It is always incredible to see the training, skill, and excellence displayed at the Olympics. However, the passion, focus, and commitment are even more impressive. When working toward a goal, we want to see that our efforts are producing successful change. Yet, too often, the majority of our focus is centered on analytics, expertise, skill, profits, and science. Unfortunately, these tools sometimes ignore other critical requirements for successful change and better decision-making, such as: passion, focus, trust, effort, risk, and commitment.
These elements of successful change are frequently lower priorities because they are difficult to measure and make analysts uncomfortable. For example, decision makers frequently hate considering risk, despite the fact that it is present in almost every issue. Additionally, due to the high levels of uncertainty involved, we are often slow at measuring results in periods of rapid change like a pandemic, inflation, and new innovations.
Change is hard, even when it’s successful change, we are often hesitant to adapt.
As a business consultant, I constantly hear, read advice, and see comments focused on worries, concerns, caution, etc.—basically, all the old paradigms related to achieving business success. In my experience, more attention needs to be given to the areas that are difficult to measure. Some suggestions to accomplish this include:
Positive thinking is vital. A good chance at success requires a balance between reality, paranoia, action, and positive thinking. An interesting tactic is to focus more on how you succeed with some clients than fail with others.
Positive thinking does not necessarily mean avoiding or ignoring negatives. Instead, it involves making the most of the potentially bad situations, trying to see the best in other people, and viewing yourself and your abilities in a positive light.
Create a positive culture. Say please, thank you, and show that you care about people via praise and encouragement.
Accept that operating a small business is a process. Recognize that you will make mistakes. Your goal must be to develop, test, measure, and adapt rather than give up after the first or second problem.
Encourage open communication, a sense of realism, and focus on problem solving. Be sure to constantly assess your situation. Develop expert support and, when appropriate, have discussions with outside and inside colleagues.
Be prepared to pivot quickly. The market changes constantly and so do your customers’ lifestyles. So, you need to be able to shift along with it. By expecting that your market can change from year to year, you’re being proactive in your thinking, and can create flexible plans to adapt to these changes.
Know your sh*t, but be ready to listen. There is extensive research supporting the idea that people don’t change unless they believe in it.So, when given the opportunity to argue your case, try to emphasize the benefits for the other party. It’s well proven that tactics like collaboration, trust, and listening work better in decision making than dictating, lecturing, and proclaiming false expertise.
Develop, test, measure, and adapt. Many plans, forecasts, and proposals are done in a static format with one dimensional analysis and results. They’re usually flawed because we live in a more dynamic and interactive world. For example, branding, marketing, pricing, and operations all must be viewed as an integrated program rather than separate and isolated activities. Similarly, businesses need to have alternatives at the ready, as well as a process in place to adapt. Mistakes will occur, but remember, Steve Jobs got fired and Tom Edison tested thousands of light bulbs before succeeding.
Understand your goals, resources, and risk. In particular, really understand your market analysis, competition, how and why your company is different, and why customers should care. Are you focused on long-term growth or quick profits? While testing alternatives is a great strategy, ensure that you are focused on priorities that you can execute well and that will have the most potential.
Analytics is an incredible tool for improving progress, developing alternatives, and measuring outcomes. However, in order to achieve successful change, it needs to be supplemented with passion, effort, commitment, and focus. Without these, it’s much easier to throw in the towel when things get difficult. You may have been born with the innate skills necessary to win countless gold medals, but without the drive, determination, and dedication to go for it, those natural abilities may not reach their full potential. It’s the passion that pushes you to succeed.
Dr. Shlensky 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.
We all know what happens when we assume… And yet, how many of our decisions are based on untested information and assumptions? Have you ever been told to wait an hour after eating before swimming or you’ll drown? Where did this information come from and why do we accept it to be true?
Bubbe-meise is a Yiddish term used to describe old wives’ tales. Some examples include: It’s bad luck to open an umbrella in the house. Eat all your food—there are starving children in Europe! Chicken soup will cure anything!
In general, we tend to accept beliefs, data, news, teachers etc. as valid. Even putting aside lies, probabilities, bias, incompetence, etc., we accept a lot of bad information, assumptions, and suggestions. Why is this?
We need to question more, check resources, and test assumptions in order to make better decisions.
Frank and Ernest Comic
Perceptions and inherent patterns can also cause inadvertent actions. Recently, social scientists have focused on how we make seemingly obvious decisions. The results show most people tend to be risk adverse, avoid change, and accept the most comfortable alternatives. So, while we can work to change a bad decision at any time, we frequently avoid, delay, or defer change and, thus, draw out a negative situation. For example:
Denying the effectiveness of COVID vaccines is just unexplainable. For years, we have accepted seat belts, polio and various other vaccines, not driving while drunk, and many other safety measures. The vaccines are just a similar precaution to save lives.
