Grab your Popcorn…Things are about to get really weird

9 12 2010

There are things you hope never happen to your business, some you even discuss and prepare against. And then it happens just like you planned: a rogue employee for the US government slips a little known website confidential material and suddenly, all heck breaks loose.

This example seems like a Hollywood sci-fi show, yet the effects and impact are played out in reality and cost innocent bystanders money.  What started with Julian Assange posting a few things have spiraled towards a digital Armageddon.  First was a smear campaign against Assange; true or not, things were leaked to damage his reputation. Then, those hosting WikiLeaks were pressured. It worked, and like a good fighter, he took the punch, regrouped, and counter-punched.  We know the story, it has been the same through time. All of a sudden he is seen as an underdog, and the following starts. He becomes the flag-bearer for those oppressed and in the shadows, who then rise up to support their black knight. And all of a sudden, businesses involved in some way are attacked.

So buy your “Go WikiLeaks Go!” tshirt (you knew someone had to make a t-shirt), grab your popcorn, and get ready for the show – this one is just starting up.  And I have a strange feeling Assange might be saving his best for last.

For those of you playing the home version…click here for a link to the Google news thread on WikiLeaks.

While you are at it, you might have a discussion about what would happen if your website is attacked.





Wallet Alignment…Life’s Perspective

6 12 2010

We hear and often bemoan comments in many professions, as the judgements often seem settled from the outset. For example, while reviewing an x-ray he took on my first appointment, my chiropractor remarked succinctly, “You are an ideal candidate for chiropractic therapy.”

Surgeons see operations, lawyers see risks, dentists see cavities, policemen see crimes, and consultants see problems.  When you are a hammer, life looks like nails.

One of the core reasons strategy management consulting works well is it trains companies to let strategies align wallets.  All too often we take the advice of the squeaky wheel, or allow personal politics to drive decision making.  Strategy management is about a consistent process geared to drive decisions, fund initiatives, and find those that no longer serve their purpose.

    • How often do you hear employees complain about certain initiatives?
    • How often do feel your organizations fund pet projects?
    • How consistently are decisions based upon closing strategic gaps?
    • What is the process of funding new initiatives?
    • Could you improve on any of these?




      Analytics: Frequency Distribution & Bell Curves

      8 11 2010

      A statistical method we often overlook is the distribution curve.  I think most of the time it is dismissed because people get nervous about using statistics if they are uncomfortable with math.  While there are some advanced concepts around using a frequency curve, it can also be used visually as a simple tool to explain results.

      A simple stats lesson….

      Normal Bell Curve – roughly 68% of the population is within 1 standard deviation (measure of variation) of the average and 95% is within two standard deviations. Below is an example of IQ scores.  The average score is 100 and 68% of the data is between 85 & 115.

      While this visualization doesn’t do a tremendous amount for us, this is what we assume when we think of populations, like customers and employees.  And because of our limited statistical training we make a large number of assumptions based on averages.  We love to look at average revenue: average revenue per employee, average revenue per customer, etc.  This thinking also gets us looking into the outliers (that <5% that sits way out to the left or right of the chart).  How much time do you spend on less than 5% of the business?

      OK, so back to thinking of this in terms of running a business….

      Let’s map out our revenue per customer.  I would be willing to bet it looks something like the following:

      If this is the customer revenue distribution, if we use the average number in our analyzes we can quickly generate a number of wrong assumptions.  First and foremost, our typical customer is larger than reality.  It might lead us to think we are serving mid-sized businesses than more likely smaller market customers.  I am also willing to bet our profitability per customer has a similar curve to it.  In this case we are likely spending money on the wrong customers and aligning our better services to a lower profit generating customer (or more likely a profit destroying customer).

      Do we need to use it in everything? Of course not, but it might help everyone once in a while to challenge our overuse of the mathematical average to reassess perspectives of our business.  A great place to start is map out the customer base in terms of revenue (profitability is better, but takes a lot longer to do).  It might just lead you to understand your customer (think customer segmentation) better.

      Real life example…I was once part of a research project to understand discounting to one side of the outliers (<1% of the business).  The outcome was to focus on reducing discounting to that <1% of the business.  What I argued was to focus on the larger part of the business, where the same efforts would have resulted in millions more in terms of profits.  It was a clear lesson is where to apply process improvement.





      Visualization Methods

      14 10 2010

      I thought this was worth sharing….Periodic Table of Visualization Methods.  This is a nice visualization of the different types of visualization.  It shows some good examples, and some not so good examples of visualization. Make sure you mouse over the different elements.

