If someone offered you a million dollars, would you accept it? Some of us might be quick to answer yes, when in reality, we should be asking, “What are the conditions?” You need to know the parameters in order to make sound decisions and understand variables or analysis. Parameters describe specific characteristics of our population, market, and environment. They are critical because we frequently ignore aspects of a situation that are critical to our analysis.
For example, details of the 2020 census were just published and there are some clear trends that need to be considered. Most importantly: Diversity is not just some political issue. The growth of minority groups, urban population, the south, and the decline of the white population are actually critical factors in understanding marketing and analytical challenges.
Income inequality, diversity, global events, and the environment (including the pandemic) are key factors affecting even small businesses. Here are some parameters to consider that may help improve effectiveness:
Population: In 1990, the white population represented over 80% of the population compared to 57% today, and it will continue to decline.
Social changes: Women and minorities are not always treated with dignity as employees and consumers. Andrew Cuomo’s recent explanation of his behavior reminded my wife that she still remembers going to buy a car and being ignored by dealers and being called “honey.” We need to consider proper behavior towards all participants.
The Internet of Things: The Internet and its usage, especially among younger people, will continue to explode. Nearly every consumer-based market is dominated by businesses that are capitalizing on the Internet of Things, like Amazon and Google. Similarly, sharing services like Uber, Airbnb, Amazon, and thousands of other businesses are disrupting their individual markets.
Analytics: Chances are that your competitors are already taking advantage of a myriad of advanced analytical tools. CRM systems are completely changing the game and giving businesses new opportunities to understand their customer base.
Wealth distribution is becoming increasingly more unequal. 10% of the population control 80% of the wealth in this country. The pandemic has only accelerated this trend.
Our physical and social environments continue to shift. Climate change, political unrest and polarization, as well as other disruptions around the world are causing increased instability. We need to be ready to adjust accordingly and, therefore, these areas require significant new analysis and strategies. Recent rapid changes in areas like COVID, New York State, and Afghanistan illustrate the need to recognize both the speed of change and the need for new solutions.
Income: The reality is that the top 1% of the population accounts for about 80% of income (and this number continues to increase) while the lower 20-40% continues to struggle. Marketing to struggling service workers requires far different strategies than marketing to Silicon Valley millennials. We need to recognize the presence of the K-economy (one for the rich and one for the poor) and develop differentiated solutions.
The pandemic: Data from 2020 and 2021 needs to be carefully considered. For example, productivity is currently running 3-4% compared to a historic 2-3%. Is that permanent, a trend, or just a temporary result? There are presumably about 10 million unfilled jobs and there are 9 million people looking for work. How will that evolve? What are the permanent social impacts in areas like work from home, business travel, virtual education, entertainment, health care, etc.?
As you consider parameters, here are some suggestions to help you adjust:
Embrace diversity. We need to be aware of our environment and recognize where there is inequality. And then, work to create equitable change.
Improve measurement and understanding. Improved analytics gives us the capabilities to better understand populations and responses. For example, Hispanics represent 18% of the population and Asians 8%, while blacks represent an almost constant 12%. These segments are more concentrated in certain geographic regions, but need more attention in every focus. Hispanics also represent 17% of the under 18 population and only 4% of the over 70 population.
Remember that interacting parameters have as much impact as individual. Bias change, potential, etc. all affect decisions and outcomes. For example, analytics advises us to pursue the most likely outcomes. However, intuition, passion, and effort underscore most venture capital successes.
Manage changes in parameters. The best example is in finance where the economy has experienced low interest rates and inflation for the last several years. One outcome is that stocks have returned 10-15% while bonds only 2-5% over the last 10 years. However, financial advisors have been slow to change and investors have received lower returns.
Don’t ignore tools to understand parameters. While factors that may show relationships, don’t misunderstand cause and effect. Many algorithms assume linear distributions while information is frequently more complex. In particular, intuition and outside outcomes are more likely than we think. Probability and risk should always be considered in analysis.
