Category: Book Reviews

My Favorite Business Books of the Year

“I am learning all the time.  The tombstone will be my diploma.” ~Eartha Kitt

“Books are the bees which carry the quickening pollen from one to another mind.” ~James Russell Lowell

And my all-time favorite quote about reading…

“Outside of a dog, a book is man’s best friend.  Inside of a dog it’s too dark to read.” ~Groucho Marx

I love to read books and absorb new information and ideas. In this final post of the year, I thought I would share some of the books that most inspired me this year. I hope you might also get great value from them. Some of them aren’t exactly business books, but I got business value from them and I thought you might benefit similarly.

Without further ado, and in no particular order, here are my favorite books of the year:

Customer Culture bookCustomer Culture: How FedEx and Other Great Companies Put the Customer First Every Day
by Michael D. Basch

This one was recommended to me by Anna Barcelos after I wrote my post on the 4 Keys to a Customer Centric Culture. Luckily, I think I was largely on the same page as Michael Basch, but I learned so much more about company cultures after reading his tome. Basch was a co-founder of FedEx and their initial SVP of Sales and Customer Service. He relays plenty of his learnings at FedEx, but he also relates the stories of other customer focused businesses small and large. He even covers an incredibly innovative Australian dentist office! Many of the stories sparked plenty of ideas in my mind, and I even excerpted one to highlight in my blog post on the power of naivete. Basch gives some very specific and easy-to-follow advice on creating the types of customer-focused cultures that drive businesses that simply succeed more because of their focus on their customers.

Why Can't You Just Give me the Number

Why Can’t You Just Give Me the Number? An Executive’s Guide to Using Probabilistic Thinking to Manage Risk and Make Better Decisions
by Patrick Leach

Every manager and executive should read this book. Patrick Leach does an excellent job explaining the concepts of probabilistic thinking and decision making, and he does it in everyday language that is easy to consume for business people who don’t necessarily have advanced degrees in mathematics. He makes a very compelling case for using probabilistic thinking to greatly improve the bottom line. This book, more than any other, was the inspiration for some of my posts on Monte Carlo simulations.

Hidden BrainThe Hidden Brain: How Our Unconscious Brains Elect Presidents, Control Markets, Wage Wars and Save Our Lives
by Shankar Vedantam

This is a book that I actually didn’t love immediately after reading it. However, the concepts I got from it kept creeping back into my brain, and maybe that’s an even better way to value a book. I excerpted a bit of it in my most recent blog post on the power of our hidden brains to dominate our decision making in ways we don’t consciously realize. Author Shankar Vedantam deftly manages to explain complicated brain inner workings through easy-to-read stories that illustrate the concept and leave lasting memories.

Upside of IrrationalityThe Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home
by Dan Ariely

I included Dan Ariely’s first book, Predictably Irrational: The Hidden Forces That Shape Our Decisions, as an all-time favorite in last year’s list of best business books. While the experiments and ideas in that book were probably more useful in the marketing and merchandising functions, I would say this book is much more about human interactions and general management and leadership. Ariely focuses on topics such as the effect of pay on performance, the motivational value of creating things, and the high addiction of our own ideas. As you might guess from the title, Ariely’s conclusions are not often what we’d expect but extremely beneficial.

SwitchSwitch: How to Change Things When Change is Hard
by Dan and Chip Heath

Anyone who’s attempted to implement major change in an organization knows how difficult it can be. This book is an excellent guide for how to implement and encourage change in business and in life. I loved not only the tips but the explanations about why we humans have such a difficult time with change. The Heath brothers use a metaphor of the Rider and the Elephant to describe the rational and emotional parts of our brains that are so fundamental to accepting and embracing change (and making decisions of any kind). It’s an excellent way to visualize the concept and a concept that I’ll not likely forgot.

ClickClick: The Magic of Instant Connections
by Ram and Ori Brafman

I actually dedicated a post to this book. This is a fascinating look at the reasons people click with each other. The authors really break it all down and in the process provide an excellent roadmap for creating better connections between people. Used in a business environment, this knowledge can help up create better functioning, happier and more productive teams.

design of everyday thingsThe Design of Everyday Things
by Don Norman

This is not a new book by any means, but I somehow never read it until this year. I found this book to be extremely eye opening and completely fascinating. Don Norman spends a lot of time talking about the design of objects like doors and faucets, yet the design principles he discusses and the human psychology learnings that go into those design principles are absolutely relevant to usable designs of things that didn’t even exist in the time he wrote this (the ’80s) — like websites. I explored just a couple of these concepts, and how they apply to retail websites,  in a post earlier this year.

