Tag Archives: Business and Economy

The Wisdom Of The Crowd

We’ve all been there. A group gathers to discuss an idea or to brainstorm. Inevitably, the session drags on as we all try to gather people’s divergent views into a coherent whole. It’s the old expression about a camel being a horse designed by committee. What often emerges from this group-think is a solution that makes everyone equally unhappy but often doesn’t represent the best solution to a question.

If you’ve spent any time here on the screed you know that I think it’s critically important to gather as many facts and opposing points of view as possible when facing any question. What I might not have explained clearly enough, however, is the role I often played when working with my team on questions. I was, as I used to tell them, the benevolent dictator, or as President Bush once said, “I’m the decider.” Every group needs one.

It’s hard for groups of people to make decisions. There is wisdom in crowds but there aren’t always enough informed members in that crowd to make what they predict or present of real value. While in theory the inherent biases in the group will cancel each other out, I find that those of the biggest mouths or most senior people in the room tend to dominate, even if they’re way off base or underinformed.

I used to try to solve this by never gathering a group without telling them in advance what topics were to be discussed and to ask them to research the topics and come prepared with informed opinions. You would be shocked how quickly consensus was reached in many sessions because everyone managed to find out the same facts and the solutions became obvious. While you always want the group to maintain an open mind, each member simultaneously needs to have an informed opinion which they can contribute. That’s when the wisdom of the crowd becomes valuable.

People know when they’re being lead to a “group decision” that’s really just one person imposing their will, usually the boss. That breeds apathy or resentment, especially when they know the boss is wrong. Making a decision as a boss – being the decider – once the group has legitimately surfaced a number of potential solutions is inclusive and empowering. Which direction would you choose?

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Filed under Consulting, Helpful Hints

Learning Business From Burgers

This Foodie Friday brings news that the folks at Chipotle are doubling down. As you’re probably aware unless you’ve been under a rock for the last few months, Chipotle has had some serious issues with E.coli outbreaks in a number of their stores across the country. I wrote about this problem a few months back so we won’t review the details here. Suffice it to say that it has been a disaster for the chain and sales have plummeted.

Español: Restaurant Chipottle Mexican Grill in...

(Photo credit: Wikipedia)

In the wake of that, the chain has decided to open another chain. This one will serve burgers and has launched the first outlet in Ohio, calling it Tasty Made. It will serve the same sort of fare as McDonalds, Burger King, and any number of other chains: burgers, fries, and shakes. They intend, however, to put the Chipotle spin on them, as explained in this article:

The company said the new restaurant chain will use “high-quality ingredients that are grown and raised with respect for the animals, the land, and the farmers who produce them.” The company said the new restaurant chain will use “high-quality ingredients that are grown and raised with respect for the animals, the land, and the farmers who produce them.”

That’s the same philosophy as the main Chipotle chain and it had been serving them well until the bacteria breakout hit. Now one could rightly wonder why they’d be thinking about a couple of things. First, why burgers? It would seem as if the field is pretty well saturated and there is even a high-end competitor – Shake Shack – that seems to be in the space already. Second, why now?

I often remind clients that eBay wasn’t the first online auction site, Amazon wasn’t the first online retailer, and that the iPod wasn’t the first mp3 player. They just did things better. We’ve all heard the line about building a better mousetrap and that’s what Chipotle did in their original incarnation. There isn’t anything wrong with their model although obviously, the recent execution leaves quite a bit to be desired. None of us should be afraid to get into a crowded space if, and only if, we really do have a product that is obviously better to the consumer.

Why now? Why not. Their model works and they need to do something to jump start revenues since the flagship brand isn’t recovering quickly. They have other infrastructure already in place for marketing, real estate, systems, and distribution. In fact, they have a couple of other ideas (pizza!) in the works as well. I’ve found that if we wait until conditions are perfect, we’ll generally be waiting a long time.

Our love of a good burger isn’t going anywhere. Let’s see if Tasty Made does. No matter what, it’s will be interesting to learn from them.

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Filed under food, Thinking Aloud

Why Free Data Is A Bad Thing For You

Everyone likes “free.” Heck, there are plenty of marketing tomes that say “free” might just be the most powerful word in marketing. Well, as usual, I’m here to burst your bubble about one particular aspect of something free which I find detrimental to us all. It’s something aggressively marketed by T-Mobile and Verizon but others do it as well. It’s called Zero-rating of data. Their “Binge On” and “FreeBee Data 360” offerings provide subscribers with free streaming media that doesn’t count against their data plans.

The basic concept is that ISP‘s – in this case the two aforementioned wireless carriers – don’t charge consumers for data used when the consumers use specific sites or services. That’s pretty appealing. In fact, T-Mobile reports that mobile subscribers who sign up for their “zero-rated video” offering immediately double their consumption of video. So why is this a bad thing?

Verizon bought Yahoo this morning. They previously bought AOL. One might expect that those two companies and their services will become zero-rated for Verizon customers. While T-Mobile has yet to buy a competitor, one can easily imagine them assembling their own lineup of content and service providers. Cable providers have been doing the same thing for a long time with fledgling cable networks. They take equity in these companies and, in return, provide carriage on a better tier (meaning it’s more widely available). These cable providers are also ISP’s.

The reason our digital ecosystem is flourishing is that until recently there was no one picking losers and winners. Zero-rating does exactly that. Think about the food court at a mall. There are two restaurants side by side, but one serves free food which is paid for by the mall landlords. Which one do you think will have the longer line, regardless of the quality of the food served? If a new streaming service enters the market but there is no data charge to visit their entrenched competitors, what chances do they have to succeed?

So yes, everyone likes free but in this case free is a bad thing. It will restrict the development of new companies. It will give more power to the gatekeepers. It enables internet providers to gain a significant advantage in the promotion of in-house services over competing independent companies, especially in data-heavy markets like video-streaming. Does that make sense?

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Filed under digital media, Reality checks