Parameters need to be managed to improve decisions. Understanding the risk, the rewards, and the importance of issues can improve outcomes. Don’t allow fear, uncertainty, or tradition to lower your potential and prevent you from trying something new. This includes both analytical and social issues. The realities and changes in parameters like populations, the economy, political environment, and social values should all be reviewed and considered regularly. The most important thing to keep in mind is that many variables are changing faster and more often than ever before. So, not only do you need to understand parameters, you need to keep up with the latest ones!
Dr. Shlensky is a graduate of Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products before starting StartupConnection. Having provided counseling to over 2,000 clients, he now focuses on working with select startups and small businesses.
When it comes to our business, we want to ensure we’re hiring quality employees who we can trust. Selecting and reviewing employees is a critical aspect of your business’ success—you’re choosing who you’ll work alongside, who will represent your brand, carry out day to day tasks, and interact with customers. How do you ensure that you’re selecting employees that are a good fit?
Although many of us consider ourselves experts on employee selection and evaluation, there are numerous objective reviews of the process that show significant opportunities to improve. The major issues usually revolve around what you are selecting and how and what you are measuring. In particular, personality and “fit” frequently receive too much attention while skills, experience, and motivation do not receive enough. I would also argue that the process is burdened with many complex efforts that produce minimal results.
The process of selecting and reviewing employees can be significantly improved with some simple tools that incorporate both the nature of the job and measuring the right factors correctly.
What are you really looking for? Looking for a car mechanic, surgeon, and other specialists is far different than looking for a social worker, manager, or other candidate that needs to fit in and support an organization.
Additionally, many efforts focus too much attention on long-term potential when many candidates will be gone in short periods. I think the interview question “where do you want be in five years?” is usually irrelevant. Many people won’t be there in five years, they don’t have a real answer to the question, and their answers are often based on interview training rather than validity.
In my opinion, skills, intelligence, experience, and motivation are far better predictors of success than social skills, common interests, and appearance. While this may seem like common knowledge, many decisions concerning selecting and reviewing employees are made in less than a minute (based mostly on appearance). This is a partial explanation for a well-proven theory that analysis can outperform interviews in predicting performance especially in well-defined situations.
How are you measuring what you’re looking for? In general, the process of selecting and reviewing employees is less effective with informal interviews, few criteria, too many data points, and less structure.In contrast, clear criteria, more structure, and trained interviewers can improve the process.
For example, the process of one person conducting multiple interviews with random people and averaging the evaluations has many potential concerns. In contrast, having different interviewers reviewing various relevant concerns and comparing the results can be highly beneficial to get valid perspectives. These initial evaluations should also be independent until all reviews are public to prevent results from being influenced by external factors.
Diversity should be an opportunity and not a burden. There is no denying that explicit and implicit discrimination are more common than we realize. In particular, when you review diversity in occupations, politics, business, etc. the progress is very slow. It will take aggressive and committed strategies to accelerate the process. Even programs like STEM (which attempt to get more women into science) do not fully understand the barriers and reluctance to accept more recruits.
Diversity is an opportunity: it increases the number of qualified and excellent people to select from and can increase organizational effectiveness. Areas like law, medicine, and the military have greatly benefited from increased diversity. Employee diversity also adds to the perspective of organizations. It can provide greater understanding of the strategies and needs of particular segments and audiences. We need to recognize that women make up about half the labor force and minorities currently make up over 50% of births. Fostering a company culture that focuses on inclusion will only make your business stronger.
Background information like skills, education, experience, and references are more important than you realize. Skills, education, and experience are fairly reliable determinants of the potential for success. In particular, education does show real accomplishment, maturity, and skills of candidates. However, it’s important that these factors don’t become the sole criteria so that other great people aren’t precluded from consideration. For example, how many great candidates are excluded due to professional organizations recruiting only at the top schools?
How do make a final decision when selecting employees? Frequently, the most significant barrier is bias. While simple predictors and sharing perceptions after interviews can be very helpful, we must be careful to avoid the trap of judging candidates after a minute or so on superficial criteria. We must also look for special characteristics that might make a candidate unique. Ask yourself: Am I looking for people who can just do the job, people who will be long-term employees, or someone who possesses something extra special?
The right fit depends on their needs as much as it does on yours.