And just for kicks, since I’m a music nut, here are my top 10 albums of the year:

  1. Trombone ShortyBackatown
    A great combination of jazz, funk, hip-hop and rock. Trombone Shorty rips on both the trombone and the trumpet. Standout track: “Hurricane Season.”
  2. Florence + the MachineLungs
    Technically, this record came out in 2009, but the Grammys have nominated them for Best New Artist this year I think I get to include the record in my list. Great vocals from Florence and the drums in particular are amazing on this record. The sound is powerful, a bit dark and different from anything I’ve ever heard. Standout track: “Dog Days are Over”
  3. Grace Potter & the NocturnalsGrace Potter & the Nocturnals
    Grace Potter can flat out sing, and the songs on this record are top-notch. This is just good, ol’ rock ‘n’ roll and a rollicking good time. Standout track: “Paris (Ooh la la)”
  4. The Gaslight AnthemAmerican Slang
    Gaslight Anthem are kind of a Green Day meets with Replacements and (not surprisingly since they are from New Jersey) jams with Bruce Springsteen. Standout track: “The Spirit of Jazz
  5. Mumford and SonsSigh No More
    The bluegrass tinted pop from British newcomers Mumford and Sons is highly infectious. Very impressive vocal harmonies as well. Standout track: “Winter Winds”
  6. Sons of SylviaRevelation
    A band of brothers (I assume their mother is named Sylvia), these guys have put together what I guess could be called an alt-country record because it’s basically pop music with country instruments. Lead singer Ashley Clark can flat out wail, and the band certainly holds their own. Standout track: “50 Ways.”
  7. Sharon Jones and the Dap KingsI Learned the Hard Way
    Sharon Jones and the Dap Kings are the best of the new wave of R&B retro, and this record does not disappoint. Standout track: “Money”
  8. OzomatliFire Away
    I’ve been an Ozomatli fan for a long time, but I think this is their best record since 2001’s Embrace the Chaos. Great combination of Latin, hip-hop and rock, and the songs are lots of fun. Standout track: “Yeah, Yeah, Yeah, Yeah”
  9. Aloe BlaccGood Things
    I suppose Aloe Blacc is a bit of an R&B retro artist, but he’s got a sound that feels both contemporary and throwback at the same time — and he’s very smooth. Standout track: “I Need a Dollar”
  10. SantanaGuitar Gods: The Greatest Guitar Classics of All-Time
    Carlos Santana teaming up with a bunch of guest vocalists to record some of rock’s all-time great guitar songs (sort of — I’m not sure Dance the Night Away would be my choice for a Van Halen song). Artistically, this is not particularly impressive. However, it’s a lot of fun to just listen to Carlos Santana wail away — even when he’s stepping all over the melodies. Standout track: “Back in Black”

What were your favorite business books of the year (and music, too)?

Do we really need the frying bacon close-up?

bacon fryingThe scene opens with a wide view of Owen leaning over the stove. Next is a close-up of Owen’s face peering down at the skillet, a bead of sweat dripping from his forehead. For two seconds we see a close-up view of sizzling bacon before returning to a wide view of Owen scooping the bacon out of the pan and carefully placing it just so on a plate of eggs and French toast. Cut to a scene of Owen bringing this newly prepared breakfast to his bride in bed.

”Happy Anniversary, honey.”

The budget conscious movie producer drops the script on the table and stares at the director.

“Do we really need the close-up of Owen’s face? The set-up for those shots adds a ton of extra cost. And the bacon close-up? Really? Does that really add anything to the story? Are we going to sell even one less ticket if that shot is not in the movie?”

But the director insists, “Yes, we have to have those scenes. They add the emotion and visceral impact that is required to tell the story, to let the audience feel Owen’s love. They are as essential to the story as the dialogue. Those shots are the difference between a professional film and a home movie, and no one will pay to see a home movie. They may not list the close-ups as the reason they don’t like the movie, but trust me, they’re a much larger factor than you think.”

The director is right. (And don’t worry, this post will eventually get to the retail relevance.)

