Time is money, are you using real time data wisely?


busby-berkley-snowflakeTime is money, are you using real time data wisely?

Are you feeling up to date, in sync with the times? Both individuals and organizations find it challenging to fully leverage technology and integrate the sea of real time data that surrounds us.

This past week, I attended a local Internet of Things (IOT) conference, only to be reminded how we’ve been kidding ourselves with respect to the human machine dynamic.  When Factiva reported in 2013, that the previous two years had created 90% of the world’s data, it also reflected the impact of visibly faster technology and emergent opportunities for those capable of wrangling more data. Similarly, the exchange of information machine to machine and the responses that  IOT and the Industrial IOT (IIOT)  make possible  will soon surpass all human generated information.

Information has never proven more valuable to competitive advantage than now. The key istimely mastery and/or the ability to separate meaningful data from noise. Possessing  Real time capabilities merely up the ante. 

Suddenly,  all of the conversations about the real, meaningful  difference of  Big Data clicked. The challenges I knew and had experienced working with volumes of data is not something everyone experiences, and itswhy I missed the significance of the message. Language can do thar. Today’s – competitive advantage relies on learning synchronicity between people, and also between people and machine. 

Yep, syncing as in coincident timing. Timing reactions require coordination on the order of the elaborate dance numbers Busby Berkley made famous will separate winners and losers. 

People learning rates

People are interesting precisely because we begave inconsistently.  These same traits  make us effective competitors and efficient information processors.  We focus and only selectively pay attention, which means we consciously ignore most information in our midst. Unlike machines, we are slow few of us possess capabilities to process high volumes of complex data at high speeds. 

How people integrate data remains a bit mysterious. Part conscious and part unconscious, each of our senses connect to different parts of our brain and the information isn’t always processes with consistency. 

Humans create their own reality. For example, our eyes see things differently than what we describe and not because of language problems. Automatic transformations correct using depth perception and pre existing knowledge to flip the image, while sound tends to retain its integrity. 

Similarly, information new to us versus updates also  process differently; and yet, endless streaming information can overload and confuse us. Today’s powerful computers don’t experience anxiety or fatigue though they may overheat or fail.

The natural limits of time and energy challenge people to choose their focal point, the when and how we respond to data and perceive opportunities. For example, few of our waking moments and activities require conscious thought. Our body takes care of itself and manages to coordinate processing of external sensory information with internal demands. This syncing makes possible mindless activities like breathing, eating, walking and resting.

Consciously, our ability to track our time and energy is spotty.  Still, unstructured/unplanned  moments, especially those that demand little of us mentally remain ideal, while society frowns on the same characteristics when referred to as idleness. The contradiction reflects the value we attach to purpose or meaningful use of effort over time that results in tangible output.

Artists create, builders build, analysts compute and chefs cook for example by adding their effort over time. They make something or transform original materials/inputs.

The notion of efficiency also boosts the value of effort by measuring the effort relative to the output produced over time. Likewise effectiveness, measures the additional value produced relative to the starting inputs. Together, these measures translate into meaningful consistent tokens of value that permit ready exchange, or wealth accumulation.

In this context, the accumulated tokens of value allow us to buy ourselves time to take vacation or be idle as easily as buy us time to learn, create and do more.

Machine learning capabilities

This also explains precisely why technology advances prove so valuable, as they have progressively reduced the amount of time and effort necessary to perform a task. As a result, we DO spend less time on common, routine activities than was previously necessary.  Internal plumbing saves us time we spent fetching water, Wheeled transportation saves us time we spent walking, and similar telecommunications vastly removes the break in communications that once necessitated considerable effort  to cross the distance by one if not both parties, or the enlistment of a proxy to carry the message on their behalf. The human messengers were replaced first and written notes/letters, and then the telegraph dramatically reduced the time between message sending and receipt.  Now text messaging and email is displacing telephone and video conferences.

This evolution in communication methods affects the people’s interaction styles but also their information needs and expectations.

Real time communications savings and benefits are not equally distributed and so inefficiencies persist.  On one hand they present a new opportunity to replace planning and documentation of activities essential when communications were primarily indirect and time lagged. Built-in tracking, boosted transmission capabilities and data recording can both fill in and increase information gaps.  Problems associated with incomplete, unsupported or even delayed information that always created risk persists, but for new reasons.  The flood of data from more sources both people and machine generated pose new challenges to separate out meaning, predict and or respond in timely, relevant manner.

Another opportunity real time capabilities offer are all around us, assisted by the information collected and transmitted from multiple data sensors scattered across the environment.  In fact, it’s how airplanes fly automatically, rail road cars notify switches of their location to either open or close crossing gates, motion sensors in buildings adjust level of lighting and air temperatures, and Tsunami warning systems saves lives.

