Data analysis is a critical — but often overlooked — factor of success
Data has quickly become one of the most important components driving growth in the legal cannabis industry. While the metrics that fuel analytics-driven growth have been there all along, very few cannabis businesses felt pressed to track them. Simply collecting and organizing that data was overwhelming enough for a lot of organizations, but they survived because they believed in their product and were brave enough to blaze a trail in a hostile operating environment.
Now that regulations are relaxing, more established players like tobacco giants Philip Morris and Alliance One International are looking to capitalize on the most profitable crop in the world. Businesses lucky enough to be first to market are in danger of being overtaken by companies that may have little-to-no familiarity with cannabis but have the experience to successfully run a grow operation or take products to market on a large scale. To compete against these latecomers, established cannabis businesses will have to adopt new tools and processors.
Ultimately, in order to be competitive, small and mid-size businesses need to optimize operations based on facts instead of gut feel. I tell people that the data you have is more important than what you’re putting on the shelf, and that’s not hyperbole. Whether you’re running a seed genome lab, extraction facility, dispensary or an independent edibles manufacturer, your ability to collect data, analyze it and use it in a predictive way will directly impact your growth potential. Analyzing data can make you nimbler than your competitors when market conditions and regulations shift and your business has to react. And it can literally save you from being shut down for a breach in regulatory compliance.
Think about all the data you already have — plant genomics, information about manufacturing and productivity, sales data, supply chain throughput, etc. Every one of these dimensions becomes another tool in your kit if you have a strong analytics foundation in place. This is where the rubber hits the road in terms of controlling your ability to compete and drive toward planned outcomes — the difference between making things happen and having things happen to you. Technology will change, but you’ll be competitive through each evolution.
Analytics can sound overwhelming, but it’s worth the effort, especially as competition in the cannabis sector gets fiercer. Your ability to organize data will help you do trend-based forecasting and outcome modeling for strategic decision-making. The speed at which you move in this direction will directly impact your ability to quickly identify problems (and opportunities) as they arise. It will also help you get off the hamster wheel of manual reporting and optimize your business so that every investment dollar has a role to play.
So what can you do today to make this a reality? First, unify your data in a database that allows you to have one version for operational reporting, regulatory reporting, etc. Take advantage of technology to support this effort and begin to put metrics in place to monitor progress. This lays the groundwork for a more sophisticated business model and allows you to manage your business more strategically, like the enterprise-level companies do. At this point you will be well-positioned to leverage emerging capabilities — such as incorporating external data to better inform models and improve outcomes — and to adopt best practices from similar industries (agriculture, manufacturing, retail) to improve your day-to-day operations.
But most importantly, you will be positioned to crush the competition, because you will be able to decide the best path forward based on real, empirical data. You won’t waste excessive time on repetitive operational and regulatory compliance reporting, the latter of which will undoubtedly get more complicated. Plus, it will support your company’s market value when the next funding round, negotiation or merger opportunity comes along.
Remember, the emerging large-scale competition has a head start when it comes to using analytics technology. But if you’re established in the cannabis industry, you may have a real advantage in product development and knowing your audience. Imagine how far you’ll go when you buttress your passion with the strategies and tools the big players are just now bringing to the table.
Xena Ugrinsky helps organizations in and out of the cannabis market stay competitive through innovative uses of data and analytics. She frequently speaks on topics related to the application of advanced analytics to systems modernization and business transformation. She can be reached by email at email@example.com.