How can you stop short term choices from crippling long-term value?


cancer-curable-not-corruption

As more bad news about Wells Fargo’s practices emerge,  the stain transcends CEO Stumpf’s  reputation. Warren Buffett opted to wait and comment knowing that he himself needs time to sort through his own internal review process.

It’s not just Stumpf who needs to believe that the “cancer “found in the retail bank was its source. The Gr8 prorgram setting very high bars for growth with 8 interconnected accounts per customer delivered results but discovery of the ill effects  proceeded much slower.  It took years and then the decision to remove the malignancy—firing of low level employees and managers—what made management believe this toxic behavior didn’t spread?

Well that’s naïve, if not ridiculous, isn’t it? Elizabeth Warren made clear that an organization must remain accountable to its customers more than its shareholders, no matter how large or successful it becomes. Somewhere along the line Wells Fargo, Samsung, Chipotle, VW, and GM all made similar high profile mistakes.

Speed to market may appear an appropriate competitive response but not if short-cutting quality results in shortchanging business value.

Bottom line the antenna in a business can’t be only tuned in for reward especially since it often means the business misses the risk signals. The obsession for rapid growth isn’t just blinding good judgment shows in ignorance of the environment and its complexity.

Interconnected digital networks absolutely create a speed advantage. But speed needs to be managed, and adjustments made to acknowledge the additional risk it creates. Ask the NASCAR drivers what precautions they take that are absent in other environments, or the Samsung engineers who knew they hadn’t done enough testing to properly advise the risk management team with information that prepared them for the inevitable fire.

Pull not push

The Internet made it easier than ever for consumers to find anything, anywhere, and at anytime. Businesses and sales people need to adjust and adapt to accommodate these more informed buyers. At the same time management goals or quotas must recognize changes in the environment, but looking more broadly at the inevitable interactions and the change in likelihood that they will occur.

It may be a cliché, but it isn’t true that what got you here will get you farther. What worked in the past works differently today and will work in another way in the future. The trick is to find the part that is essential and remains critical. Water does seep to the lowest level, but technology advances have created stronger more resilient and resistant containment mechanisms that alter the impact.  Don’t wait to understand them until it’s too late.

Start by answering these questions to the satisfaction of your leadership team and board.

  • How does your management team leveraging or limiting the new levers of change?
  • How does social media, sensor networks, big data and cloud computing alter the behavior of your customers?
  • What risks to your bottom line do they introduce?
  • What steps have you taken to mitigate and or adjust your targets to assimilate them?
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How Framestretching adds clarity


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This morning on Twitter @Bedtimemath posted the image above with the caption that read: “A natural distribution spotted in the wild! The wear on a weight machine reveals where people place its pin.

Though we experience life using multiple senses-sound, taste, touch,scent and sight, how much do we actually use to understand our place and actions?  Consider this two dimensional picture, the visual more than likely drives the meaning we make. Did the words add any more meaning to what you understood in looking at the picture?

Last Friday, the strategy discussion I lead monthly talked about visual thinking and I realized how readily my business training reduces most if not all of the perceptions available through my five senses down to only one or two.

At work, we use words or numbers and rarely put both together as well as this tweet and accompanying image.  This visual asks you to interpret the worn out paint or coating and recognize a normal distribution , which is a statistical explanation that adds another dimension to our understanding.

Could you plot a graph with the information you obnormal-sampleserve?  How about wear vs. weight?  That’s only two dimensions, with weight values on the x or horizontal access, and wear shown on the Y or vertical access.  It might look like the two dimensional graph on the right.

Does this representation tell you anything more than  the original image? I assigned numeric values to the different amount of chipped coating. Do you connect the current location of the weight on the machine as  170 across and  estimate as I did 20 up?

Both image and graph show, but don’t tell as much as we assume.

Where’s the context? Do you know the amount of time it took for the paint to chip or relative distance between observations, or usage of the machine itself?  We know nothing about the users of the machine, or its location and yet we do don’t we? The rust itself takes time to form and we can infer that more users choose at least 50 pounds, and the most users 90 pounds.

More than meets the eye

Next time you view a two dimensional graph–ask yourself what’s missing?  Try to voice and articulate the context that you’ve assumed. Yes even if you do it alone, as hearing your thoughts activates different processing.  When you do it in the company of others you will be surprised at the differences in your understanding.

I happened to see that DataScope analytics, a Chicago Based Data science firm had posted a request under data science on Reddit.  They asked “What data skills do you wish non-data people you worked with (e.g. managers, PMs, marketing, HR, etc.) have?  The responses on Reddit were quite fascinating.

Personally, I couldn’t help but notice how the replies typified the  constant challenge and struggle that any information or data presents to everyone.  What does the data mean, what is it’s significance?

The same themes arose in the conversation among business people exploring the challenges of visualizing data, in which we quicly recognized that few people see the appearance of data and instinctively look to explore it, versus others whose interest in data are for the sole purposes of confirming what they know.

The questions and process with which anyone approaches data obviously informs how it gets used and thus represented too.  Too often we use only one or two dimensions as suggested by the graph of the interpretation of the photograph.  I created the variable wear based on my interpretation of frequency approximated by the degree of chipped paint.

In contrast, the two dimensions suggest more than they reveal about how the world works.  Economists, for example, plot  supply and demand curves that look like a large X.  Supply being the first line that descends vertically, and demand the second line that Ascends.  The vertical access is Price and the horizontal access quantity.

What else is  assumed in this representation?  Geography? Time?  what about probability and or frequency?  Accuracy or specific observations as in the photograph are not the point of the representation.  It’s merely to create a general understanding of the relationship between price and quantity from two different perspectives.

The economists are exploring  and not predicting behavior, they are merely seeking ot make sense of the world not necessarily profit from it.