In general, people are wired to process information in real time. We use an array of body language cues to understand how to  manage the situation and engage with the people in our midst, and yet we do it unconsciously.  Planning on paper is a far more conscious activity, time consuming and energy draining.  Worse, planning often stops us from activating the unconscious real time processing.  We follow the plan, rather than notice the inconsistency or the more obvious information we may or may not have incorporated.  Best example, is the step by step navigation systems that we know are less than perfect.  Have you found yourself using the navigation only to discover it’s asking you to turn onto a one way street going the wrong way? Or your location is “ahead” of the GPS signal and so you miss a turn?

My point is this.  Too many built in business procedures and processes were designed in the absence of real time information.  In order to be more relevant, more valuable people will need to revisit their processes with respect to learning, creating and doing.  It will require a shift in attitude, refocus of needs and adjustment in expectations.  It’s a shift from a look back and partner with machines that look forward, use more data sources and get to analysis faster.

If you have any examples of success or any challenges I’d love to hear about them.

[i] Mike Hogan, “big Data of your Own,” August 2013, www.factiva.com

John Adams, “Be careful or Big Data could Bury your Bank,” January 25, 2013 http://www.factiva.com

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?

Changes we notice and changes we choose 


I suspect you are a mobile addict. You don’t have to be obsessed and have the device in arms reach at every moment to qualify. You merely have to rely on its always connected capabilities to keep you “plugged” in to your connections, and by default the world. 

The speed at which mobile technologies have been adopted has been unprecedented, and I am less interested in its occurrence, and more interested in unraveling its meaning and understanding what changes will unfold next. This post invites you to consciously evaluate the range of activities that tether you to this device, and the choices you can make next.

An overwhelming number of people check their device for “messages” within their first waking moments. In the not-too-distant past, messages waited to be picked up in the variety of places where they were left.

A missed caller could leave messages on answering systems, that replaced secretaries who made and pass a note. This task was automated by machines who accurately recorded the caller, and refrained from edits or shorthands. The machines soon became embedded into answering systems with retrieval now possible remotely.  You could call in to learn who had called.

Email, a desktop computer application, was faster than the post office, and quickly displaced the fax machines for sharing documents or lengthier detailed messages.  Cheaper computing, networks expanded Email from an office communications system to personal. Not only was it faster than regular mail, it was significantly cheaper than calling and more convenient. 

Now, all messaging systems are neatly available in your single mobile device, and your messaging interests and practices routine, if not obsessive.

How does this capability to be more on top of your communications make you feel?

Does this combination of access make you feel more effective, responsible, efficient  or something else? Are the experiences and emotions associated with interaction or the anticipation of the interaction? when and why does the experience become distracting or chaotic? 

Workflow

I’m asking this questions, because I have a hypothesis that needs testing. I believe it’s the small stuff we change that leads us astray from our original purpose or focused intent.

Distractions come in many forms and largely occur when our attention wanders. Driving for example, our focus should be on the road, the vehicles and conditions. Instead , we’re typically multitasking while driving, Whether the division of our attention happens by listening to the radio, engaging in conversation with a passenger, or on the phone ,  or just the flow of other thoughts.

Diversion is candy to the brain. It’s how small stuff easily adds up. The sideways glance that misses what’s ahead robs our attention,  scatters our focus, can delay our progress and mar our effectiveness.

Any efficiency we built in to our process are quickly filled by the abundance of new opportunities, the change in process enables.

Here’s the rub, it’s at the moment of learned efficiency that we choose either to keep learning or we move on to a new domain.  In both cases, we have reached a level of effectiveness and masters keep moving up while the rest of us begin a steady ascent of decline.  This has been documented as the learning curve aka the efficiency curve, and it’s that pivot moment that interest me.

My hypothesis is that it’s in those moments of awareness of the pivot point that innovation begins.

Process changes: Innovation, Invention or Improvisation

I invite you to consider the value of anticipation, or the expected emotions that flow in a particular situation. For example, we want a celebration event to end on a happy note.  Likewise we want our decisions to also produce positive outcomes, but that’s the problem, not all of our behaviors result from conscious decisions.  When driven by habit, the small stuff that changes escapes our notice. That’s both good and bad.

For example,  no matter where you live on the planet, the time of sunrise and sunset changes daily and we generally don’t notice or feel those effects. We do experience the differences relatively over long periods of time, such as the longer days of one season vs. shorter days in another.

The same is true over the little changes we make every day in the use of our mobile device. Perhaps you have grown aware that you are using it differently than you did a year ago, but you don’t know exactly why or what you are doing differently.  Of course some of the changes have been controlled by the businesses who are using agile methodologies to constantly release improvements in the look, speed and functions available on the screen.  The more these businesses issue changes, so does your behavior.

So, have you taken the time to reflect and assess your own set of personal habits and processes?  Have you considered the cumulative effect on your employees of these external changes and its effect on their productivity, their effectiveness and your overall efficiency?

I did, and reflect on my processes pretty regularly. It’s the bane of being a consultant, I need to understand and tinker with things in order to keep up to date and provide relevant information to solve client’s business problems.