      Rules of visualization designed to create action:

      1. Keep it simple, clear, and concise – with the emphasis on simple.  Don’t use complex charts to explain simple ideas.
      2. Know your audience.  Don’t present glorious details of each step in the analytical process to executives – trust me, they don’t care.
      3. Find a chart style that works well with the data.  Line charts show historical trending, bars charts do a better job of showing relativity.
      4. Don’t use 10 charts when 1 could suffice.
      5. Label well.  Take the time to make sure all of the information is explained.  The last thing you want to happen is for someone to look at it and say “what does it mean?”
      6. Understand there is a difference in analysis and presentation.  If you are trying to convince someone to act, then make sure the data (and you) tell the story.
      7. Start with the big picture, then explain (if necessary) how you got there.  People learn by seeing the picture first, then seeing how the parts go together.
      8. Document your assumptions.
      9. Explain your conclusions, don’t expect your audience to jump to the same answer.
      10. Highlight the relevant points within the data that augment your argument – use a color scheme that calls out the item if you can (red bars vs gray).  Do not be afraid to use the power of a printed report and some hand written notes with arrows to the corresponding areas.
      11. Understand where and why the data does not support your conclusions.  Be prepared to defend against those points, because your audience will likely be looking for ways to contest your conclusions.
      12. Practice what you want to say.  The more proficient you sound the more convincing you will be.




      Breaking down Profitability

      12 10 2010

      One of my favorite bloggers / writers, Seth Godin, writes about “When the long tail is underwater” on his Oct 10th blog.  He actually touches on a couple of interesting points, how much time and energy is created that generates no value, and how do we filter out all of this information to understand what is relevant.

      Take for example the Droid/iPhone app market…Apps are everywhere, and try to do everything.  Apple and Droid both claim wildly unusable numbers of apps.  With all of these potential apps, ask your friends what Apps that they can’t live without and people get strangely quiet.  I had a few people respond Urban Spoon and one guy mentioned Wolfram Alpha.

      Seriously, hundreds of thousands of apps out there and we can’t create a list of “gotta have” apps? Yes, I know there are hundreds of those lists.  Read one of those lists and ask yourself which one will you be using a month from now.

      Sorry back to the point…Compare this to your company’s information:

      • How much data do you have?
      • How many reports do you have?
      • How much of it is relevant?
      • How much old stuff is out there that no one has any idea of its worth?
      • How often do you clean up the environment?
      • How quick do people respond?

      AND how often do you hear people say… I don’t have the data?  OR I am not sure where I can find the information I need?

       

       





      Flakes…not just for breakfast anymore

      5 10 2010

      Carbon Flakes (aka graphene) just earned a pair of University of Manchester students $1.4 million, oh and the Nobel prize.  Think nanometer material that is unbelievably strong (Wikipedia).

      While we might be a few years off, there is certainly some potential to see new paradigm shifts in certain markets:

      • What could a light weight, strong coating do to the car market where weight and MPG are inversely related?
      • What could it mean to the military in terms of personnel and vehicle armor?
      • What could it do to clothing?
      • How about kitchen materials?
      • How about computer components?
      • Plastics?

      If you believe this could impact your products, your market, what would you do?  When would you need to start thinking about it?  How do you discuss items that might change your space?





      The end of Blockbusters…

      23 09 2010

      OK, well it is potentially the end of Blockbuster Inc.  This morning Blockbuster filed for chapter 11 protection.  It is a great example of the Risk of being the market leader.  They owned the market, they were on top of the world.  I am sure during their heyday money was being thrown all over the place.

      I would love to hear these questions answered:

      The trap of leadership is that you often have to wait and see the result.  You are often not allowed to change your business model until it is too late.  If you change it when you probably need to and a loss occurs, then everyone loses their jobs.  The analysts would quickly call out leadership saying that they lost market share because of the business model shift.  Even it is was a great move that would ultimately save the company, our short term focus is entirely too great.

      It is also difficult to understand the nature of the perceived threat.  I am sure there were a couple of times when Management said “what do we do about NetFlix and the changes in the market?”  I would guess that 10% market share did not scare anyone, nor 20%.  Yet, at this point there was too much momentum.

      As leaders, when do we act?

      If we react too soon, we risk looking prone to panic.  We can always explain it easier after the fact.  Our egos, politics in general, and concern about saving face probably drive more decisions than anyone would ever want to admit.

      All to often we push harder on marketing and sales to cover shortfalls in market share.  I would be willing to bet that the company spent more time creating sales spiffs and getting creative in terms of finances, than investing in new business models.  What this leads to is a further entrenchment into the business model, a “we can weather this storm” mentality.

      I wonder what would have happened if they would have set hard targets in terms of driving action.  What if they would have said “once our market share slips by 10%, I want a meeting where we come up with 5 new business models”.  We are just not trained to think about creating very specific action.

      We ponder and delay (then get out and let someone else handle the mess).