Further explorations that southt to clarify the assumptions led to the evolution of the  behavioral economists and  their additional perspective enahances general  understanding  of people’s beyond the one dimensional buyer or seller role and expanded the representation.  The inclusion of additional dimensions of probability also introduce additional complexity in exchange for greater understanding.

My own training as an analyst has led me to begin with exploration, and interrogate rather than merely to extend or convert  the representations. There’s always ore than meets the eye when it comes to understanding what we see.

 

 

 

Insight, the counter factual to what we know


dot dot dot

A belated response to a package I unexpectedly left for a friend who apologized for not acknowledging its arrival sooner. ended with

” more importantly , I am at a loss for words.  Truly I don’t know what to say . ”

My return reply was this:

Its ok,

“it’s possible to talk about something and have the words themselves not be very telling”

associations ..the dog that didn’t bark?
I stole the quote, but it’s applicable
We live in strange times, and life is strange.
Obviously i was feeling a bit spunky…just looking at the word, makes me laugh.

to exchanges robbed of words but positive sentiments
you are very welcome.

His response:

“Riddle me this.”

I share this as example of human to human conversations.
There’s no chance that a cheeky chatbot would have written such a response. It’s why people are less predictable, making their every move less certain and the exciting part–capable of learning–both to be good or to be bad.

This was my reply.

riddle suggests you want an answer,
don’t have a personal one,
here’s what I’ve been reading and thinking
One. Roger Schank’s latest blasts courtesy reminder from another cognitive scientist acquaintance I made recently:
(Roger writes some great pieces on this…if you find it interesting as I do, here’s another series
Two, the dog that doesn’t bark? Shorthand for a famous turn of the phrase by Conan Doyle ascribed to Sherlock holmes seeking to solve a crime in which it was the absence of information that he cleverly used to solve the crime.  (see the short story  The Adventure of Silver Blaze). He collected the data, framed it in context to get information and then  use the counterfactual to obtain the insight.  What happened, what did you see or hear? When do dogs not bark?  when they recognize someone they know, so obviously it was the trainer….
[note this reference appears in The Big Short  too…great movie!]
Three, Comment I noticed by Leda Glyptis who is now at Sapient…what a great bio!
Extracting value from a wealth of structured and unstructured data, however, is not as much a technical problem, as a business problem. Technical heavy lifting will undeniably be needed to get you from having a ‘data lake’ to being a data-driven organisation but fundamentally: saying ‘there are 10,000 species of snake in the world’ is data; ‘there’s one under your seat’ is information; ‘it is asleep right now, so you can get up and walk away’ is actionable insight.

The whole interview is here:   http://www.femtechleaders.com/europe/leda-glyptis/

My point –make the time to be human, take the time to notice and connect to more of what you know.  The payoff? Surprising insights will be yours

 

How Doing, stopped my was and they thinking


I suppose, in highschool I first imagined being a writer, but I never committed.Adjusting Sensibility allows me the opportunity to practice, rehearse and communicate more effectively.

This morning Bruce Kasanoff’s  suggested “repetition is powerful, use it wisely.” It was a point I emphasized in my Goldilocks is a genius talk last week.  After spending my weekend struggling to write, it also reminded me that practice  always helps, but it’s not enough.

Purpose matters, and the ability to see differences yourself that yields progress.

I never learned grammar rules well. They annoyed me, they got in the way of my thinking aloud and desire to be creative, and imaginative in my writing.  Today, I read a note aobut courage and another about It’s more likley that unconsciously I was insecure, less confident about everything.  I did many things, and the easy stuff that came and most naturally, happened out of school in organizations and with people.

Today, maybe there’s a university that grants degrees in leadership, especially since so many claim to be effective teaching the subject. Personally, I fought taking on the mantle and continue to enjoy being a collaborator. I now know that leadership terrifies me, becasue I beleive leaders need to be clear in their vision, confident in their situational assessment and unwavering in their commitment to their team and the mission.

Several  times I held project and team leadership responsibilities, I found myself sabotaged. My team didn’t challenge me or push back, it was my associates and peers in other roles or parts of the organization, and even at times my own boss.It wasn’t that they disagreed. More often it was the changes that the success of my intiaitve implied for them, changes they didn’t want to make, even if the changes actively improved the organization’s positioning.  Now occassionally, they had better sight lines than I did. Just as often however they didn’t want to ponder the implications and preferred to shut down the intitiave, impede changesthat disrupted the smooth steady flow of their own projects.

Professionally, and personally, I had been taught not to speak out of turn, and that it was best to find the right time and place to raise objections.  In other words, a public meeting may not be the first time to challenge a colleague or a superior.

Many people are surprised most by the passion and persistence that occassionally emerges when I do feel in command of my subject. It rouses and inspires them.  Unfortuanately I don’t feel that consistently, so many who know me, see and experience something else. That voice needs confidence to speak, it needs purpose.  I may love an idea but until I know what to do with it, then it’s just a vague notion.

At present, in particular this post, I decided to share how using my voice in prose also helped me overcome confusion and reconcile inconsistencies in my thoughts and actions.

It’s not what you know, but what you practice that counts

Grammar annoyed me. It was a dull subject with seemingly annoying rules and my bad experiences stopped me from learning. I did well in school but not as well in English, becasue I  never fully assimilated the basic lessons. Rather than learning how to improve, I got angry at all my mistakes and lost my confidence and along the way muffled my voice too.

I recognized great writers by thir prose and persuasive narrative but never saw the effects of the underlying grammar unless, the author exaggerated it for affect.  My inability to see these signs meant I didn’t try and work them out for myself until decades later.  My writing remained less effective, less convincing and less committed.