Test and evaluate your results. Are you measuring your results and achieving your goals? Are your methods and processes effective? Are you attracting and reviewing the right candidates? For example, finding the right pool of candidates to choose from is a critical step in the process. This might mean you need to change where you’re advertising the job or expand the location you’re hiring in—is this a job that can be done remotely? You may need to consider out of state candidates. Perhaps, you need to rewrite the job listing—some excellent candidates may not apply if the listing has spelling errors or the description doesn’t sound enticing enough.
If you find that you’re not hiring effective candidates, take a look at your process. Are you differentiating between job requirements, candidates, and methods? It’s not a one size fits all process. For example, some jobs require great social skills and some do not. When interviewing candidates, make sure you’re focusing on the skills they possess that could make them great and not the skills they lack, if they aren’t essential to the position.
In general, objectivity, skills, structure, and alternative reviews can improve the hiring process while bias, subjective reviews, and poor information can detract from it. And keep in mind that great people don’t always make great employees. Therefore, in our efforts to be more effective in selecting employees, we must understand the process and acknowledge the difference between a candidate who is qualified on paper and an employee who is a valuable asset to our company.
Dr. Shlensky, President of StartupConnection.net, is a graduate of Sloan School of Management at M.I.T. He servedas the president of WestPoint Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he now focuses on working with select startups and small businesses.
“Business proposals and applications? Yay!” is probably something you’ve never thought. They’re time consuming, tedious, and, very often, frustrating. Whether you’re writing and sending or receiving and reading, there is a better process to write better proposals that we can all implement to make everyone’s life easier.
On one hand technology has made it easier to write, submit, and receive multiple proposals. However, this also increases the number of unqualified proposals and puts more demand on readers. For example, if I post about a job opening (even with specific qualifications), I get hundreds of replies. While some are excellent, I can tell the majority just copy and pasted a formatted response. I mean, why not? It only takes a few seconds to respond that way and MAYBE you have a shot…
I argue, however, that our current process of writing and receiving proposals and applications has simply not kept up with the technology of generating them. The most difficult issue is unqualified applicants. In many cases, job descriptions fail to include basic requirements like location, full or part-time, skills needed, and education/experience requirements. When they do provide specifics, many applicants ignore them or simply don’t read thoroughly. Because it’s easy to click and send, we end up wasting each other’s time.
The process to write better proposals is made even more complicated due to mistakes and carelessness. Here are some examples and ways to avoid these issues:
I have received proposals that I can tell are copied and pasted because they have other client’s names on them. Huge red flag there. If you’re the person sending this: Read things before you send them. It looks highly unprofessional. If you’re the person receiving this, it’s probably a waste of time to consider it. Has this person really read the description of what you need if they can’t even take a minute to look over their response?
Fees are often confusing and/or misleading in the same letter. In particular, refund information is frequently contradictory. These are usually settled, but why not avoid the confusion to begin with by taking the time to proofread?
Applications that show little awareness that they have read requirements or the nature of the request are annoying. Make sure to address the specifics. Details are important and stand out to someone who is choosing between various applications.
Too many details can be overwhelming. For instance, pages of legal or unnecessary information often clutter up a proposal. While things like payment conditions and adhering to laws are appropriate, much of the rest is simply irrelevant. Packets are often sent out that include a broad range of information that isn’t applicable to everyone. For example, if a job is remote, don’t send pages about in-house rules/expectations. Be relevant.
Additionally, proposals need to meet clients’ needs and goals. Things you should consider and/or address in your proposal: Are you truly qualified to provide what is needed? What are the technical versus creative aspects of a request and how will you approach each? What kind of budget is available? When is the deadline? Is it part-time or full-time? Is it a one-time project or ongoing relationship? How much of the request is analysis and understanding versus established solutions? Why are you right for this job? What skills or experience makes you stand out from other applicants?
While going through proposals, the first thing I do to reduce the number of applicants is to eliminate all that lack the experience and skills I requested. I also get rid of the ones with low fees—you get what you pay for and you don’t want a plumber when you need an electrician.