I always asked lots of questions, the biggest difference in my process happens to be the research process.  In the past, I was a very avid reader of the New York Times and dutifully ventured to my front door half asleep to pick up the paper and begin scanning the headlines.  Later I went to the Wall Street Journal and slowly opted to skip the chore of recycling the old newsprint, and read the headlines on my phone through the convenience of their respective apps, or use my desktop.  The thing is, the biggest change? Neither one of these newspapers remains my #one information source or morning view.  In fact, I stopped reading the New York Times entirely for a while, because as email habits led me to click open the inbox, other publications had more interesting headlines and their content became a more interesting set of sources.

Better still, the minute I opt to share an article with a colleague, I’m no longer in email but a new application that the team chose to use less to keep our inbox clear, but to insure we were finding and able to keep and organize the messages.  Naturally some of our remote global team members would notice I was online and would shout out to me via Google Chat.  Those who were using the proprietary platform we built, would post and the site would automatically trigger an email notification to encourage other members to respond.

I discovered that my own process, work habits and overall effectiveness ebbs and flows with the connected capabilities of the underlying platforms I find myself using.  I’m not suggesting that having one is a good idea, but I also know that it’s valuable to impose some discipline and standards for the teams in which I work.  It’s way too easy to be online, for example this post began as a voice transcription using my phone.  The longer it got, the sooner I had to move to a bigger screen and so I jumped to my desktop to continue.  Inevitably, there was a sync delay. Later, I  had to reconcile the two versions on the two separate devices.

I would welcome thoughts on if and when you personally, or your team revisits your work processes and to what extent efficiency or effectiveness plays a role.  Please share, and if you would be willing to be part of larger research drop me a line.

 

Are you looking for a recipe or a map?


Problems are like Puzzles, both I think are well named, because there’s no implied process.  No approach that everyone instinctively finds or consistently produces a quick result.

Most common approach to problem solving suggests that it gets broken into smaller pieces.  Why? Does a pattern emerge? Or, can you determine a relationship between the different pieces once separated? It sounds like a puzzle, doesn’t it?

A jigsaw puzzle, it turns out defies this process.  At an early stage of our process, after just a few attempts, we recognize that finding the edges first makes assembly of the puzzle easier.

rubrics cubeRubrics cube, or its predecessor the four cubed puzzle–Instant Insanity, and its multi-dimensions add degrees of difficulty. The individual variation in the blocks make the solution difficult. Conceptually the puzzle’s solution includes deciding on the pattern to produce, and then setting the sequence in the cube face to match.

Crossword puzzles, one of those things that people take great pride in their ability to be fast at completing.  This type of puzzle is multi-layered patterns.  One its’ the pattern of answer to match the clue, and there’s an insider advantage from practicing, the other is the words that fit the number of empty boxes, or has a particular letter in a particular place that allows it to leverage words it crosses.

Now look at a map.  It has edges that easily extend, if it’s a mobile dynamically linked map or not, or you know connects to a larger representation that’s known.  In other words, maps help you see a larger reality in a glance. It expands your view of a landscape or a system.  Maps and blueprints both lay out another perspective.  We apply many rules to create and understand the representation. For example, scale, the ratio of an object’s drawn size to the object’s size in reality helps us visualize the inter-relationships of objects from a different perspective. One inch can represent a mile, or a thousand meters.

Creating maps are more of a puzzle than reading them.  The same is true about a recipe. If you know what you want to make, then a recipe provides the list of necessary ingredients and the instructions for assembly.  It too incorporates a scale, so much of each ingredient when combined will create x number of servings.  Most recipes scale easily you can increase the number of servings by apply the same factor to each ingredient.  A recipe that serves 2, doubled now serves 4.  Retaining the proportions of scale allows us to zoom in or zoom out to see more or less mapped details.

Process, the method or approach that literally advances our thinking our understanding or activity turns out to be a bit of a puzzle.  It’s exactly why framing a problem matters.  As I learned last week, when asked to assemble into an 8×8 array 64 small tiles with white and black geometric patterns. There was one rule. Each edge of the tile must match the colors on its adjacent edge face. This was not a solitary task. My team effort comprised people who sat nearby but were strangers. We had 30 minutes. In addition, we were to estimate our progress at 15 minutes, and use the same estimation method at 30 if we were unable to complete the task.

The objective was clear as day. Our team of six suggested that the task sufficiently resourced to tackle 64 pieces. The thirty minute timetable sounded reasonable.

That was until we realized we had no methodology, no way to organize the six people and their skills, perspectives or background. We also lacked the means to identify what this particular challenge needed, and therefore we had no experience to assess the amount of time needed to complete the task.

Brave and trusting souls that we were, we didn’t waste any time before everyone began to move pieces in front of them. Each of us set out to understand the task by doing.  Quickly, suggestions began to spoken aloud. “We could assemble a small section, and then attempt to put the sections together.” Quickly, the group determined that approach too challenging. Instead, we opted to lay out one edge and build out the array.  Well we didn’t finish in the 30 minutes.

Did we fail? Not really, because each of us learned something new about process. More accurately, we paid attention to one aspect of process–one that generally we overlook, but proves essential to the solution. When breaking bigger challenges into smaller pieces, we don’t pay much attention to how those pieces once connected. These interfaces, or places and mechanisms that connect the pieces turn out to be essential to building on ideas, a recipe, a structure, a machine or even a city.