In contrast, my graduate professor in statistics challenged my lack of commitment to learning and excelling in her classs.  I spent hours in the math library learning the notation to keep up with the matrix algebra that execeeded my formal math studies in basic calculus. I learned to feel the different effects that only practice produces. Likelihood tests and probability colors my thinking and establishes clarity that today I appreciate as akin to the effects of active prose.

Our will, our intention and our purpose expresses the likelihood of our followthrough.My senior year in highschool I took an advanced literature course from an english teacher my oldest brother revered. I like to think she drummed out the word I from my prose.

For decades, the pronoun One replaced I. Yes, it was gender neutral and I think that was its one saving grace. In additio to the distance it added to my voice, I no longer expressed my thoguhts or feelings but rather the thoughts, feelings or actions by those omnipresent, or omnicient–the ones.

It’s fine to use third person. After all, this voice appears most most commonly in storytales. Goldilocks does, so do the bears, and so does Red Riding Hood, Hansel and Gretel every other character. What makes the story work for me is it’s use of active voice, that allows the reader to play along AS IF they too were that character. It’s in the active, direct prose that I now recognize but missed understanding and thus failed to practice.

More directly, my present experiences and payment for writing made me up my game.  It made me commit to learning and understanding.

Let me correct that. The faith of the marketer who offered me the job, in fairness had seen some of my writing but he also demonstrated the value of great prose.  After submitting a very hasty first draft long on creativity and very short on grammar, I got a single request.

“Tighten it up.”

I had no idea what they meant,what I needed to change or where to begin. The last thing I needed to do was show my incompetence, so  I turned to my colleagues of experienced writers to guide me.

One buddy asked “what’s your process?” I couldn’t answer that questions which led to a series of additional questions on both sides. The more I didn’t know the sooner I realized the depth of my inexperience.  The downside of blogging? It’s the absence of direct feedback that makes you a better writer.  Conceptually I knew about thesis statements but had never consciously tried to use them in a cogent, organized fashion.

Suddenly, years of prompts and suggestions made by lawyers and other active readers of my writring flooded back to me.  My arguments were delayed, I had been a weak communicator becasue I overwhelemed the reader with detail and never disclosed my purpose clearly up front.

After struggling mightily alone, a friendly call arrived just in time.  Another friend and occassional collaborator offerd to coach me through.  She held my hand, read my prose and succinctly pointed to examples of indirect reasoning and endless rationalization; that could be summarized in a short direct phrase. She helped me see how my sentences would benefit from  better grammar practices.  Her beautuiful quick examples used the active voice. Another lightbulb helped me see more clearly what I needed to do and how to do it too!

Suddenly, I could see my poor grammar, my awkward phrasing, and my habits encircling  a point and take the steps needed to correct them.

Tighten became a directive for simplicity. I could see where I confused presenting a fact and thinking aloud. My readers didn’t benefit from learning  my situation that led up to the analysis, they cared about the analysis.

In closing, it’s easy to read good writing and it’s easy to understand too. If you know what you want to say, then you can write it, and you shouldn’t be shy about it either.

If you don’t then whatever you write will waste yhour reader’s time.

Blogs are fine for thinking out loud, exploring what you want to say. Do yourself and your readers a favor, before you hit publish, take your closing points and put them at the top.  Then reread to be sure the prose you keep follows and supports that point.

Aat the very least, maybe, like me, it will allow you the practice needed to improve your writing.  Why else do you blog, if not to communicate your thinking more effectively?

 

The right message, or influence


Joe Fig, Jackson Pollock (2008) Copyright of the artist and Cristin Tierney Gallery.

“There is an alchemy of delivering the right message to the right person”, Maurice Levy (CEO of Publicis) suggested in his recent Bloomberg interview about Business Innovation.

Representation

Contrast Jackson Pollack’s Alchemy to anything you discover online. As the image above shows, Pollack’s aggressive style and posture shown above matches the work, and if like me, you had a visceral reaction to seeing it in person was that the message he had in mind? By contrast, the image shown online loses that quality, not because the photographic rendering was less than precise but because the online medium transformed our perceptions, placing it at a distance.

In person, our clothes reflect our personal style as often as the default expression on our face.  Think attitude and what if anything you do that distinguishes you when people meet you.  Is it a small gesture that you actively put forward, or the less overt  passive way you carry yourself that make people forget and fail to remember your name?

When you want to impress others, how much do you know about the person you wish to impress and does it affect your preparations? Similarly, does the setting dictate and direct the choice of clothes, accessories, hygiene etc?  The same questions, by the way,  apply to your representation online.

Professionally, it’s difficult to not have some online presence. A client, and well schooled friend whose PhD in sociology remains unaffiliated with an organization. He created an informal editing business for himself. He charges small sums to people who seek him out by reputation and word of mouth. In other words, his only clients are referrals from people with whom he worked before. Nothing wrong with organic growth, but he asked for my help to figure out how to scale what he did. His low level visibility online left me dumbfounded.

That’s what prompted this post.

I realize my strategy for online presence has not been well thought out too. I always considered PR to be a specialty and not something I needed to do for my business. Like my friend, I thought being me, would be enough, which is pure silliness or ego.

My investigations turned up plenty of marketing strategies that made my head spin. AT the end of the day, I wanted to understand how reputation gets built and grows, which happens to be the purview of marketing but not theirs exclusively. m

Actions have always been the singular make or break of a reputation.   If you don’t do as people expect, then that’s how you will be known–unpredictable, unreliable, or maybe unexpected.  I enjoy being unexpected, that’s what my efforts in framestretching has always been about.

The challenge, comes back to what Maurice Levy says, not every person seeks the unexpected. When you are hungry, or thirsty a great idea or a leaky water bottle that unexpectedly strands you is far from welcome.