The process of writing and receiving proposals can be time consuming, inefficient, and produce mediocre results. If we make concentrated efforts to improve the process in order to write better proposals, the finished product will be more successful. Before submitting a proposal, ask yourself: Do I understand the goals and requirements? Do I have the experience and qualifications requested? Have I expressed all of this clearly in the proposal? If you can answer yes to all of these, submit away! And remember: make it personal—to them and their needs as well as to yourself. After all, they are hiring YOU. So, highlight what makes you special and how your unique talents are the best fit to execute their needs.
Bert Shlensky, president of Startup Connection is a graduate of Sloan School of Management at M.I.T. He served as president of WestPoint Pepperell’s apparel fabrics business as well as President & CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he now focuses on working with select startups and small businesses.
All living creatures are biologically self-interested. We are programmed to prioritize our survival. Therefore, we don’t usually make bad decisions on purpose. Nevertheless, mistakes happen and poor decisions will be made now and then. But, is there a way to limit or even stop making bad decisions?
When it comes to analysis, the topics that dominate the conversation are: sampling, statistics, and accuracy. This is where things can go wrong because the process of measuring needs to be reviewed—not just the results. In other words, we think we are making a good decision based off of accurate data when, in fact, we are making an uninformed decision based off a faulty measurement process.
For example, let’s say a child wants to go on an amusement park ride that has a minimum height requirement. The ride attendant measures the child and the results say he/she is tall enough so the child is allowed to ride. This seems like a good decision until we learn that the measuring stick was in feet instead of meters. So, the decision was actually based off wrong information and, as a result, the child’s safety is jeopardized.
If we are to stop making bad decisions, we need to study the following are issues that affect the measuring process:
Confirmation Bias
This is one of the biggest problems when gathering data as we try to stop making bad decisions. Confirmation bias happens because we (consciously or subconsciously) want to support our own views or predictions. As a result, our preconceived ideas restrict fair analysis. For example, most people judge a presentation within 90 seconds based almost entirely on appearance rather than content.
Confirmation bias can also be a result of efforts to simplify the decision process. For example, doctors and other professionals frequently make early hypotheses and seek evidence to support that diagnosis. While that approach can be effective, it ignores contrary information.
We need to recognize and reduce our “tunnel vision” by working to stay curious, exploring opposing views, and truly listening to what others think and why. This can help us see things from another perspective more clearly.
It’s also noteworthy to mention that how we explain our success or failure is often a byproduct of confirmation bias. No one likes to accept poor results or defeat. Therefore, when we lose, we often attribute it to unfair conditions or make up some other excuse. However, when we win, we chalk it up to our great skills and valiant efforts. This is a biased way of thinking and one that we should all keep in mind when analyzing results.
Measurement
We frequently mix measurement components. There’s a famous story about a young man who visited the Museum of Natural History. He asked the guard how old the tyrannosaurus rex was and the guard told him it was sixty-five million and thirty-eight years old. The boy then asked how he knew that. To which, the guard replied, “The skeleton was estimated to be sixty-five million years old when I started to work here and I have been here thirty-eight years.” Obviously, two methods of measurement were used and combined to get a very specific, but most likely, inaccurate number.
It’s very interesting to see how people try to explain why results are “wrong” rather than accepting and admitting that their measurement was flawed. For example, end of the world forecasters will blame timing, weather, and other phenomenon when their predictions are incorrect rather than just admitting that their measurements were wrong and the world didn’t end.
Presentation
How data is presented also affects how it is interpreted. For instance, if you attach a number to a concept, it will be believed more. There is even a concept called “Potemkin Numbers” (or Potemkin Village) that exemplifies how made up numbers can enhance belief in an idea.
Relativity can also sway measurement perceptions. For example, the perception of numbers can vary based on presentation as an absolute number, percentage or ratio. Additionally, charts are frequently scaled to show the most or least degree of change, depending on the goal of the people presenting the information. In short, the method of measurement and the manner in which results are revealed can play a huge role in the accuracy of data (and/or the interpretation of that data).