Many economic proposals ignore that the k economy is getting even more evident. The k economy argues that economic recovery is experiencing different rates among the poor and the affluent. Specifically, the poor are experiencing even more problems while working class and the rich especially are experiencing exponential gains. Excluding this information is irresponsible and will only produce inaccurate conclusions.
Discussions about returning to work and school are frequently based on personal opinions and biases. Why can’t we recognize we lack perfect information and rely on and test the knowledge we have?
The solutions to these issues are not simple or obvious. However, we can pay more attention to alternatives, successful examples, and valid data while focusing less on personal opinions and bias. In particular, we need to include the parameters and process in our deliberations. Other helpful strategies include:
Get the politics of the issues out of the discussions. How many poor decisions are made because we think that’s what the boss wants? Or because “that’s the way it’s always done?” Or because we’re afraid to speak up? Or because we refuse to acknowledge that the situation has changed? Drop the ego and make fact-based decisions.
Utilize analytics. This is an incredible tool for improving success, developing alternatives, and measuring outcomes. However, analytics can be less reliable when the data is wrong, we assume invalid relationships, sampling is inappropriate, and risk is not considered.
Review and evaluate processes and decisions. It is unreal to me that objective testing mostly outperforms personal interviews in staffing decisions. But, the reason is mostly because of poor training and bias.
Stop using old or incorrect data. We need to check that our sources are correct and up-to-date. The pandemic has significantly affected data and trends using 2020 information. The census shows some dramatic changes in the population—in particular, we need to consider diversity. For example, different regions have significantly different ethnic characteristics.
Don’t ignore facts and tradeoffs. Going back to the office has many tradeoffs such as commuting time and communication among employees. We need to understand the issues, develop flexible solutions, and test various alternatives rather than relying on personal preferences of people.
Consider the conditions of a situation. Facts are frequently more independent than we think. If you flip a fair coin, the odds are still 50-50 (regardless of the last few flips because the flips are independent). However, sports analysts have proven that certain conditions, like left-handed batters hitting to right field, are more probable.
Don’t assume cause and effect. We frequently jump to conclusions before doing a proper analysis. Differing and multiple goals (such as short-term and long-term) can impact the understanding of cause and effect. Medical symptoms are often incorrectly diagnosed because a correlation was detected, which could be mere coincidence. Too often, an assumption is made and a diagnosis is given before things like environment, heredity, or psychological factors are even taken into consideration.
Check your biases. The biggest issue is probably bias, which is most evident in political and economic arguments. Questions like: Why are the poor are poor? What is the impact of IQ? How will the stock market perform? What are the causes of crime? These types of questions all involve a complex analysis of a variety of factors. And yet, everyone seems to chime in with an unchecked, biased opinion.
Bias is one of the greatest complications when it comes to accuracy in the scientific analysis of decisions. This includes statistical problems like sampling, measurement, and development of information. I also believe that social bias can be more impactful than statistical bias—this includes our preconceived perceptions and assumptions about factors affecting decisions. Cultural and environmental factors also affect bias.
Analytics, tradition, and experience are all valuable tools that help improve decision-making. However, we need to ensure that the assumptions behind those tools are accurate and reliable. In particular, our rapidly changing environment (especially in regard to issues like COVID) requires regular testing and validation. Similarly, creativity and intuition that defy some analyses are becoming increasingly necessary. Search alternative causes and solutions, test your assumptions, and always ask yourself: Why do I believe what I believe? How do I know my information is correct?
Dr. Bert Shlensky, President of www.startupconnection.net, offers experience, skills, and a team devoted to developing and executing winning strategies. This combination has been the key to client success. We welcome comments, suggestions, and questions. You can write him at: bshlensky@startupconnection.net or call at 914-632-6977
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.
Whether it’s implementing a business strategy or taking a family vacation, we all want to plan accordingly. We try to rely on analytics and intuition. We look at business trends in an attempt to make educated decisions and we check weather forecasts hoping we won’t get stuck in the rain. And, with so much technology and Artificial Intelligence (AI) are our fingertips, the ways in which we can make these assessments are abundant. But, how can we know what the best strategy is? When is Analytics most reliable and when should we ignore technology and stick with our instincts?
When it comes to predictable events, Analytics is fantastic for providing insight and additional analysis. Currently, there is significant hype for new AI tools. GPS, improved forecasting, trend analysis, and selection have all experienced dramatic gains. I am amazed, for example, how GPS systems monitor traffic and predict an arrival time. However, it’s noteworthy to ask ourselves if we’re simply using them for efficiency and ignoring important considerations. This is one of the problems of using analytics and intuition.
There are two questions we must ask when using AI and Analytics:
First, are the assumptions, data, analysis, and conclusions really valid?
Second, do we limit the use of intuition and small measures in using these tools?