“How” different or even the same things fit together isn’t straightforward. It definitely helps to have an objective. Highly specified objectives make the solution easier to recognize and more difficult to achieve. Loosely specified, sparsely details objectives generate a greater number of solutions and may create a new problem, selection.

There’s an art to balancing the specificity of an objective and the skills and possibilities available. Each of us leans on our past experience and know-how to face new tasks and tackle new problems. For a new or unfamiliar task, we may find comfort in narrow specifications, easily achieved and successful solutions recognizable. Its part of why we often try what we know before trying something new.

Thankfully, we also get bored with too much repetition. We enjoy variety but also willingly engage in many routine tasks to save ourselves time and energy. Accepting the trade-off of early or later specification changes the difficulty of the task and our ability to solve it efficiently and effectively. It’s what differentiates innovation from improvement, learning from reacting and leading from managing.

Try it with different materials with your own team and discover more about your own internal how thinking and motivations. I encourage using play things—spaghetti and marshmallows with the instruction to build a tower, or small groupings of identical pieces like Lego that you invite everyone to build their own tower. Assign the open, but limited time task. Give people an opportunity to share what they did and engage a wider conversation about process dos and don’ts. It’s not just a great team building activity, it’s also great leadership and management development exercise. I’d love to hear back what you did and what happened as a result.

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

Continuous transformation or a transitional approach, which path do you prefer?


Janet Yellen Testifies House Fniancial Services Committee

Earlier this week, Janet Yellen told the House Financial Services Committee that no decision has been made, but shared the Federal Reserve Bank‘s expectations via the Wall Street Journal.   “The economy will continue to grow at a pace that is sufficient to generate further improvements in the labor market and to return inflation to our 2% target over the medium term, and if the incoming information supports that expectation, then…December would be a live possibility. ”

Wow, lot’s of room in those statements.  Both US Stocks and bonds slipped following her remarks. It’s become commonplace to link Fed Chairpersons’ remarks to the rise and fall of the markets.  I’m not so willing.

Maybe because my thoughts of late were influenced by a conversation hosted by the Becker Friedman Institute I attended last week.  Entitled The Role and Impact of Monetary Policy in an Uncertain Economy  and included Charles Plosser of the Philadelphia Federal Reserve  and nobel laureate Lars Peter Hansen.

First, I’m with Plosser in sensing that it’s foolish to expect that  the Federal Reserve’s control of the money supply and interest rates can be used to effect both inflation and domestic employment.   Second, we need to be cognizant, as Hansen advises, that models can be very helpful but are not exactly the same as direct relationships.  Politico made a similar point. “The Fed and its staff, like any good economists, rely on past patterns as a guide to future outcomes. And now, those patterns are no longer working…:

In fact, it’s the latter thought the differentiation between modeled certainty and certainty deserves more attention.  I’ve been unpacking and exploring this in a variety of ways .  Here’s one:

I know with certainty the relationship between the gas pedal and the degree of pressure applied by my foot and the acceleration of my car.  Janet Yellen and the Fed no matter how experienced and accurate the input data, the econometric models relationship to the economy remain uncertain.  It’s why changes in pressure they apply to expand or contract interest rates have a fuzzier relationship to the economy, and the measurable results more complicated and less consistently understood when compared to my car’s observed speed when I hit the or lighten up on the gas.

Modeled certainty when it fails produces uncertainty but doesn’t mean stop, or does it?

I only watch the dashboard in my car.  I used to have a ticker list of stocks I followed, but no more.  I also rely on the weather app on my phone even though it’s not very accurate. Why? Well it’s useful to be prepared for forecasted conditions, even though several are beyond my control. Yes the weather is uncertain inspite of models who do their best to assure us.

I’m not alone in my struggle to understand and interpret the signals around us, especially the indicators of the health of the American economy and the global economy.  For one, its more complicated than the working of my car, which I also don’t fully understand. The dashboard guides me, it reminds me that the gas tank needs refilling or that in a particular area I may need to reduce my speed, or if the other lights go on I should get a mechanic to take a look.

Today the growing interconnections between sensors, and communications technology make makes it possible to funnel more information to me in real time than ever before.  So, what value do additional indicator really offer? What does knowing more change? The answer is it changes everything, but not necessarily in a predictable way.

Experience, does affect how we process information. Our brain uses experience to filter out commonplace or the “usual” details in our midst. Organizationally, experience used to model and plan the allocation of resources and assure us with forecasts based on different decisions.  The bigger the organization, the more careful and challenging the coordination and planning activities.

When I was a kid, I heard the expression “As goes General Motors, so goes the country.” I didn’t know the first thing about economic indicators, or inflation rates.  My family bought GM cars, so when my grandpa bought a new Buick, things were going well. Conversely, things were going less well when my father continued to drive his Pontiac long after a small hole in the floor board  appeared spurting water when we’d hit a puddle.