Parameters
Sometimes we ignore the information needed to make good decisions. This could result in focusing on the wrong customers or choosing the wrong branding information. Paying attention to the appropriate information is critical. For example, ignoring safety or customer service in today’s environment can destroy a great business. On the other hand, providing clientele with a sense of confidence during a pandemic can greatly enhance effectiveness. (Many companies attempted to do this right away—we all got an abundance of emails from businesses assuring us that they were taking all the necessary precautions to keep customers safe during this uncertain and scary time.)
In general, we understand what risk is, but measuring it can be as uncertain as the risk itself. For example, we frequently categorize risk as high, medium, or low with literally no definition of what that means. As a result, people have quite different definitions of those terms if not given clear parameters.
Misinformation and Misunderstanding
Cause and effect is a highly misused concept. Just because factors seem related does not mean they are a result of cause and effect. For instance, it is clear that poor living habits can contribute to poor health. However, that does not mean that factors such as injuries, the environment, heredity, etc. can’t also play a role in poor health. Therefore, you cannot conclude that poor living habits exclusively cause poor health.
Inadvertent decisions can also stem from confusion. A key strategy of large law firms is to overwhelm poor plaintiffs with as much information as possible. Planning can reduce confusion and may help us stay focused, but we are repeatedly warned that too much planning can disrupt the creative process. The point being: long and short-term goals, profit versus growth, and qualitative goals (like happiness) can all affect our perceptions, which play a role in our decision-making. Knowing where you want to end up will help you make good decisions to get you there (while still giving you some freedom in the process of how you’ll achieve that destination). In other words, it will you you stop making bad decisions.
Perceptions and inherent patterns can also cause inadvertent actions. Recently, social scientists have focused on how we make seemingly obvious decisions. For example, we tend to be risk adverse, avoid change, and accept the most comfortable alternatives. So, while bad decisions can be changed at any time, we frequently avoid, delay, or defer change. So, while we know eating unhealthy is bad for us, making the shift to buying organic foods and incorporating new, nutritious recipes might feel overwhelming and, as a result, we put off making the good decision to improve our eating habits.
Analysis, statistics, and data are important aspects of decision-making. However, we also need to acknowledge that the parameters, method of analysis, misinformation, presentation, and bias can greatly alter results and data. A simple tool to help avoid these pesky issues: Include a “devil’s advocate” in your decision process. Just taking a quick moment to look at things from a different perspective can help you see clearly… maybe it debunks your theory or, perhaps, it strengthens your convictions. Either way, you (and your decisions) will be better for it. Stop making bad decisions.
What are you struggling with? Do you have a decision you’re wrestling over? Want to learn more about how to stop making bad decisions? Has a bias affected your outlook? Whatever obstacles you’re facing, I’d love to discuss options to improve your business.
Contact:bshlenksy@startupconnection.net or 914-632-6977 Dr. Bert Shlensky earned a PhD from the Sloan School of Management at M.I.T., mentored a few thousand clients at Score as well as in his own practice, grew Sure Fit products from $50 million dollars to $150 million in sales including $60 million of direct Internet sales, was President of WestPoint Pepperell’s Apparel Fabrics Business, and headed the $400 million Culet Shirt Group. In short, he knows what works and can help you lead your company to greater profitability and success.
Functioning during a pandemic is the ultimate conundrum. While constant uncertainty, risk, and complexity complicates (and slows) every decision, the pressing need for immediate change, adaptation, and redirection never lets up. It’s a relentless balancing act between immediate survival and long-term success and the only sure thing is inconsistency. Amidst so many necessary adjustments, it’s difficult to know the best way to advance effectively as we are maneuvering through a pandemic. But, alas, advance we must.
Are baby steps the answer or is big change the way to go?
As we find ourselves maneuvering through a pandemic, on one hand, some baby steps are critical because problems continue to develop every moment that require urgent and immediate changes. While we are rushing to develop solutions, the nature and complexity of immediate goals has dramatically shifted. Safety must be at the forefront of every program and decision. Short-term financial constraints have become paramount while uncertainty is limiting most forecasting through 2021 at least.
Crises Response:
With forecasting unavailable in a rapidly changing business environment, instant flexibility and response are crucial. For example, work-from-home, online shopping, and crowd avoidance will continue to evolve over the next few months.