Essence

If there’s any trick to effectively communicating, it’s about understanding your audience, and establishing an even representation of yourself. Naturally, people learn to expect that things or people don’t change, what we see is what we believe is all there is, even if that representation appears unconventional. Professional demeanor proves recognizable when our profession dictates our actions consistently, even if the profession may be less conventional.

The trick isn’t in how to be consistent, it’s in choosing what defines you. Once defined, committing to its use over time will slowly affect how others perceive you.  The actions you take are not embodied in words, or the design of your logo–though they definitely impress many of us on some level.

John Maeda, former Dean of Rhode Island School of Design, spends his time understanding differences between commerce, design and art, as well as the perceptions that make us differentiate so many things.

In his work, he has helped people recognize that regardless of the content, perceptions often cloud the meaning of what we see, dictate how we will feel and decide what we sense.

John Osborne, an artist did a take on Maeda by reshaping the written words in his book into a tree, and at the same time expressed making his own meaning and then reshaping it.  Word of mouth is in fact the internal translation of what we know and then share with others about people. It’s how story became a conventional mode of transmission.

As a little girl told me over the holidays, she recalled the questions I had asked her about Goldilocks a year earlier. The questions had made her stretch her frame of reference and think about possibilities that really stuck, which was my point and purpose. Her Dad, just grinned, after all he knows my reputation as a framestretcher and it thrilled him to see his 8-year-old thinking critically, considering the parts .

So what representation do you want others to share, what stories can you help them tell better?

Refreshing Core Values


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Remember the  expression built to last? It was an expression that my grandparents used to differntiate value.  What I saw as an old tool, or piece of basic furniture or clothing they valued.  The phrase also describes capabilities and inherent qualities that stand up, endure over time surviving changing conditions.

The ups and downs of the stock market represent value differently. Analysts love to pounce on companies when they stumble. The bigger the company the better the blunder and the better for the Bears.  Retail food and department stores currently appear to be under heavy fire these days, even brands and companies that dominated their industry.

So what value should you seek? Investors seek returns but don’t always consider the long term costs, do they? Does sustainability really matter?

I suspect some of these thoughts  led Jim Collins and Jerry Porras to title their 1994 book Built to Last (BTL). Sure they may have thought to follow the example and success path set by Tom Peters and Robert Waterman  whose titled 1982 research project  In search of Excellence also became a best seller.

Sadly, in writing the book Collins and Porras did what other well-meaning authors do. They put a priority on pithy copy over substantive analysis. In short, they wrote great stories.  In fact they went so far as to feature the CEO as leader/hero.  Their research (see sidebar) to distill what made companies visionary  was refashioned into a great read.  Nothing wrong with a great read, unless the reader confuses the story for prescriptive advice and your analysis turns out to be a bit superficial.  If you think I’m being harsh, consider these comments:

Martin Maneker, Collins and Porras publisher put it this way in the Daily Beast in 2009

“the heart of the Good to Great philosophy is that disciplined people, engaged in disciplined thought and taking disciplined action, have the greatest chance at success.”

Or in Collins own words on his website  posted in May 2009 about his book Why the Mighty Fall :

“[Porras and I were ]discussing the possibility of a project on corporate decline, in part because some of the great companies we’d profiled in the books Good to Great and Built to Last had subsequently lost their positions of prominence. On one level this fact didn’t cause much angst; just because a company falls doesn’t invalidate what we can learn by studying that company when it was at its historical best.”

Or Consider  Fast Company’s look at BTL 10 years post publication written in 2004:

“ at least 7 of BTL‘s original 18 companies have stumbled (8 if you’re cynical about HP) — scarcely better than the results you’d get by flipping a coin.”

In other words, the fundamentals that stand the test of time more likely due to discipline or luck. Sorry that it’s not the five that Collins and Porras research efforts describe.

So why did Jennifer Reingold and Ryan Underwood in their Fast Company retrospective review of this highly influential business book try to salvage its essence? For the same reason that these books continue to inspire and continue to be best sellers.  The Fast Company authors looked beyond the company profiles and focused on the stated principles.

As pointed out earlier, Collins and Porras in later editions had to qualify their original findings in the preface. Collins’ later writing also back pedals with post mortems describing how his BTL companies had lost their way.

I’m not the first to question the relevance of the principles to demonstrate the thesis of the book. In fact Collins was well aware of the criticisms leveled at Peters research, and why they adopted matched pair design for their own research.

What bothers me is how story telling hijacked the writers’ judgment.  For example, why use distinctive new prose when citing the principles?  The better to make believers and best sellers, that’s why.

Long before social media, Collins understood the power of language. Catchy language could  impress the ideas on his reader but also fuel fan sales, and  “word of mouth.”  Consider one of his most famous original phrasings:

“A Big Hairy Audacious Goal, or BHAG, a long-term vision that is supposed to be so daring in its scope as to seem impossible. “

It’s in these language choices that I begin to feel the book tilt.  BHAGs  conjure really ugly images.  Who, other than a hero, would dare to take on something ugly? Personally, my criticisms side with Reingold and Underwood.  Even by 2004, the BTL principles seemed less relevant in the face of massive consolidation, global outsourcing or even disruption that shifted the business environment.  But the descriptive principles they coined failed to capture the essence of deeper qualities that underlay any organizations success, ones my grandparents would recognize.  I’m talking about  people believing in people.

Recently, I attended a local meeting of the Private Directors Association. I heard a panel of three CEOS talk about their 100 year old companies.

At the close, each of the CEOs identified factors they thought helped them survive. Profitability never made their list, nor did any pithy phrases tumble from their lips.  The single repeated understanding described their commitment to people and values.  Not only have these companies experienced low employee turnover over the life of the company, they shared unusual views about proper compensation and invested heavily in training.  For two of the three, visible diversity on their boards had been a conscious decision in the most recent period.