GM of course was until recently not just one of the world’s automakers, it’s activities were deeply embedded into the economy.  A report by US Auto Alliance , quantified the importance of the automotive industry in the U.S. economy  claiming:

  • more than seven million private sector jobs and $500 billion in compensation,
  • drew foreign direct investment (FDI) currently valued at $74 billion—approximately 3 percent of all FDI in the United States.
  • And collective investments of almost $46 billion that expanded and retooled U.S.‐based facilities since 2010.

It take a reasonably long time to build a car, but people don’t buy them very often, so supply can generally keep up with demand. If we use GM as a litmus test for the economy there’s some wise and prudent parallels becasue there’s a lot of interdependencies between larger sentiments and people’s financial capabilities.  In contrast, fast food offers a set of alternative indicators to measure the pulse of the economy. In May of 2015, US news speculated about the inverse relationship between the two in an article entitled “McDonald’s earnings slide could be a function of economics. Besides, McDonald’s is the 2nd  largest employer in the country, trailing WalMart. Not surprising given its 14,300 restaurants –4.6 outlets per county.  (I plan to explore this idea more fully in a post I’ve drafted called  McDonald’s a truly American Story).McDonald's Workforce, 2005-2014

See http://fortune.com/2015/06/13/fortune-500-most-employees/

I only point to these two companies becasue I think it’s important to notice the difference between government actions and companies responses to changes in external conditions.

BCG put it this way:

“To compound matters, the diversity of the business environments—in terms of growth, rate of change, and harshness—that global companies face is expanding in a multispeed world. So it is not surprising that many companies find their strategies and business models increasingly out of step with their environments.

Many companies get caught in a “boiling-frog trap,” where they fail to recognize the problem and delay efforts to remedy it, thus necessitating a painful and risky step-change transformation.”

Is that what you want the Federal Reserve Governors to do?  I hope not.  It’s why I don’t envy them nor am I ready to second guess them.  In reality no one should let uncertainty about monetary policy and interest rate hikes hold up your planning, I would encourage you to take a harder look at the relationship between the micro as well as the macro trends in your industry. You don’t need a data scientist per se to create an elaborate model, but it can’t hurt.  The trick is to merely face the realities.    Try to imagine how your customers adjust and see if these factors are included in your own models, you might fill in a few more gaps..a sustainable path is up to you.

Are you wired for growth?


https://i1.wp.com/cgamagazine.ca/wp-content/uploads/iStock_000020240421XLa_opt1-572x210.jpegI wanted to call this post, switched on  growth, but that didn’t fully capture the emerging idea in my head.

Upon waking I found myself wondering about two very different idea. What makes flowers in chicago bloom in November and why the internet never seem to run out of capacity? Since its not uncommon for my ideas to make sense to me but sound to others as if I’m hovering in the clouds at 30,000 feet, allow me to explain.

We distinguish two types of changes –transitional and transformational. I doubt caterpillars or tadpoles in their initial state can do anything that prepares them for their existence post their transformation into butterfilies and frogs? People in the course of their development do.  We have an uncanny ability to remember past experiences and in many cases it forms our thinking about the future. In other words, if we set our minds to it we can imagine our future in ways that I suspect is impossible for tadpoles and caterpillars.

Seeds don’t imagine flowering, instead they are merely wired for growth.  Something switches on when they find themselves in the right environment and as long as the conditions persist to sustain that signal they keep on growing.

Research into human development when combined with the neuroscientists understanding of our brain’s  growth reveals that humans bear a similarity to seeds.  From the conception moment, as long as the environmental conditions prove favorable, we manage to grow inside the womb, and then we do go through our own transformation as we emerge into the wider world at our birth.  Our sensititity and early instincts begin to form long before we experience our first breath of fresh air.

The different parts that we call the human brain just as the different body parts that comprise our stature do have limits. The internal instructions of DNA and RNA have some latitutde which is why environmental conditions do have an impact.  But it’s the same underlying code that turns some seeds eggs into tadpoles and some into humans.

The biggest advantage humans have over all other creatures and life forms seems to be their ability to alter their environment.  In other words, we can modify and then optimize the conditions in which we can thrive. Social tools like communicaions and today’s more advanced incarnations  realized through a combination of hardware and software offer amazing opportunities.

The motivation to transform our surroundings not unique to humans, as evident in nesting behaviors. Birds have been observed building rather elaborate nests, as do other creatures establishing protective and cozy environments that protect their young. Likewise learning or mimicry has been observed in the animal kingdom, and even to some degree plants who move with the sun.

The more distinctive qualities of humanity, such as fashioning materials with our hands has evolved to a much greater degree than in other animals. Unlike other animals, our internal wiring as refashioned and transformed our brain to be capable of a variety of higher functions one of which is manifest by this post.  The abilit to formulate ideas, conceive of connections without seeing them and then describing them in a manner thtat others can understand now or at some point in the future?  That’s pretty different from the tricks my favorite dog and plants can manage.

Ok, enough background.