I’ve been reading a lot about how our brains make decisions. Books such as How We Decide, The Hidden Brain, and Switch all explore the two parts of our brains that combine to formulate our decisions. Scientifically, those parts of the brain are the neocortex and the amygdala. In Switch, the Heath brothers call them the Rider and the Elephant; others call them the rational brain and the lizard brain. Whatever we call them, our decisions are the combined effort a conscious part of our brains that control our rational thinking and an unconscious part of our brains (the Hidden Brain) that controls our emotions.

Think you don’t make emotional decisions? Think again.

It turns out that without our emotional brains, we wouldn’t be able to make decisions at all. In How We Decide, Jonah Lehrer recounts the story of a man whose brain injury caused his amygdala to stop functioning. As a result, he was utterly incapable of making even the simplest decisions in life. Without an emotional brain to push him toward a decision, his rational brain simply went into analysis paralysis.

Our brains are extremely powerful, but they’ve got a lot going on. As a result, they basically compartmentalize processing power and take shortcuts when encountering situations that seem similar to past situations they’ve encountered. While this compartmentalization is generally very efficient, it has its drawbacks. Here’s how Shankar Vedantam explains it in The Hidden Brain:

The conscious brain is slow and deliberate. It learns from textbooks and understands how rules have exceptions. The hidden brain is designed to be fast, to make quick approximations and instant adjustments. Right now, your hidden brain is doing many more things than your conscious brain could attend to with the same efficiency. The hidden brain sacrifices sophistication to achieve speed. Since your hidden brain values speed over accuracy, it regularly applies heuristics to situations where they do not work. It is as though you master a mental shortcut while riding a bicycle—bunch your fingers into a fist to clench the brakes—and apply the heuristic when you are driving a car. You clutch the steering wheel when you need to stop, instead of jamming your foot on the brake.

Now imagine the problem on a grander scale; the hidden brain applying all kinds of rules to complex situations where they do not apply. When you show people the faces of two political candidates and ask them to judge who looks more competent based only on appearance, people usually have no trouble picking one face over the other. Not only that, but they will tell you, if they are Democrats, that the person who looks more competent is probably a Democrat. If they are Republicans, there is just something about that competent face that looks Republican. Everyone knows it is absurd to leap to conclusions about competence based on appearance, so why do people have a feeling about one face or another? It’s because their hidden brain “knows” what competent people look like. The job of the hidden brain is to leap to conclusions. This is why people cannot tell you why one politician looks more competent than another, or why one job candidate seems more qualified than another. They just have a feeling, an intuition.

This same “leap to conclusion” occurs when people visit our websites. They come to our sites with a preconceived notion about what a quality website looks like, and many times those preconceived notions have much to do with the types of design elements that many “rational” thinkers would equate to the frying bacon close-up described in the movie scenario above. It’s hard to imagine how a rounded borders versus straight borders might effect someone’s likelihood to convert, but it will because the hidden brain is making lightning fast decisions about a site’s credibility based on everything it sees and how closely what it sees matches up to its past experiences with what it found to be credible websites. A customer will not likely point to border type as a reason she didn’t buy; she’ll just feel uneasy enough about the site that her ultimate decision to buy will go negative.

Conversely, the right design can play a huge role in increasing a site’s credibility and turning that decision to buy in the right direction. For example, there have been numerous experiments conducted over the years that show how the price of a bottle of wine can genuinely affect people’s taste. In his blog, Jonah Lehrer discusses the wine experiments and “The Essence of Pleasure” and shows how paying close attention to the “essence of a product” or a site, like “Coors being brewed from Rocky Mountain spring water, or Evian coming straight from the French Alps” can actually lead to a change in sensory perception. This, of course, is what good branding is all about and it can absolutely make the difference between new customers further engaging with our sites or bouncing off to another site.

Since customers won’t generally be able to tell us about specific design elements that are causing them discomfort, we need to use various techniques to help us get to the heart of the truth. Multivariate testing can be a great way to understand the immediate value of different designs. Combining multivariate testing with a predictive voice of customer methodology like the ACSI methodology used by ForeSee Results (shameless plug) can really help us understand the long-term brand impact in ways that simply multivariate tests alone cannot. It’s critically important to understand our customers’ perspectives on design in context with their overall future intentions in order to get to a truth of design’s impact that even the customer could not tell us directly.

Metrics and methodologies can point us in the right direction, and then we need to hire and trust talented, professional designers to do their thing. In the end. high-quality, professional design speaks well to the hidden brain and leads to enhanced credibility. Enhanced credibility facilitates a better selling environment. So, yes, we really do need the frying bacon close-up.

