March 29, 2017 · 11:49 am

The Margin Of Error

One bit of my old life as a broadcaster that I seem unable to leave behind is the ratings. TV ratings – and specifically those from Nielsen – are the currency of the TV ad business and billions of dollars of media are bought and sold based on these numbers. What caught my eye this morning was the reporting of last week’s late night ratings and the analysis connected to the report. The writer did a good job dissecting the numbers except that they conveniently failed to mention one thing that should be instructive to any of us in business: the margin of error.

English: Graph showing weekly Nielsen Ratings ...

(Photo credit: Wikipedia)

What the author failed to mention is that there was no statistical significance between the reported audiences in any of the numbers that Nielsen was reporting. Since the numbers discussed in the piece were Adult 18-49 numbers, the reporting is based on a subsample of Nielsen’s panel, meaning that the margin of error is wider than on all the ratings as a whole. While I don’t have a rating book in front of me, I know there always used to be a disclaimer in every book explaining that the numbers it contains are only accurate up to a point. They’re estimates. When we’re looking at number this small (and the late-night numbers are in tenths of a point), it’s just as possible that the network reported in third place could, in fact, have more viewers than the network reported as in first place.

The point here isn’t to denigrate the ratings system (I’ll save that for another screed). The point is to remind each of us that almost every piece of data that we look at needs to be taken in context and with appropriate disclaimers. What I find helpful is to pay attention to trends and not to absolutes. The only numbers without a margin of error are those pertaining to actual money received and actual money spent, and even those are generally only snapshots of a moment in time.

The next time someone comes to you with a data point, ask about the margin of error or about any factors that could affect that data. New visitors to your website are up? What percentage of people routinely delete cookies and, therefore, seem to be new when they’re not. App installs are up? How many people deleted the app last week, was that an increase, and could the new installs, in fact, be reinstalls? See what I mean?

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March 27, 2017 · 12:43 pm

Getting Elected Isn’t The Win

The big news at the end of last week had to do with the withdrawal of a bill that would have changed the laws regarding health insurance in this country. If you’ve been here in the screed before you know that we don’t do politics, so I’m going to refrain from any commentary for or against what happened. There is, however, a pretty good business (and life) lesson to be taken from Friday’s activities.

One thing you heard over and over was that the folks who wanted to change the existing law had 7 years to come up with a plan that would be better. It took them 7 years to control both Congress and The White House, thereby assuring that their plan would become law, assuming, of course, that it was palatable to the members of their party. It wasn’t, and so it hasn’t (become law, that is).

What can we learn from this? That it’s easier to win an election than it is to find the consensus you need to run the government. Winning is easy; governing is hard. The same thinking applies to managing a business. Becoming a manager is easy; managing the business is hard.

I met with a potential client last week who had recently been promoted into his job. He’s a smart, young highly motivated guy. In the course of our conversation, he mentioned that he was having some trouble adjusting to his new role and was finding it difficult to get things done as quickly and efficiently as he wanted. I told him that I had suffered from the same thing 35 years ago when I was handed my first department to run. Getting the job was a lot easier than doing the job.

What does that mean for you? If you’re looking for that next promotion, you might want to focus on the challenges of preparing to do the actual work rather than the challenges of getting a promotion. Trust me: the powers that be will appreciate your focus on execution and that will increase the chances of that promotion.

If you’re running your own business, a focus on execution is a good thing as well. Satisfied customers are more important that finding lots of new ones. There are tons of studies that show that using resources to keep existing customers happy is more profitable that spending resources on finding new customers (it costs 5x more to find a new customer than to retain one!).

Getting elected or promoted to a position isn’t really the win. Getting stuff done, whether it’s in your cubicle or on the floor of Congress, is the real test, don’t you think?

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March 24, 2017 · 10:13 am

Sampuru

This Foodie Friday, the topic is sampuru. No, you probably don’t call anything by that name but you’ve seen it. It’s the fake food you often see in the lobby or window of Japanese restaurants. Great sampuru is incredibly realistic and can negate the need even to look at a menu. Like many seemingly simple things (such as making the rice for sushi), sampuru artists require years of training.

Typically for this space, as I was thinking about sampuru, a business thought came to me. Fake, plastic food has its business counterpart although they’re not called sampuru. I call them empty suits, but I’m not sure we should limit the term to people.

Your typical empty suit, like great fake food, gives the appearance of being real and nourishing. The reality is that they look great but can be toxic if ingested. In fact, I think they’re easier to spot than great sampuru. Ask an empty suit for an opinion and it will either be the same as either the boss’s or of whomever in the room they’re trying to please if they have an opinion at all. You see, empty suits rarely have enough knowledge about a topic to give a well-reasoned opinion about anything. They may rattle off a number of industry buzzwords but if you try to dissect what it is they’re saying it becomes obvious that, as Gertrude Stein said about Oakland, there’s no there there.

Oddly enough, I think entire businesses can be sampuru. Coincidentally, I ate at a Japanese restaurant the other evening that I would call an empty suit. It looked fine – a sushi bar, teppanyaki tables, etc., but the food was nondescript, the service was lackadaisical, and the teppan chef I saw was just barely going through the motions. It was a sampuru – a plastic model of a business that looked like the real thing but wasn’t even close to being it.

We need to make sure our businesses don’t fall into the trap of being sampuru – of looking like we’re fresh and flourishing when, in fact, we’re dead and toxic. As executives, we need to stay informed and not be afraid to offer our own opinions about things. We’ll be wrong sometimes but by being true to ourselves maybe we’ll also advance the conversation to new, more profitable ground. You with me?

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