Another notable common thread described their recognition of business value–that goods and services they offered should always exceed the price customers paid.

Pride of ownership too dominated  and was demonstrably evident in each of these companies successes though  Mead&Hunt now employee owned and operated, and the other two remain family owned and operated.  Each and every company pointed out their expectation of modest returns and willing attitudes toward change and adaptation.

In other words, missing from the conversation was the idea that any of them expected to use the business as a vehicle for generating great wealth.

A friend pointed out that mid-market company values, at least evident in the mid-west,  don’t seem to match those of corporate America.  I wouldn’t go that far. Particularly since these companies were all privately owned, its difficult to measure them using the criteria that BTL employed– 10x returns on stock price.  Not a one would be considered leaders in their industry.  Even Mead & Hunt which is employee owned understands that returns on their own capital rely directly on production and interaction with customers and not financial shell games.

Kevin Boyle, the CEO of Schulze & Burch, “the biggest baker of toasted pastries in the US” typified the distinctive attitude of these companies.  Here’s how he answered an investment banker’s inquiry about how  growing valuations and M&A affected his business.   “Keep doing what you’re doing,” Boyle said, “it’s good for me and keeps my cost of capital down, and also minimizes my competition.”

Had to laugh at that.

If you are curious Wikipedia’s list of the oldest  surviving companies found many that began before 1300  and not surprisingly they were primarily service businesses, and remain small– as in less than 300 employees.  This list https://en.wikipedia.org/wiki/List_of_oldest_companies

Connecting and mobility simplifies dealmaking , are you #GivingTuesday


midia impact on social friday 2014

As reported this afternoon by the WSJ, Black Friday is in full swing. Holiday shoppers and retailers actively engage in dealmaking. The decisions elaborated supported by a web of connectivity, funneling information to promote and identify where to find the best buy on what.  The sights and sounds of the season all tweaked to arouse an emotional frenzy. Its a season preoccupied with comparing, connecting and strategic advantage worked by both buyers and sellers.

This commercial frenzy reaches another peak the Monday after Thanksgiving when Cyber Monday redirects consumers to connect online. Last year, emarketer reported that the single day figures represented 5.8% of total US retail sales for the year. (See http://www.emarketer.com/Article/Total-US-Retail-Sales-Top-3645-Trillion-2013-Outpace-GDP-Growth/1010756 )

Givingtuesday.org

#givingTuesday Campaign

The latest addition #GivingTuesday, with its twitter hashtag of the same name , launched by the 92nd St Y and the United Nations Foundation wanted to kick off the giving season with a different message. With less than one month notice, the 2012 campaign offered a charitable answer to the intensity of focus on retail shopping. By its own acclaim, the campaign quickly launched “a global movement engaging over 10,000 organizations worldwide.”

According to The NonProfit Times, donations on #GivingTuesday in 2013 amounted to $32.33 million processed on five online platforms: Blackbaud, PayPal, Razoo, Network for Good and DonorPerfect. Blackbaud, which handles contributions for large nonprofits, reported that it processed $19.2 million in online donations on the day, a 90% increase over the prior year. Blackbaud also reported the average donation it processed rose by 40% in 2013 to $142 from $102 in 2012.

As USA today further reported, “The dollar amounts and the digital evidence are impressive, but the real story is about how people are giving back,” said Kathy Calvin, CEO and president of UN Foundation, a #GivingTuesday founding partner.

Has #GivingTuesday started the important international conversation about caring that Henry Timms, the originator and executive director of the 92n Stree Y hoped?

You bet it has. A quick look at the numbers indicates significant coalescing attention and energy that goes into #Giving Tuesday literally pays off. Figures from Emarketing news and the Department of commerce showed total usRetail sales for 2013 reached $4.53 Trillion of which Mobile commerce represented only $42.13Billion, an order of magnitude less. Just zeroing in on Black Friday and Cyber Monday Adam Marchick writing last week for internetretailer.com showed that smartphones and tablets combined drove a new record of $259 million and $419 million in online sales respectively.

Since many of the contributions for #Giving Tuesday were mobile, there’s significance in collecting $32.33 million, or 12.5% of the commercial online sales activity achieved on Cyber Monday.

Current e-commerce statistics from Statista state that “40 percent of worldwide internet users have bought products or goods online via desktop, mobile, tablet or other online devices. This amounts to more than 1 billion online buyers and is projected to continuously grow. “ The clear influence and  power of connection made simpler with mobility continues to surprise and challenge the best of plans for resource allocations.

The  ability to make changes in the world will continue to reside in the power of greater connections. How they get put to work and for what collective end, remains at the moment within our reach. Don’t just cross your fingers but use your own connective power to shout out to your friends #Giving Tuesday opportunities and help move the needle on donations every upward. .

Successful businesses both Create and Capture value, Can you?


A year ago,  Casey Winters then data analytics guru at Grub Hub, shared the data analytic tools that Grub Hub found contributed value to improving long buy-cycle results.  His list of dominant vendors who then weren’t cutting it made me wonder what tools he found most useful now.  Casey  has since moved on to Pinterest, to further the message its CEO recently sent about its power to create beauty and creativity not merely provide social bookmarking. Double congratulations seemed to be the right tone for my note for landing the job and completing his Chicago Booth MBA.  I wondered whether Casey credits his experience at Grub Hub or his analytic experience coupled with his concurrent studies at Chicago Booth to his greater understanding and usage of predictive analytics?  Before asking, I found myself distracted by content in Casey’s tweet stream, especially a story he found akin to GrubHub’s experience–a start-up that had launched in 30 cities in 6 months.