Transitions the ability to adjust and assimilate new information depends on prior experience.  I’ve never met anyone who can remember their life in the womb, but again researchers studying human development know among all of our senses, vision is the last to develop.  In fact it takes babies months before their eyes  can hold focus while shifting their line of sight between objects near and far.  I mention sight becasue it’s an easy transition to understand.  Who hasn’t crossed a threshold and found themselves momentarily blind by the extreme difference in light levels.  It takes a few moments before your eyes acclimate, doesn’t it?

Transformations, as we described above are a wholly different experience.  Imagine walking only to find the next step plunges you into a deep hole filled with water?  your body responds in even less time than your eyes take to adjust.  If however you were on the edge of the water and had maken a conscious choice to go for a swim, your body knows exactly what to do. Again no transition or acclimation to the needed unless of course you want to open your eyes underwater.

Differentiating between conditions that require transitions and permit instant transformation is what I beleive separates an agile and flexible organization ever ready to grow.  Both benefit from planning but their response time to change varies dramatically.  If your organization desires to remain competitive learning and building the right capabilities and capacities matter.

I believe that like the human brain, an organization needs a flexible responsive platform to coordinate and integrate the exchange of signals. Why a platform? Simple answer is humans are only good at keeping in mind about two or three thoughts at once, the platform like the really capable personal assistant can track and pop up the right messages at the right time.

No, I don’t mean Siri.  Why?  becasue Siri may be able to talk to my calendar and figure out much of my personal peculiar turns of phrase and short hand names for things I need and use regularly.  Siri doesn’t yet fully take advantage of signals other than location, or the fixed notations.  Siri may help me, but  I haven’t seen the enterprise version, have you? When you do, let me know I’ve got several assignments for her.  I’m betting you do too.

A couple of characters–how best to drive returns for your organization?


The big questionOK,  between Sherlock Holmes and Goldilocks, who would you trust with your current business challenges?

I have a colleague who recently re-read J Conan Doyle’s fictional representation of Sherlock Holmes and thought it represented a great model for his own consulting practice. So I can understand that many of you would also choose Sherlock Holmes for his brilliance. I’d like you to reconsider how Goldilocks may be a more appropriate choice for the times.

Yes, Goldilocks!

I’m sure you have read more than one post heralding the new age where social media and networking mastery will not only differentiate your business but also insure your long term survival. Or maybe you worry more about how to incorporate big data and the internet of things, or the sudden mystique of social capital has cost you to lose a little sleep. No matter what topic, the only certainty in life is uncertainty. Sure, Sherlock Holmes offers a variety of approaches that can help minimize the uncertainty. His methods deconstruct the immediate mystery, circumstantial problem and suggest solutions are always possible. True in time, but do you have that kind of time and patience? Do your customers, suppliers and shareholders?

This is why I propose Goldilocks may be a better hire. There’s no illusion with Goldilocks. She doesn’t fear what she encounters and does what we all wish we could. She’s focused and intent to try out all present possibilities and then decisively chooses what suits her. She quickly satisfies her immediate needs and then gets on to the next task.

Now Goldilocks doesn’t bear any responsibilities for her actions. Instead her confidence means she doesn’t waste time asking questions, second-guessing her actions, investigating or looking hard for clues.

Do you believe she lacks due diligence, or feel her actions suggest some shortcoming because she doesn’t stop and consider the possibility of alternatives beyond her line of sight? After all, she does what most of the people within your organization do in the absence a clear vision, leadership guidance and integrity. She muddles through.

I know, now you’re really puzzled. How does Goldilocks thinking really help me get through my immediate challenges?

The answer lies in the question. Action beats inaction, doesn’t it?

The oldest character tests, include a surmountable challenge. In many legendary tales, how the character responds provides the emotional tension in the story and drives the dramatic arc, and serves as a turning point. If you never thought of your own actions as part of a larger story that has yet to be played out, then I hope you will now.

point in many legendary tales and it’s how your answers to similar questions really hinge on your own leadership image.

This subtle business of our own character development deserves more attention, than the tasks that consistently demand responses. My colleague took a long time to realize his kinship with Sherlock, and once he did he understood his limitations and his opportunities better.

We all get caught up by time and its rhythmic certainty that we can’t control. It’s why I’m so intently focused on strategy, because it offers individuals and organizations perspective and a handle on the future and the inevitable variety of tasks and challenges we will encounter.

Don’t start with evaluating how much time may be available to decide, thought that will be useful. In this context Goldilocks does well, making split second decisions. Sherlock in spite of his amazing deductive reasoning skills requires time to investigate, learn the facts and only then be ready to help make decisions.

Instead I suggest you turn your attention to strategy and invest your efforts in character building. Recently Harvard Business Review shared a brief synopsis of provocative work done in 2014 by Fred Kiel of KKR. Kiel and his team surveyed 84 organizations’ employees to assess their leaders consistent exhibition of the following universal character traits: integrity, responsibility, forgiveness, and compassion.

“I was unprepared to discover how robust the connection really is,” Kiel says. In addition to outperforming self-focused CEOS [lowest scoring] on financial metrics, the Virtuoso [consistently top scoring] CEOs received higher employee ratings for vision and strategy, focus, accountability, and executive team character.