People management is requiring more quick decisions and administration. When, who, and how do you bring back staff? How do you make decisions and adapt the organization while considering factors like work-from-home, more volatility, and more uncertainty? Should you consider hiring creative types or especially skilled people who can offer new solutions?
Pricing strategies during a pandemic are critical both in controlling costs and generating volume. In particular, you need to recognize new costs and new customer preferences; which will require analysis and measurement using multiple small trials. Consider alternative pricing tactics as well as the entire pricing package. Online sales, measurement, and flexibility will make these rapid changes executable.
The latest trends in dealing with the crises also bias our decisions. For example, many businesses are executing 25% operating formats that most experts think will fail. Every business owner needs to continue to test a lot of alternatives that integrate expectations, uncertainty, psychology, culture, risk, quality control, consumer confidence, and values.
Planning ahead:
Short-term small efforts must be integrated and designed with long-term strategies and operational efforts in mind. Start with a quick assessment of who you are and where you are going with your business. Don’t worry about the details. Just take a half hour or so and write down key goals, challenges, and opportunities. Make it short so you can focus on priorities rather than overwhelming yourself with too much. You can (and should) come back and revise this list frequently.
Assess your potential profitability and financial needs. There are simple profit models that can help you easily determine your viability, key issues, and alternatives. In particular, the analysis should focus on the impact of various factors on your profitability and potential. One of the surprising aspects of this analysis is that growth and prioritization are frequently more important than cost cutting in business success.
Focus on what you do well and eliminate efforts that will fail.
Keep strategies and programs integrated. Issues like rent, supplier relations, marketing, operations distribution, etc. are critical and must remain flexible on a daily basis. And while finances may be tight, marketing could be the best opportunity for success. Additionally, collaboration with suppliers and landlords will be essential for success. Many tenants and landlords seem to avoiding each other, but I suggest negotiating new rent requirements and marketing efforts in order to survive and generate more business. There are also a number of marketing efforts that can be tested and purchased on a reduced or trial fee.
A lot of great discussions are taking place regarding working-from-home, office spacing, and communication. However, most of the talk revolves around physical settings to accommodate spacing and other requirements. We need to also examine the impact on structure, communication, social interacting, and decision-making.
The new normal must include tools that encourage informal communication in order to help develop relationships, build trust, encourage new ideas, and create safe feedback. Examples: some in-office meetings and social events, including part-time or other department staff, promote health and wellness, and develop community efforts to replace interactions that no longer exist such as “water cooler chats.”
“I just thought we should talk more.”
In general, I support developing confidence and taking more risk. In many cases, we overestimate the costs of failures and underestimate the value of success. Midst pandemic, constant uncertainty makes risk more prevalent in all decision-making. Make sure you understand the value, alternatives, and the probability. Similarly, analytics frequently ignores the potential of innovation and out-of-the-box-solutions. Adapt and be flexible. Most efforts won’t succeed on the first try, but practice integrating the positive components from each trial with some different approaches.
Traditional organizations will most likely fail in the wake of the “new normal” because they are inflexible, hierarchical, and change too slowly. Walter Isaacson’s book, The Innovators, illustrates how commitment, diversity, collaboration, and friction among diverse participants such as Jobs and Wozniak or Gates and Allen led to success. The structural key to change is the need to be open to measurement and feedback. Looking at, understanding, and sharing financials, operations reports, and sales reports are the first step. Simple research studies and social media can be additional tools.
As we find ourselves maneuvering through a pandemic, the solution seems to be found in a paradoxical combination of immediate change and big baby steps. Inarguably, the slate needs to be wiped clean and new paradigms are a necessity. This will include immediate crises and opportunity management as well as long-term strategic considerations. A focus on cooperation, open collaborative systems, and trying to keep in mind that “smaller can be better” may offer hope for organizations as they restructure. Finding a way to stay afloat and, ideally, thrive during such a transformative time requires nuanced decision-making. You’ll need to find a balance between small steps, immediate action, gradual shifts, and drastic change while determining which approach works where and deciding if it’s a short-term response or a long-term solution. Sure, it sounds complicated, but that’s the nature of business. And you already knew that.