Casey reminded me what value exactly analysis delivers.  Sure, telling stories grabs headlines and has a way of rippling to the very combination of people responsible for business growth.  I’m not just talking investors, but sexy company stories draw employees and on the web, links make it easy for customers to find you too.  Increasingly the value created in the data streams seemed to be secondary to the primary business operations.  Google in sharing the under the hood analytics understands the mutual value creation venture and so do a great many others in the tool creation business.  But that’s just the beginning. Value may be created but unless you capture it then your business won’t last very long.  At least that’s what a number of successful investors track.

Patterns

Sure, start-up fever seems to infect everyone today.  We love stories about founders who go from nothing to something based on their own grit and determination.  Sound familiar?  This quintessential bootstrapping myth  fuels American’s reverence for business. The reincarnation of Horatio Alger stories as rags to riches tales, applaud individuals who by their own hand pull themselves up. In fact, the origins of the term boot-strapping comes from the idea that regardless of one’s background, you too can create a livelihood and viable business from scratch. Adora Cheung’s startup  recently named San Francisco startup of the year story follows this pattern.

Of personal interest, are the patterns that emerge from both Adora’s story and that of Casey Winter.  Both of them developed an expertise acquiring online users and retaining them, a key growth driver for any business. I suggest that they not only understand how to create value, but their skills bring critical value.  What advantage does a web-based business at least for now, have over on premise businesses? The ability to focus on the behavior of the end users, find patterns and then build profiles that allow them to tweak the site to improve not the data analysis capture but convert the information into tangible financial benefits.

“They’re focused on optimizing everything,” said [Michael] Hirschland, adding that its systems allow it to be far more data-driven than its peers. It’s already using data to predict where best to expand beyond city centers, into the suburbs.

 

Admittedly, simple businesses make it easier to focus on the few moving parts at once and understand what works.  Long buy-cycles tend to show more complex business decisions, where the co-dependencies may lie beyond the control of the user your connections allow you to observe.  Both Casey and Adora honed their experience analyzing  businesses appealing to  simple users direct needs. This no doubt helped them increase the contribution value of their analysis, make insights easier to uncover and use them to move their businesses to greater advantage by exploiting opportunities beyond simplifying their users’ on site journey.As they accumulated additional perspectives of happy online users and recommended tweaks to improve the ease of their site’s use they took a slight turn.

human advantageNaturally we compare and contrast personal and experiences, and no doubt Casey and Adora compare and contrasted their personal site experiences to wider systems of experience.  They exercised these skills to leverage the value created by their analysis and tools and explore using them to optimize offline services.  These associative connections remain outside the realm of predictive algorithms and require human know-how.  This level of strategic thinking allows a business to scale and in their case replicate  in multiple locations quickly.

The analytics know-how does more than create value, it offers the advantage that comes from capturing the value too.

The value chain break down

Let’s face it,our brains are wired to find short cuts.  Anything that saves us from thinking about a routine action allows us time and energy for other things.  A mobile app spares us from having to remember the URL, or type it accurately into our smart phones and access the information we want quickly.  Why should we have to think about basic things when there’s an app that captures the necessary information and simplifies if not eliminate s the guesswork for a host of activities.  That’s what GrubHub did and that’s what Homejoy does online, though it might want to merge with  HouseCall.

Simply put, the reason businesses must be online, happens to be why everyone realized the value Facebook or Twitter offered–a connected, concentrated user community.  Decades ago, businesses opened in the mall for the same reason, be where your customers will find you.  Search engines remain important but increasingly they take second place to an established phone app.  Each tool creates value but they capture value very differently. Snaring customers may be the first step, but mobile apps done well allow you to keep them–one of the fundamental drivers of growth.

Websites when linked to effective traffic directing vehicles has been the principles fueling and giving new life to direct marketing analytic firms for a long time.  Today, successful analysis of logistics matters.  What steps a business takes to simplify real world experiences certainly creates value, but the trick again is to capture it.  A host of online tools exist to make it a snap for users to find, pay for and track the delivery of  what they need.

There’s evidence that Jeff Bezos understood this from the beginning and increasingly stock analysts ascribe greater value to Amazon’s combined capabilities over its narrow profit margins.

Today, Amazon  offers its users one stop search, payment and delivery platforms. The early versions of online e-commerce focused on one aspect of business, displacing if not eliminating the middle man by competing on price that squeezed  the markup between wholesale and retail. Amazon’s  logistics expertise and value capture to date make it a significant threat but will this advantage sufficiently keep them winning over other retailers?

The array of sensors residing in smartphones no longer tip the advantage to online service providers.  These changes impact how everyone in the ecosystem accesses the data, and gets meaningful information from the various readings, like Geo-location, gyroscope, accelerometer, or even the magnetic flux. In the near term,  smaller service business like Grubhub, Pinterest and HomeJoy are deriving benefit from mastering logistics.

For each business the advantages go beyond match making and into literal service management for both consumers and suppliers/providers.  That’s the beauty behind HomeJoy.com.  Consumers  find qualified, cheaper house-cleaning services, and the cleaners benefit from vastly improved wages, simplified scheduling help and timely payments.  If that’s not logistics than I don’t know what else to call it.

