to be more analytical

Learn the skill of pattern matching

Photo by Drew Beamer on Unsplash

Analytical skills didn’t come easily for me.

In college, my least favorite classes were quantitative. It was a miracle I even scraped by.

Which is why I was so surprised when Gap Inc wanted to hire me, upon graduation, to be an analyst.

The job was 100% about numbers.

Logically this seemed like the worst possible fit.

I thought, “They want me to manage millions of dollars of product and optimize profitability? Using real money?”

Once I got over the surprise, I knew I could do it-I would just have to work harder than everyone else.

My career is in marketing, which is not typically seen as an analytical field, but I still use these skills daily.

I’m fortunate that I got to benefit from 40+ years of the Gap’s best training on a skill set that’s rarely taught directly.

When I started, I’d look at numbers and not know what to do. I couldn’t see the “story” the numbers were telling me.

But over time, I learned.

A manager would hand me a spreadsheet with size 8 font and never-ending rows of metrics, and I could make sense of it.

If I can learn it, you can too.

Being analytical isn’t just about numbers

It’s shocking to me that we’re not taught how to be more analytical, critical thinkers in school.

Some of us are lucky enough to learn it on the job. Some of us teach ourselves.

What I’ve come to realize is this:

It’s about validating your hypothesis. It’s about having a hypothesis in the first place. It’s about looking at multiple data points to get closer to the truth.

The benefit of developing an analytical mindset and skill set is two-fold:

  1. It will help you make more informed decisions in every facet of your life
  2. It will give you a competitive edge among your peers

I’ve gotten hired for competitive roles because I was able to demonstrate stronger analytical ability than other marketers.

The concepts below are ones I come back to again and again in my own work. If you want to become more analytical, I hope these concepts help sharpen your thinking.

1. Get the lay of the land: Patterns & pattern breaks

See the norm, what sticks out, what needs a second look. The idea is to get a lay of the land. You want to start putting together your own point of view. To do that, you need to notice patterns.

What’s “normal” around here?

What sticks out?

Why is it sticking out?

How much does it stick out compared to everything else?

As you answer these questions, you’ll start to piece together the puzzle.

2. Find the boundaries of an idea

By understanding the boundaries of an idea, you can make better decisions about how it applies to your situation.

You don’t want to only see in broad strokes. You want to see-in finer detail-where an idea applies and when it doesn’t. You want to be able to say, “This works for these situations but not these.”

This allows you not to toss the baby out with the bathwater. It’s powerful to see nuances when other people just see a binary yes or no.

3. Absolute numbers & percentages

Look at both absolute numbers and percentages. If you only look at absolute numbers, big numbers seem good and small numbers seem bad. If you look at percentages, you’ll see the relationship between the parts and the whole.

4. Variance

Variance is about change: change from the baseline and changes over time. How much did this change month over month? This month versus this month last year? Was the variance in line with the industry’s growth-or did it outpace or lag comparatively?

5. Expected vs actual

“We saw 17% growth” might seem good… until you realize you forecasted 30% growth.

For example, let’s say you’re reviewing sales data for cashmere sweaters at J.Crew. You invested in improving the product quality of the sweater and ran multiple marketing promotions for this new cashmere. You built a higher forecast to account for these investments.

This is where looking at expected versus actualized numbers is useful. Even if you’re handed a spreadsheet with sales data without any context, you can spot that the expected vs actual had a big difference.

Then you can verify your hypothesis by looking at the cost of goods sold (COGS), to see that the cashmere cost was double that of previous years.

6. Percent contribution to whole

This helps you see the relative importance. Is X a tiny sliver of the pie or the majority of the pie?

You can look at percent contribution from the perspective of:

  • Dollar: “This accounts for 80% of total dollars.”
  • Volume: “This accounts for a quarter of units sold.”
  • Top hits: “These five pieces of content made up 80% of all new visitors.”

7. Zoom out to a broader scale

At Gap Inc, we looked at trends in the near term and over a 3–5 year period to see peaks and valleys.

For example, if white t-shirts have never sold more than X units in the last 5 years, what makes you think it will sell more this season?

It doesn’t mean you can’t beat a previous peak. It just means you’ll want to have rationale and a logical basis for why you expect a new all-time high.

8. Check profit margins and don’t be enamored by big numbers

When you see huge revenue numbers, look at the profit margin. A company can make $5 million in revenue, but spend $4.9 million. Look at gross margin compared to the industry, prior years’ history, and the company’s strategy.

For example, some industries have profit margins in the single digits. Here’s a chart of the industries with the lowest margins. So they might make a lot of revenue, but they’re not keeping most of it.

Some companies might have a strategy that’s intentionally focused on growth over profitability. Venture-backed tech startups are a good example.

9. Consider who benefits from this narrative

We might categorize this in the bucket of critical thinking, but I think it’s worth including.

What are the incentives of each party? If someone tells you something, how do they benefit from this narrative?

This gives you a healthy skepticism and awareness so you can decide what’s best for you.

10. Investigate why

When you notice a pattern or pattern break, what should you do?

Figure out the cause. Figure out the impact.

You’re looking for clues that give you insights, that then help you form better assertions of what to do next.

Marketing | Product | Strategy | Prev: altMBA, Seth Godin HQ, Flite (acq by Snapchat), Gap Inc. @wes_kao | weskao.com