Another business lesson from politics today. Then again, politics is a business so I’m not sure why I sound a little surprised. Despite the fact that I don’t express political points of view in this space, I guess you can tell I pay a lot of attention to that business as well as the ones I write about more often.
We’re in the midst of primary season for one party. Unless you’re under a rock, you have probably heard that former governor Romney just won the Florida primary pretty convincingly and there are calls for other candidates to admit defeat and let Romney focus on the general election. The three other remaining candidates have refused to pack it in, and therein lies the business lesson.
What got me thinking was this piece on Slate:
Before we get carried away analyzing What Florida Means, let us calculate how close to the GOP nomination that each candidate actually is. The nominee needs 1,114 pledged delegates. Here’s the progress towards that number, based on CNN’s count of pledged delegates.
Mitt Romney – 5.8 percent
Newt Gingrich – 2.2 percent
Ron Paul – 0.9 percent
Rick Santorum – 0.6 percent
In other words, 90% of the delegates haven’t been chosen and yet many pundits are saying a decision has been reached. The business point? If this was your business, you’d certainly not want to make any major decisions based on 10% of the data and yet just as in politics we see people doing just that. You make a change to a web site and there’s no immediate traffic bump or you start a banner campaign that doesn’t generate immediate conversions so you rush to try the next thing. Bad idea.
Other than predictions based on accurately weighted samples, drawing accurate conclusions on a small (10% in this case) sample of data is hard at best and impossible at worst. Business is more about imperfect information – where not everything is visible – than it is about having perfect information – as in chess, where one can see all the pieces. Because of that, in my mind one needs to take as much time as possible under the given circumstance and wait to gather as much data as one can. Emphasis on “as possible”, which might not always be the optimal time.
We’ll see how the Republican race plays out. Unlike your business, they get another chance in four years if they mess it up this time around. You might not be so lucky if you jump to conclusions.
Consult Keith 