What do you think? How is design treated in your organization? What tips do you have? Or are you not buying it?

The power of a little naiveté

questioningMost of us are experts in something. Our expertise and experience are usually significant advantages that allow us to deal effectively with complex problems and situations. But they can occasionally be Achilles’ heels when they breed the type of overconfidence that causes us to overlook simple solutions in favor of more complex and costly solutions. Injecting a little naiveté into some problem solving sessions can spur new thinking that results in more effective and efficient solutions.

In my experience, experts tend to skip right by the simple solutions to most problems. Groups of experts working to solve a problem are even more likely to head directly to the more complex solutions.

Consider this example from the excellent book I’m currently reading, CustomerCulture by Michael D. Basch (thanks to Anna Barcelos for the tip):

Hershey’s Chocolate Company had a problem on its Rollo production line. It had worked with teams of employees to improve quality and had raised the consciousness of their employees around service in all aspects of the operation. This example involves a problem where the candy went through an automatic wrapping machine, and the wrapped candy was dropped onto a conveyor that dumped it into boxes to be sold in retail stores. When the box reached the specified weight, it would be shifted to a new empty box, and the process would continue.

The problem was that, all too often, empty wrappers would come out of the wrapping machine and end up in the retail boxes. These boxes had cellophane windows where the consumer could see the empty wrappers, and, although the box was sold by weight, the customers’ perception was of poor quality and the feeling of being taken advantage of.

The company put a team of engineers on the problem, and a new wrapping machine was not cost justified. Therefore, the problem became “How to get the empty wrappers off the conveyor.” The engineers then designed an elaborate vibratory conveyor system. A vibratory conveyor vibrates, and heavy things tend to move with the force of gravity. In this way, they could vibrate the filled wrappers off the vibratory conveyor to the box filling conveyor. The cost would be about $10,000 to move equipment around and to install the new system. Of greater consequence was the time. This line was working 24 hours a day and 7 days a week and was still falling behind. A retrofit would stall production for a day and one-half.

Fortunately, part of the team inventing the new system was the production workers who worked the line every day. The engineers presented their solution for feedback. The next day, two production workers were discussing the problem just before lunch when one said, “I’ve got it.” The other asked, “What have you got?” “I’ll show you after lunch,” came a hasty reply as the man left the building. After lunch, he returned with a $15 fan he had purchased at Wal-Mart. He plugged in the fan. It blew the empty wrappers off the conveyor, and the problem was solved—no great cost, no stalled production.

In the end, the simple solution was both highly effective and highly efficient. I don’t know why expertise largely blinds us to these types of solutions, but maybe it’s because our training and our past experiences have been so focused on complex solutions that we just automatically go there. And when we’re discussing the problems with groups of experts, as was the case in the Hershey’s example, maybe we also just assume the others in the group have already considered more simple solutions.

Hence, the power of a little naiveté.

Too often, we associate naiveté with ineptitude, but the root of the word, naive, is really more about lack of understanding or sophistication. And that lack of sophistication can be just what the doctor ordered in some problem solving situations. I can think of many conversations I’ve had over the years with hard core technical folks where I asked a series of “dumb” questions that ultimately led to those highly trained experts developing simpler and ultimately more effective solutions.

Next time you have a complicated problem you’re trying to solve, rather than just gathering the best of the best (and only the best of the best) to discuss solutions, consider inviting a few “differently experienced” folks into the room. These don’t have to be inexperienced people in general, but rather people specifically inexperienced in the particular problem being solved. The main idea is to get some different thinking injected into the conversation. One of the main tenets of the Monkey Cage Sessions problem solving technique I’ve written about before is inviting people of different experience levels and backgrounds into a single session that allows views of the problem from multiple perspectives.

We need our assumptions to be questioned if we hope to find the absolute best solutions. Let’s tolerate a few “dumb” and “naive” questions and appreciate fresh perspectives on the problem. We might be surprised what solutions we come up through the power of a little naiveté.

What do you think? Have you ever encountered the power of naiveté in problem solving situations? Or do you think letting lesser experienced folks into complicated solution finding sessions is a waste of time?

Click (not the one you think) to success

Click book coverIn my experience, the most important factor for success in business is the ability to interact well with other people. Leadership skills, financial skills and technical skills all matter a lot, but they don’t amount to a hill of beans without solid people skills.

The reality is none of us can be successful completely on our own. We need the help of other people — be they peers, staff, managers, vendors or business partners — to successfully accomplish our tasks and goals.