None of these were businesses that followed the simple pattern representation of “If you build it they will come.”  The article details can fill you in and tell the story better. so, do take a look:

Summary

What’s the key to creating and capturing value? Here are three suggestions.
1. Mine the Gaps
It’s not about whether your business plan happens to online or on premises.  Can you find gaps between value created and its full capture, aka system level inefficiencies?  I urge clients to look for areas where one or more parties in a transaction leave money on the table.  In the case of HomeJoy, Adora and her brother didn’t seek to create a cleaning service, they merely reflected on their own experiences and applied their knowledge of logistics to realize that the home cleaning service business suffered from inefficiencies they could exploit.
The Gap:  Established cleaning companies were prohibitively expensive.  At the other end of the home cleaning market classified or posted ads for cleaners  were unknown entities.  Users face a choice between paying prices that prohibit frequent purchase of “qualified cleaners, ”  or hiring unknown, self-qualified cleaners at more affordable prices, with little or no recourse if the service proves unsatisfying.
The system level inefficiencies suggested that if they could resolve these issues, they could easily scale the business to become an established cleaning company.  No HomeJoy was doing nothing to disrupt the market, they merely used their ability to mine and funnel the knowledge within the system for greater efficiency.
2. Chicken or egg
What you don’t know makes it harder to understand where to start.  Both Casey and Adora and even Jeff Bezos leveraged what others know, but couldn’t put to work for their own benefit. The know-how necessary for success generally exceeds what’s available in a book or published article.  Few successes come to us from merely reading it, we need to try it out and integrate it with what our experiences have already informed us.  Instead find ways to learn directly from your competition, study from the inside as much as possible. (Of course this can be very challenging to do, as Adora can attest).
Surprise, this same chicken and egg problem often makes it hard for  other players in the system.  For example, consumers often need help finding what they want, and suppliers need help finding customers.  That’s why  focus groups often falls short.  The insights may be sufficient to get you past your current obstacle but won’t necessarily offer you competitive advantages that come when you challenge and improve opportunities at the higher systemic level.  You will learn more about the issue, but the difference between success and failure comes from really finding where the untapped value lies.  In these cases the business benefited from focusing on logistics and using analytic tools that weren’t only monitoring and tracking observable patterns. .
3.  Give to Get
  Many start-ups start by thinking they will give something away for free, but you can’t give away your service and then turn around and ask for payment later.  In the case of HomeJoy they used simple old-school growth hacking tricks–printed flyers and compelling copy wasn’t hard but unless people read them they would have no customers.  So they used the advantage of satisfying an immediate need within a concentrated geography to get their message out. They passed out free water with their flyers and sure enough they built their initial customer base and then their site analytics and the web tools to help these customers share with their friends their satisfaction and grow their business.
4. Research, research, research
Matching software may be the basic kernel of value for which many real services or products depend on the web to help coördinate or connect them to their users located anywhere.  Throw in a rating system  for the service/product and now the site itself creates value, right?  But a host of very established sites such as yelp address these needs and yet both Homejoy and Grubhub are growing and co-exist with the search engines and rating sites.
The razor-thin operating margins underly the basic business models for all of these online businesses, whether you are talking about Amazon, Grubhub or Homejoy.  Created value alone won’t keep them afloat.  Each and every one of these businesses must capture that value and they did it by replicating the model. For Grubhub and Homejoy they quickly expanded to multiple markets.  Amazon used their integrated book sales systems to sell other long shelf-life products, then their excess server capacity to offer retailers online commerce  and increasingly are moving into perishables.
If you are incorporating analytics in your business, at what level of the system are you applying the insights you learn? Investing in strategic thinking can go a long way to sustain your business and insure you capture the value you create. 

Goldilocks can help you face your challenges, will you let her?


photo (1)What’s the story? Today’s headlines continue to be filled with a persistent recurring behavior symptomatic of leadership failures.  Most of us are familiar with storybook tales and parables that remind us of particular lessons. No one wants to be The boy who cried wolf. Cinderella teaches us not to give up hope, and I’m sure you have an equally simple take away for the story of Goldilocks, aka the story of the three bears.

Have you considered using simple stories, and in particular the tale of Goldilocks,  to lead differently? 

I’m actually heartened by Mary T. Barra, because I think she gets this lesson. Today’s New York Times report on the ignition switch investigation suggests that unlike her predecessors, she pursued a different approach. This stands in sharp contrast to last week’s New York Times story Business school Disrupted where Jerry Useem offers a glimpse into Harvard Business school‘s decision-making around digital, online education.

How IS it possible that one of the most premier academic institutions in the world–with articulate thought leaders on key business issues related to Strategy, Disruption and Innovation– continue to cling to their old ways, unable to effectively transform themselves?  I’m not interested in their offering per se.  Their decision options resemble those of Fortune 500 business leaders when surveyed.  They find it difficult to pursue a path toward transformation, though failing to try, often cripples their organization’s ability to sustain value and/or their competitive advantage.

I see the decision dilemma as actually two stories. One, the tale of a lizard, or chameleon, and the second the universal tale of Goldilocks.

Steve Jobs sittingSteve Jobs, from what I’ve read, understood how to lead like a chameleon. By association the story of Apple throughout its tumultuous history can easily be interpreted as a lizard’s tale. Academics, however like many cogent, intelligent thought leaders resemble Goldilocks. Their training, the PhD process itself promotes competition, neither intentional antagonism or collaboration. Individual researchers training emphasizes objectivity, perhaps fearlessness, definitely curiosity. Still academics produce results relative to existing thought using an established process.  These predictable outcomes rarely achieve or encourage breakthroughs in understanding.  Occasionally, this process model when most forcefully applied manages to create disruption in existing domains. Leaders in these established environments rely on orderliness, offsite planning and reflective discourse. Failure to challenge their process makes them vulnerable to outside breaches that create havoc at multiple levels within their hallowed institutions and the underlying operating models their continued existence depends. Basic physics teaches that a body at rest stays at rest.  This lesson exemplifies the impact of complacency and comfort, and the necessity to avoid them at ALL costs.

Goldilocks isn’t a morality tale

Adaptation came easily for Steve Jobs , though in many ways he also behaved like a Goldilocks. Constantly moving and sampling new things until he seized on an idea that resonated with his core principles—simplicity , quality and durability, as in built-to-last. His passion for these principles when wrapped around an idea supported peer learning that enabled development of a powerful culture that made his ideas tangible. The Steve Jobs in Walter Isaacson’s book both hungered for new ideas, and was steadfast in his resilience. These qualities resemble chameleons, making it possible to adapt quickly to subtle changes happening in their environment. These thick-skinned qualities made him  tough, capable of weathering transitions and nurturing— both necessary to support transformation and sufficient to support sustainability.   The verdict remains out for Apple itself.