Seems
a bit like an oxymoron, no? Well, that’s exactly what analytics have become
these days: an oxymoron. A real conundrum. On one hand, data helps us predict
change and plan for the future. On the other, that data can be wrong or
misleading and, therefore, really screw things up. So, I say, take it all in,
but then let (most of) it go.
There’s an ongoing debate regarding the roles of data and entrepreneurship. In particular, the increased availability of analytics data and tools is making planning, scheduling, and analysis much simpler and more accurate. Amazon is one of the best examples of using analytics to improve logistics (i.e. more one-day shipping).
In contrast, the argument stands that these tools are less effective than originally expected. The most significant instances are incorrect data, method, and change. If the data is wrong, access to more data does not improve analysis. Mistakes like Boeing, Afghanistan, WE WORK, G.E. and retail stores represent diverse examples where people simply focused on wrong information. The existence and use of the phrase “alternative facts” supports the unnerving idea that it’s easier to make up lies than it is to refute those lies. That alone does not bode well for analytics and data.
Data can also be misleading when a dramatic change occurs.
Disrupters like E-Commerce, ride share apps, and food delivery dramatically
affected markets and parameters. Consequently, significant shifts in culture,
politics, and buying habits also make economic forecasting much less reliable.
Additionally, analysis is dependent on using the right
tools and methods. Many assumptions and approaches may not be appropriate. For
example, investment advisors frequently tout their individual excellence while
changes in the overall market are usually the largest factor in investment
success. Mathematics shows that the more history one has on a topic, the more
accurate the analysis. However, if parameters change, history may become
irrelevant.
This is why we take it all in. Think on it. Absorb it. Let
it all sit for a bit. And then throw most of it out the window.
You should absolutely consider what they teach on the first
day of a statistics course (Validity, Reliability, and Accuracy) rather than
ignore it.
A recap in case you need a refresher:
Validity is simply focusing on whether
your methods are valid. While sampling, correlation, and other tools can improve
performance, the analysis must be valid. For example, many of us predict that
our team will win. However, the odds in most professional leagues are that
about 3% of approximately 30 teams will actually win.
Reliability is the repeatability
of results. Differing results in political polls or verifying results of
medical tests are examples of reliability issues.
Accuracy is just the correctness of
the measurement process. The most violated rule of accuracy is that you are
only as accurate as your least accurate number. There is a famous story about a
museum guard answering a child’s question about how old a dinosaur was. He said
280 million years plus 39 years and 20 days. When asked where the number came
from, he said, ”When I started, they told me it was about 280 million years
old. I have been here 39 years and 20 days.” While this number certainly seems precise, it probably isn’t very accurate.
I would add a fourth factor to this list, which is probably
the most important: Bias. On one hand, bias is a complex mathematical
term correlated with sampling, randomness, analysis, and other things. On the
other, it is how our culture, background, gender, age, and preconceptions etc.
affect our attitudes and decisions. For example, many studies have shown that
we form an opinion about a presentation within 90 seconds of it starting. I
highly recommend that, in dealing with bias, you manage its existence rather
than trying to deny it.
Finally, tools as well as methods of reporting are
dramatically changing. A colleague of mine recently challenged my website saying
it was “too dependent on PowerPoint and Excel.” While these are both great
tools and are the most dominant analytical and presentational methodologies,
they can have many limitations: The information can be old, longitudinal
analytics is frequently lacking, they are not interactive, they are not visual
enough, and they can be very boring and/or misleading. Nothing is worse than being
forced to sit through a PowerPoint presentation that is too long and loaded
with endless Excel sheets.
In summary, analytical tools offer great potential for success, but they need to be utilized properly and in conjunction with intuition to be effective. So, gather all that data and pay close attention to it, but don’t be afraid to toss it all out.
When you want to stand out, reach out to Bert for the tools that will build your “sticky” brand. My focus is on understanding and analyzing your dilemmas and challenges, so your company becomes profitable faster.
Call (914) 632-6977 or email me at bshlensky@startupconnection.net. Don’t leave without signing up for our useful free eBook!
Feeling stumped or overwhelmed? Contact Bert at (914) 632-6977 or Email to start the process. Thanks!