Human relationships are more complicated than Wall Street financial schemes, but we often take interpersonal skills for granted. We rarely study them to the degree we study financial or technical skills. After all, we’ve been talking to people all our lives. We’re experienced. But I’ll argue there are subtleties that make all the difference, and they’re worth studying.

In my opinion, the best business book ever written is How to Win Friends and Influence People by Dale Carnegie — and it’s actually not even classified as a business book. I’ve never read a better guide to the basics of interacting effectively with people.

But I just finished a book that will take its place nicely alongside the Carnegie classic on my bookshelf.

Click: The Magic of Instant Connections by Ori and Rom Brafman (authors of Sway, one of my favorite books from last year) explores the factors or “accelerators” that exist when people “click” with each other. We’ve all had those instant connections with people in our lives, and those types of connections generally lead to powerful and productive relationships. While the Brafmans dig into both the personal and business nature of those connections, for purposes of this post I’ll focus on the business benefits of understanding and fostering such connections.

The book covers a wide range of connection accelerators, more than I could ever cover in this space, so I’ll just address a few that really stood out to me:

Proximity
Simple physical proximity can make a huge difference in our ability to connect with others. A study of a large number of military cadets found that 9 of 10 cadets formed close relationships with the cadets seated directly next to them in alphabetical seat assignments. Another study found that 40% of students living in randomly assigned dorms named their next-door neighbor as the person they most clicked with, but that percentage dropped in half when considering the student just two doors away. Maybe more startling, the students who lived in the middle of a hall were considerably more likely to be popular than those living at the end of a hall.

Why?

The authors explain that these connections are often driven by “spontaneous conversation…Over time, these seemingly casual interactions with people can have long-term consequences.”

I think many of us have instinctively understood the value of placing working teams in close proximity to each other. I’ve personally always attributed that value to the working conversations that are overheard and allow various member of the team to better understand and communicate issues about the work. But maybe that close proximity is also allowing people to better connect with each other. Maybe those connections allow us to better relate to each other and give each other the benefit of the doubt. Looking back at my career, I can think of many instances where office moves have coincided with strengthening or straining my working relationships with people.

Proximity is more important than I ever thought. We should carefully consider office layouts to foster the right types of connections. If close proximity is not possible for certain teams or people, we should understand the negative effects of separation and look for other ways to foster the connection.

Resonance
Resonance “results from an overwhelming sense of connection to our environment that deepens the quality of our interactions.” Huh? For example, the book reports that we’re 30 times more likely to laugh at a joke in the presence of others than if we hear it alone. My friend and colleague Jeff Dwoskin moonlights as a stand-up comedian, and he once explained to me that the difference between a good comedy club and a bad comedy club is the arrangement of audience seating. When tables are close together, people laugh more. When there are lots of booths that separate the audience into tiny groups, it’s much harder to get a laugh and keep the funny going.

Many companies swear by their open seating arrangements. Rich Sheridan, founder of Ann Arbor-based Menlo Innovations, seats his agile development teams on open tables together. No cubes. No walls. He says it’s a huge key to their success. Does that work for everyone working team in all situations? I doubt it. But certainly working environments have impact on working relationships and their resulting productivity, and resonance is a concept worth considering.

Similarity
“No matter what form it takes, similarity leads to greater likability…Once we accept people into our in-group, we start seeing them in a different light: we’re kinder to them, more generous.”

Kinder. More generous. Those sound like good bases for effective working relationships. It’s amazing how finding common ground can bring teams closer and help them work more effectively together. Sure, those of us working for the same company in the same industry all have industry and company in common, but it seems like the more personal similarities are more likely to bring people together. For that reason, we should encourage water cooler chats and other personal interactions in the work place. Everything in moderation, for sure, but a little personal time can actually end up improving productivity by reducing stress and misinterpretations that lead to unproductive miscommunications. The book reports that a “Finnish health survey conducted on thousands of employees between 2000 and 2003 revealed that those employees who had experienced a genuine sense of community at work were healthier psychologically.”

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“Common bonds and that sense of community don’t just foster instant connections — they help to make happier individuals.” The Brofmans provide numerous examples of teams that performed significantly better than others primarily due to the interpersonal dynamics of their members. We simply cannot succeed in life without the support of other people. It’s worth taking the time to understand how to improve those relationships for the betterment of all parties. And pick up Click, it’s well worth the read.