Goldilocks adapts too.  She makes do with what she finds but she herself never undergoes any transition. She changes her environment, it doesn’t change her. Her existence also depends on encounters with normally distributed choices. The variance around the norm makes her choices rational and predictable.  This may explain why her innocence makes us lose sight of the disturbances she leaves behind.

I don’t know what personality profile Goldilocks fits exactly. It’s why I believe today’s popular assessment tools used by many companies in their hiring practices to find cultural fit ultimately don’t matter.  How exactly do profiles help an organization survive? Leaders who worry about identifying Goldilocks may be missing what I find to be the more critical perspective in the story.

What about the story of Goldilocks resonates and endures? (see post two)

Personally, I think on some level, each of us behaves like Goldilocks.  We are often unaware of how our choices create a wake or disturb the system for those who follow. We prefer to limit the number of choices. Fewer options allow us to focus and ultimately find the points of contrast most relevant, or good enough for us now. Once we make the choice, we can keep going,  gain additional experience and be ready for the next opportunity we meet.

Goldilocks always finds a suitable, generally satisfying choice after sampling all of them. What would she do in a complex situation where the choices exceed her ability to sample? The absent inhabitants of her found environment don’t stop her from seizing the opportunity or indulging her curiosity.  Why doesn’t she hesitate or allow uncertainty to get in her way? When the Bears do return, Goldilocks flees and the narrative ends.

Of course, our experiences allow us to imagine the internal voices that often stop us from pursuing what we recognize could create difficulties for others.  A verbal exchange of assumptions often proves surprising and reveals greater diversity in perspective than any of us imagine. These behaviors Leaders need to cultivate and question when presented with Goldilocks canned results.

Ask Mary T. Barra if the risks were worth the time her predecessors saved shutting down alternative thoughts, questions left unspoken and open issues under examined? Does complacency in your process overrule critical thinking and exchange among peers of diverse perspectives? Should PhDs be reviewed only by the experts in their own domain? What are the principles that every report and process should adhere?

The challenge for management and leadership isn’t to isolate Goldilocks, but to encourage and nurture transformations and mindfulness .

Create value by sticking to principles and collaborating


I’ve been reading and writing a lot about creating value.  Value creation is what sustains our spirits as well as insuring us a livelihood. It preserves quality in our relationships as well as justifying our existence.

Does creating “shared value” accomplish the same thing?  creating value

A recent headline in the Financial Times challenged the premise of Michael Porter and Mark Kramer’s ideas on creating shared values caught my attention.  Corporate Shared Value, (CSV) conceptually seeks to align social impact and company success.  A very noble goal, akin to what John Mackey, the CEO of whole foods describes as Conscious Capitalism.  Andrew Crane’s Financial Times article merely wishes the CSV theory found its way into execution and not corporate report window dressing and lip service.

15 years ago, Frederick F. Reichheld  and Thomas Teal working for Bain Capital discovered that too few growth strategies successfully drove profits and explained competitive advantage. Since the traditional profit drivers failed to explain the discrepancy in performance, they turned to study costs.  Their research delved into a firm’s relationship between customer duration and its cash flow  and found the relationship also differentiated advantage. As they had eliminated one metric after another their discovery proved that value starts with building loyalty, growth follows and then profits result. Dual loyalty, they explained isn’t merely the reciprocal relationship between a firm’s leadership and its customers.  The duality extends to employees and includes relationships with investors.The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value published in 2001, detailed this research.  For businesses to focus and sustain this value creation process, the authors recognized would require fundamental changes in business practices including new ownership structures.

Porter and Kramer’s CSV theory in part recognizes a similar fundamental shift in business practices.  Their focus seeks to compensate for the historic failure of accounting balance sheets to report and record shared value as an asset.  Is it an output, or is Shared Value part of a  larger social movement?

Mark Cheng, Director of Ashoka UK and Ashoka’s senior advisor on social finance  explains the challenges in this article that appeared in Forbes, How Philanthropists And Investors Can Work Together To Create Social Change. He suggests, that trying to build a social innovation isn’t a company but a social movement and that’s why it requires very different investments.

To change consumer behavior whether you plan to build a new market or a social movement requires organizations to earn people’s loyalty to principles.  Reichhold and Teal explain these learnings as necessary to properly differentiate between creating measurable value and creating profits.  Porter and Kramer hope businesses will value social progress, but this alone won’t re-legitimize a business. A verbal commitment to value can’t create the cost-benefit advantages necessary to sustain the firm.

Social forces of loyalty can and often do bind customers, employees and investors. Indeed they serve as measures of  cash flow and indicate a company’s ability to deliver superior value. The interlocking set of a firm’s operating principles creates both a cause and effect which satisfies, inspires and engages all stakeholders to sustain the firm.

Alternatively, a collective solution and collaborative mindset that aligns around a broader set of principles or values clearly stated presents an opportunity to create shared value. Because the concept of shared value offers people the means to take part with the resources of a firm, these mechanisms also share in, and contribute to, the success of the wider social movement.

Cheng explains that different funders should rightly have different roles.  A social business partnership between a business enterprise and an NGO doesn’t have to compromise or tradeoff its economic goals for the benefit of social good.  Using philanthropic funds to cover start-up costs for the shared venture and utilizing the distribution prowess of the corporate entity is one way to make win-win social impact possible.

Social progress is difficult to achieve by a single player, however a shared operating model based on sound principles can be adopted and replicated to spread the changes more widely.  The goal for the business may be self-interest,  where self-preservation will be a result of its underlying value creation principles and relationships.