As a leader, you often don’t’ get the luxury of selecting your team, but you best have a strategy. Even the most zealous of organizations who screen for any number of capabilities and personality traits, still need to assign tasks and/or pair projects and teams. Pairing Sherlock and Goldilocks oddly may introduce the right tension, risk counterweight and inhibit delays in decision making. But neither will do what’s best for the organization unless you have made the biggest objectives and vision crystal clear.

Know and develop your own character and you too will be surprised by what performance will follow.

Pushing 60, McDonalds needs more reinvention than its latest face lift


Successful change initiatives often result from a deeper understanding of the problem than the questions that initially emerge when something that should work doesn’t.

For example, Does McDonald’s need an activist investor? This question posed by Parke Shall  today suggests McDonald’s may be in need of a more in-depth analysis. One that   looks beyond the basic data level and requires capabilities and alternative perspectives than those currently at the helm . This deeper thinking would take stock, examine the array of assets tangible and intangible as well as the various factors or flows in order to depict the present working dynamics that produce the present situation. For example, the following conceptual view by Donnella Meadows  and her corresponding outline of effective leverage points offers one such perspective.

State of the System

From Meadow’s perspective, data happens to be one of the least effective leverage points and big data is no exception.  After all data alone merely describes what is, was,  or what may result when applying particular assumptions.

Parke Shall isn’t the only one wondering what McDonald’s can do to appease its investors after a year of declining sales. The complexity of managing and formulating strategy have proven difficult for the chain whose market capitalization and earnings exceed those of several small nations.  It’s precisely why internal decision-making and long standing alliances may require more leverage points and even the most effective in changing outcomes a complete paradigm shift.

I’m Not Lovin' Itif it were up to a few active social media savvy shareholder and mommy bloggers, the changes begin with focusing less on appealing to children’ts natural weaknesses and interests.  When the executives got caught up denying that Ronald McDonald’s visits schools only to recall seeing him present, she had to ask a question that resonates with analysts and shareholders alike:

Are the executives at McDonald’s completely out of touch with reality?

It’s just one of a series of signs that suggest the leadership team and operating  executives appear trapped.  Their understanding and sense of how to make necessary changes that may put  their business on a more positive, sustainable path seems to be stuck in time and experience that no longer resembles the present or the future.

The signs

Millenial challenges reported by the Wall Street Journal in August 2014 tops the list of signs that McDonald’s seems to have lost its relevancy with a key demographic.  Ad Age reported that among Millenials McDonald’s didn’t even make it into the top 10 list of restaurants, though overall they remain the #1 fast food chain. For millenials eating patterns wsj 2014McDonald’s there’s significant impact not only across their 35,000-plus global locations, but its flat or falling sales of the past year for restaurants open at least 13 months, this hurts the US hardest where 40% of its locations exist.

Current CEO Don Thompson replaced the head of the US division effective October 15 with Mike Andres who in turn made additional changes in  the structure and leadership across the US.  The hiring announcement included appointing a new CMO and adding its first customer experience officer who quickly began to  usher new changes for the brand.  Beginning with Leo Burnett assuming their advertising responsibilities and refreshing a popular campaign.  Will these changes and renewed focus prove  significant  enough?  Today’s “lovin it” campaign launch hopes to earn back customers  and promote more positivity. 

Another traditional leverage point , McDonald’s long term relationships with key suppliers enabled mutual growth with product consistency and exclusivity.  Coca Cola, for example, has been a critical partner since 1955.  New York Times reported Coke’s contributions to a variety of successful promotions and innovations  McDonald’s introduced over the years, the smoothie being the latest example.   To what extent will suppliers participate in the extensive reinvention process? Given that Coca Cola has seemed to hit a sugar speed bump itself , this approach may be less advantageous.

This bring us to innovation at the menu level brings.  Widely acknowledged to prove challenging, the menu creep  throws off the rhythm of prep and compromises serve time, a key management metric and contributor to McDonald’s overall value proposition.  Expanding offerings such as  McCafe and McWraps, along with efforts to rebrand and position itself as more upscale may appease some consumers, but not clear these additions delivered sufficiently to slow if not deflect the falling sales.

Is McDonald’s too entrenched in the trappings of it’s 59-year old brand strategy?

The amount of  data  and analysts working on this task doesn’t identify a source or clear evidence of higher level strategic thinking.  A 2012  Booz & Company case study of Wendy’s strategy noted McDonald’s had sewn up three key competitive advantages. Brand name recognition for the golden Arches holds an enviable 88% visibility internationally, which helps it win over price-sensitive consumers who also focus primarily on convenience.

Its US location density  places a McDonalds franchise at the very least within 100 miles of every consumer.  This limits acheiving new growth by adding new outlets. It may be why McDonald’s has increased its innovation capabilities beyond what the Huffington Post reported in 2011 were evident in its Romeoville innovation center where it develops, borrows and systematizes operations innovation.  This effort enviable to most corporations prototyped the extensive experience facelifts ranging from re-architecture and mobile ordering.  Still not clear there’s enough in the pipeline to turn the tide against   longer term trends of lost relevance and eroding sales signals.