What do you think? Is this all hogwash? Do you have stories of how personal relationships have led to success in your life?

11 Ways Humans Kill Good Analysis

Failure to CommunicateIn my last post, I talked about the immense value of FAME in analysis (Focused, Actionable, Manageable and Enlightening). Some of the comments on the post and many of the email conversations I had regarding the post sparked some great discussions about the difficulties in achieving FAME. Initially, the focus of those discussions centered on the roles executives, managers and other decisions makers play in the final quality of the analysis, and I was originally planning to dedicate this post to ideas decision makers can use to improve the quality of the analyses they get.

But the more I thought about it, the more I realized that many of the reasons we aren’t happy with the results of the analyses come down to fundamental disconnects in human relations between all parties involved.

Groups of people with disparate backgrounds, training and experiences gather in a room to “review the numbers.” We each bring our own sets of assumptions, biases and expectations, and we generally fail to establish common sets of understanding before digging in. It’s the type of Communication Illusion I’ve written about previously. And that failure to communicate tends to kill a lot of good analyses.

Establishing common understanding around a few key areas of focus can go a long way towards facilitating better communication around analyses and consequently developing better plans of action to address the findings.

Here’s a list of 11 key ways to stop killing good analyses:

  1. Begin in the beginning. Hire analysts not reporters.
    This isn’t a slam on reporters, it’s just recognition that the mindset and skill set needed for gathering and reporting on data is different from the mindset and skill set required for analyzing that data and turning it into valuable business insight. To be sure, there are people who can do both. But it’s a mistake to assume these skill sets can always be found in the same person. Reporters need strong left-brain orientation and analysts need more of a balance between the “just the facts” left brain and the more creative right brain. Reporters ensure the data is complete and of high quality; analysts creatively examine loads of data to extract valuable insight. Finding someone with the right skill sets might cost more in payroll dollars, but my experience says they’re worth every penny in the value they bring to the organization.
  2. Don’t turn analysts into reporters.
    This one happens all too often. We hire brilliant analysts and then ask them to spend all of their time pulling and formatting reports so that we can do our own analysis. Everyone’s time is misused at best and wasted at worst. I think this type of thing is a result of the miscommunication as much as a cause of it. When we get an analysis we’re unhappy with, we “solve” the problem by just doing it ourselves rather than use those moments as opportunities to get on the same page with each other. Web Analytics Demystified‘s Eric Peterson is always saying analytics is an art as much as it is a science, and that can mean there are multiple ways to get to findings. Talking about what’s effective and what’s not is critical to our ultimate success. Getting to great analysis is definitely an iterative process.
  3. Don’t expect perfection; get comfortable with some ambiguity
    When we decide to be “data-driven,” we seem to assume that the data is going to provide perfect answers to our most difficult problems. But perfect data is about as common as perfect people. And the chances of getting perfect data decrease as the volume of data increases. We remember from our statistics classes that larger sample sizes mean more accurate statistics, but “more accurate” and “perfect” are not the same (and more about statistics later in this list). My friend Tim Wilson recently posted an excellent article on why data doesn’t match and why we shouldn’t be concerned. I highly recommend a quick read. The reality is we don’t need perfect data to produce highly valuable insight, but an expectation of perfection will quickly derail excellent analysis. To be clear, though, this doesn’t mean we shouldn’t try as hard as we can to use great tools, excellent methodologies and proper data cleansing to ensure we are working from high quality data sets. We just shouldn’t blow off an entire analysis because there is some ambiguity in the results. Unrealistic expectations are killers.
  4. Be extremely clear about assumptions and objectives. Don’t leave things unspoken.
    Mismatched assumptions are at the heart of most miscommunications regarding just about anything, but they can be a killer in many analyses. Per item #3, we need to start with the assumption that the data won’t be perfect. But then we need to be really clear with all involved what we’re assuming we’re going to learn and what we’re trying to do with those learnings. It’s extremely important that the analysts are well aware of the business goals and objectives, and they need to be very clearly about why they’re being asked for the analysis and what’s going to be done with it. It’s also extremely important that the decision makers are aware of the capabilities of the tools and the quality of the data so they know if their expectations are realistic.
  5. Resist numbers for number’s sake
    Man, we love our numbers in retail. If it’s trackable, we want to know about it. And on the web, just about everything is trackable. But I’ll argue that too much data is actually worse than no data at all. We can’t manage what we don’t measure, but we also can’t manage everything that is measurable. We need to determine which metrics are truly making a difference in our businesses (which is no small task) and then focus ourselves and our teams relentlessly on understanding and driving those metrics. Our analyses should always focus around those key measures of our businesses and not simply report hundreds (or thousands) of different numbers in the hopes that somehow they’ll all tie together into some sort of magic bullet.
  6. Resist simplicity for simplicity’s sake
    Why do we seem to be on an endless quest to measure our businesses in the simplest possible manner? Don’t get me wrong. I understand the appeal of simplicity, especially when you have to communicate up the corporate ladder. While the allure of a simple metric is strong, I fear overly simplified metrics are not useful. Our businesses are complex. Our websites are complex. Our customers are complex. The combination of the three is incredibly complex. If we create a metric that’s easy to calculate but not reliable, we run the risk of endless amounts of analysis trying to manage to a metric that doesn’t actually have a cause-and-effect relationship with our financial success. Great metrics might require more complicated analyses, but accurate, actionable information is worth a bit of complexity. And quality metrics based on complex analyses can still be expressed simply.
  7. Get comfortable with probabilities and ranges
    When we’re dealing with future uncertainties like forecasts or ROI calculations, we are kidding ourselves when we settle on specific numbers. Yet we do it all the time. One of my favorite books last year was called “Why Can’t You Just Give Me the Number?” The author, Patrick Leach, wrote the book specifically for executives who consistently ask that question. I highly recommend a read. Analysts and decision makers alike need to understand the of pros and cons of averages and using them in particular situations, particularly when stacking them on top of each other. Just the first chapter of the book Flaw of Averages does an excellent job explaining the general problems.
  8. Be multilingual
    Decision makers should brush up on basic statistics. I don’t think it’s necessary to re-learn all the formulas, but it’s definitely important to remember all the nuances of statistics. As time has passed from our initial statistics classes, we tend to forget about properly selected samples, standard deviations and such, and we just remember that you can believe the numbers. But we can’t just believe any old number. All those intricacies matter. Numbers don’t lie, but people lie, misuse and misread numbers on a regular basis. A basic understanding of statistics can not only help mitigate those concerns, but on a more positive note it can also help decision makers and analysts get to the truth more quickly.