One of the biggest issues with AI is that we simply accept the results because they are impressive or too complicated to understand. We need to review the validity of the data, measurement, and analysis.
For example, the pandemic will require adjustments for data analysis. How do you compare changes from 2019 to 2020 and 2020 to 2021? In particular, how do you forecast 2022 and beyond? How important is an annual average and should you use 2019 or 2021? The analysis is highly dependent on issues like assumptions, demographics, time periods, etc. The answers can also be more dependent on a specific situation rather than general rules. Forecasting things like workers going back to the office, students going back to the classroom, airline passenger growth, business meetings, entertainment, and apparel trends all have different parameters.
We frequently just assume cause and effect when the relationship can be nonexistent. Statistics make it very easy to assume that a relationship among factors is a straight line. However, most relationships involve a variety of factors, as shown in the chart below:
Significant issues with analytics and intuition also occur when intuition, risk, and low probabilities produce better results than analytics. We all know the lottery is a bad bet, but some people do win. Similarly, many billionaires like Gates, Bezos, Jobs, and Must have achieved fame by pursuing high-risk and out-of-the-box alternatives. Many analytical recommendations encourage the “most likely” rather than the best alternatives.
More importantly, the reality is that outliers create much of the innovation, excitement, and change in our society. Steve Jobs probably said it best: “The people who are crazy enough to think they can change the world are the ones who do.”
In their new book, Noise, Daniel Kahneman, Olivier Simony, and Cass Sunstein point out how Analytics can fail to include key metrics. For example, mood, bias, mental state, etc. can alter judicial decisions. Variables like hunger, how much sleep we got, and personal preferences can all affect decisions.
While using Analytics based on AI has limitations, here are several suggestions to make it more effective:
Keep the goal in sight to improve your decision-making. The goal of Analytics is to improve decision-making and identify great alternatives. Focusing on satisfying investors, suppliers, employees, etc. is simply an invitation to long-term problems. Similarly, you need to understand the goals, timeframe, and precision in your research. Are you simply trying to make a living in a short time or build a giant business that you know will lose money in the first few years?
The biggest problem with decision-making is bias. Whether we admit it or not, we all have biases. Analysists love to discuss mathematical formulas and measurement in affecting bias; however, most bias (especially in small businesses) is simply human. For example, our most recent experience can have a significant impact on decisions.
Keep it simple. Simplify wherever possible. Focus on factors that really affect your business so you can understand them and estimate factors that are not as significant. For example, look at aggregate costs and administrative expenses rather than trying to forecast small items like telephone, utility, and insurance costs.
Be more open. Organizations need to be open to measurement and feedback. Observing, understanding, and sharing financials, operations reports, and sales reports is the first step.
Develop, test, measure, and adapt. Many plans, forecasts, and proposals are done in a static format with one-dimensional analysis and results. Often, these end up being flawed because we live in a more dynamic and interactive world. For example, branding, marketing, pricing, and operations must all be viewed as an integrated program rather than separate and isolated activities. Remember the 80-20 rule, which states that 80% of your sales will come from 20% of your products and/or customers. Are you measuring your sales, key items, and customers?
Embrace change. Don’t just talk about change. Take action! Responding to disruptive change like the pandemic requires finding a way to incorporate data, analysis, and pre-existing models while also embracing out-of-the-box thinking and flexibility.
Don’t neglect key elements of success. Operations, customer service, and logistics are just as important as traditional functions.They present huge opportunities for a business to become more efficient and differentiate itself (i.e. selling on Amazon or bundling products).
Relax. You can’t do everything in one day. Pace yourself and remember that there will always be uncertainty and change. Stay focused and take it one day at a time.
Always be willing to improve. What are your biggest challenges? Where are you overlooking potential opportunities? In what areas could you do better? Remember: more Analytics is generally useful for small businesses; however, one must be sure the foundation, reliability, data, and processes of the Analytics have a firm base.
Understand diversity. Demographics are affected by age, location, socioeconomic status, race, gender, etc. Current events have certainly affected trends relating to racial and female groups. Staying up-to-date on your target consumer and their habits will help inform your decisions. Do you know who your customers are and what demographics they belong to?
Analytics provides astute insights for business decisions and should not be underestimated. However, its value is highly dependent on how effectively it is used and the recognition that intuition is still an important factor. In particular, the more creativity and uncertainty involved in any given situation, the more intuition will be required. It is important to use both analytics and intuition.
Contact us for a FREE evaluation and get an alternative perspective on your business. We’d love to help you identify ways to adapt to current trends. No one has time for BS—so we’ll cut straight to the point and answer any questions you have. Reach us at:
Dr. Bert Shlensky, President of StartupConnection.net, has an MBA and PhD from the 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. More than 2,000 clients have benefitted from his business acumen over the course of his long career. He now focuses on working with select startups and small businesses. Please visit our website: www.StartupConnection.net for more information.
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!
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