Among 32,000 consumer reports subscribers, McDonald’s hamburgers came in last when judged for its taste against 20 rivals. This suggests that it’s not just the millenials who no longer find the fast food’s burger offerings appealing, thoguh burgers and shakes continue to draw crowds to other fast casual restaurants at higher price points too.

Bigmac sticker shock Fortune 2014The problem of sticker shock doesn’t impact Chipotle or other restaurants among the ever increasing fast casual segment, but it sure has hurt McDonald’s. As Fortune reported, the growing gap between the dollar menu and higher price points continues to widen making the higher priced items less attractive.

Changes to help the struggling chain regain its growth may require either  McDonald’s board and.or its CEO to resolve deeper structural challenges characteristic of complexity.   It will require some serious assumption busting, re-framing of the definitions of success and aligning more attributes with those characteristic of open systems environment.  No pun intended.  I do believe ramping up prototyping activities in Romeoville and  live testing of customization such as those in sourthern California will also help.

The evident discrepancy between McDonald’s goals and its shrinking share of the markets in which it operates doesn’t only create unease among its various stakeholders (e.g. customers, employees, its board and shareholders. This contrary indicators also reflect the inter-related operating decisions that constrain and limit opportunity while at the same time provide effective command and control that enhance efficiency but at increasing opportunity cost vis a vis growth.  Some of these indicators affect competitors as well as suppliers,  impacting factors that compete and complement American eating attitudes and behaviors.

For example, notice the changes in attitude reported  over the last nine years by International Food Information Council (IFIC) Foundation’s “2014 Food & Health Survey: Consumer Attitudes toward Food Safety, Nutrition & Health.”

Healthy food attitudes surveyed

This data merely exemplifies the changes in attitude over time and supports or disputes assumptionsin evidence by decision-makers running McDonalds.  It also shows how little the major facelift and experience initiatives matched, let alone change pre-existing attitudes about McDonald’s on items  corresponding to what Booz *company reported as core strengths for the brand.

These attitudes are not independent of each other and reinvention will require exercising leverage that cuts much more deeply than switching out leadership and introducing additional menu changes.   In other words, the complex tasks associated with increasing growth will require fundamentally different approaches than those available to smaller competitors or innovators carving out new space and creating  new categories.  Will their investors be patient and have enough confidence to believe in their existing leadership, only time will tell.

Looking for growth? Try consciously connecting to wider systems


Transitions to Fall visible in the night sky

The Fall Equinox

Today’s marks the transition to Fall. Unlike the ancients, the equinox remains largely unnoticed and without much celebration in the northwestern hemisphere. It’s just another day that few of us will notice connects visibly to larger connected changes in our environment.

The growing mental distance between our conscious behaviors and the physical world robb us of our cosmic place. The disconnect stops us from developing and practicing a systems consciousness which creates complacency and limits our opportunity to grow.

We are taught the solar system as children, but few of us acquire system thinking. The earth’s orbit of the brilliant sun and the moon’s near orbit influence our daily routine, the hours of wakefulness and sleep.  The subtle but repeating changes in the length of our days enabled a greater understanding of agricultural cycles.  Astute observers of the visible patterns in the evening sky and their movements when connected to other recurring changes on earth made it possible to draw hope and plan.  Only by understanding the relative presence of visible patterns in the evening sky did society find continuity and connection to the past and set a clear expectation for the future.

Few of us draw conscious meaning from the changing appearance of light on the horizon or the position of stars in the sky.  We rely on universal artifacts that record and track time–calendars and clocks to keep us on task, on target and anticipate near or longer term what’s next.

Technology continues to free our time to devote our attention to leisure as well as industrious efforts.

A consciousness that focuses on slight differences amidst recurring patterns might make us seek solutions beyond the immediate cause and effect we observe.  The coincidence of the earth turning or rotating on its access while moving in orbit around the sun is only perceptible when you track the changing location of the sun in the sky throughout the day.

In your day to day transactions how much are you noticing about the changes that are happening around you and the forces that produce these actions?

A single data point, an isolated observation always represents an intersection of multiple forces.  Rarely do we capture and attach the presence of all those forces.  We take a picture and maybe the camera will include a time stamp. Digital images capture an instance, using a combination of data such as the distribution of different light across the spectrum, may be audio or even sequence of actions. Mistaking the sun’s movement for our own orbit happens to explain why it’s easy to confuse cause and effect.  The measure of distance between the earth and the sun changes every moment but only within a range that more broadly allows us to pinpoint our relative location in the wider routine path of our orbit.

Not everyone respects astrologers and I’m not endorsing connecting the orbit of the planets as a predictor of performance in any activity.  I’m merely inviting you to take a closer look at the data and the axes or contextual reference points provided.

When you look for growth, it helps to understand the forces that favor your success.  For example, an ascending curve tracking the sequence of Sales over time  may warrant additional reference points.