    Analysts should learn the language of the business and work hard to better understand the nuances of the businesses of the decision makers. It’s important to understand the daily pressures decision makers face to ensure the analysis is truly of value. It’s also important to understand the language of each decision maker to shortcut understanding of the analysis by presenting it in terms immediately identifiable to the audience. This sounds obvious, I suppose, but I’ve heard way too many analyses that are presented in “analyst-speak” and go right over the heard of the audience.

  9. Faster is not necessarily better
    We have tons of data in real time, so the temptation is to start getting a read almost immediately on any new strategic implementation, promotion, etc. Resist the temptation! I wrote a post a while back comparing this type of real time analysis to some of the silliness that occurs on 24-hour news networks. Getting results back quickly is good, but not at the expense of accuracy. We have to strike the right balance to ensure we don’t spin our wheels in the wrong direction by reacting to very incomplete data.
  10. Don’t ignore the gut
    Some people will probably vehemently disagree with me on this one, but when an experienced person says something in his or her gut says something is wrong with the data, we shouldn’t ignore it. As we stated in #3, the data we’re working from is not perfect so “gut checks” are not completely out of order. Our unconscious or hidden brains are more powerful and more correct than we often give them credit for. Many of our past learnings remain lurking in our brains and tend to surface as emotions and gut reactions. They’re not always right, for sure, but that doesn’t mean they should be ignored. If someone’s gut says something is wrong, we should at the very least take another honest look at the results. We might be very happy we did.
  11. Presentation matters a lot.
    Last but certainly not least, how the analysis is presented can make or break its success. Everything from how slides are laid out to how we walk through the findings matter. It’s critically important to remember that analysts are WAY closer to the data than everyone else. The audience needs to be carefully walked through the analysis, and analysts should show their work (like math proofs in school). It’s all about persuading the audience and proving a case and every point prior to this one comes into play.

The wealth and complexity of data we have to run our businesses is often a luxury and sometimes a curse. In the end, the data doesn’t make our businesses decisions. People do. And we have to acknowledge and overcome some of our basic human interaction issues in order to fully leverage the value of our masses of data to make the right data-driven decisions for our businesses.

What do you think? Where do you differ? What else can we do?

Retail: Shaken Not Stirred by Kevin Ertell


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