Tag Archives: business thinking

October 29, 2018 · 8:43 am

He’s Due

The World Series just concluded. Congratulations, Red Sox fans and boy, how it pains me to say that as a life-long Yankees fan. Watching baseball reminded me of something we used to say back when I played baseball. When a guy was in a hitting slump we’d often say “he’s due.” What we meant was that according to his batting average he had taken enough at-bats that it was time for a hit. After all, if his average shows he gets 3 hits every 10 times at bat and he hadn’t had a hit in 15 plate appearances, statistically he should get one now. We were convinced he was due.

That, dear readers, was our youthful display of The Gambler’s Fallacy. We were laboring under the misconception that what has recently occurred will affect what occurs next even if the two events are unrelated. For example, if flipping a coin nine times results in nine instances of “heads,” you might think “tails” is due. Sorry – probability still applies and there’s a 50 percent chance the tenth flip will be heads regardless of what has happened before.

Stop and think about how often you or someone you know in business makes the mistake that if something happens more frequently than normal during a given period, it will happen less frequently in the future (or vice versa). Salespeople refuse to accept higher quotas after a good year, holding back revenue projections which holds back hiring and spending which results in a missed opportunity.  Marketers keep spending against historically good targets after a few campaigns don’t result in the expected results rather than acknowledging that the market may have shifted. Financial people let their insurance lapse after a disaster figuring that if they had a hurricane hit in their area which rarely gets hurricanes, the likelihood of another one hitting is very low. As someone pointed out, the term “100-year flood” doesn’t mean a flood happens every hundred years; it means there is a 1% chance of it hitting during ANY year.

The odds of a disaster happening might be very low but we buy insurance and, more importantly, we make disaster plans. The failure to hit a revenue target after three bad quarters doesn’t mean “you’re due” to have a huge fourth quarter. It means you need to make adjustments. There is no question that luck plays some role in business success and failure but that’s not a business plan.

In the great baseball movie “Major League”, the manager brings in a pitcher to face a batter that has gotten many hits off of him in the past. When the catcher questions his choice, the manager says “I know he hasn’t done very well against this guy but I got a hunch he’s due.” That might be how you want to run your baseball team but it is NOT the way you want to run your business. It worked out in the movies but that’s not real life.

Make sense?

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October 26, 2018 · 12:40 pm

Country Omelets

It’s Foodie Friday and for some reason, I’ve got omelets on the brain. I’m not talking about the egg concoctions they’d serve you at the local greasy spoon although as you’ll see I’m a fan of those. No, I’m thinking about the French Omelet and as it turns out, there is a business point that comes along with it.

If you’re not familiar, a classic French omelet (or omelette) has, as Serious Eats put it,  a smooth, silky exterior with little to no browning that cradles a tender, moist, soft-scrambled interior. It is a dish that relies almost exclusively on technique. As with any dish, you want the best ingredients, but unlike many of the foods about which I’ve written over the years in this space, this dish is a fussy little thing and without knowing the proper technique, producing the unblemished golden-yellow eggs with an ultra-creamy texture is almost impossible.

There is no person better equipped to explain the proper technique than the great Jacques Pepin. Here is a video in which he makes a country omelet (what you or I would make at home) and the classic French omelet:

With the first one, a competent 6 year old could handle the technique (or lack thereof). I’m pretty sure that the second technique would involve a fairly large mess.  So what does this have to do with business?

I’m not going to deny that there are “techniques” in business. Where we see them most often is in the sales area. I recall going through various sales training sessions years ago where I was taught closing techniques, questioning techniques, objection handling techniques, and so on. The problem is that many of these techniques are used without an ethical overlay. Salespeople often look at them as ways to trick people. Obviously, if you have the right customer, you’re selling them something that will solve a problem they’re having. Why would tricking them be necessary?

I’m more of a country omelet businessperson. Sure, there are skills involved in what I do and you need to understand how to use the tools at your disposal. I’m far less concerned, however, with technique and more concerned with putting out a product that satisfies the basic need: someone is hungry! Is the ability to turn out a perfect French omelet impressive? It is, but it’s also way more fraught with risk. Minimizing risk while producing a great solution to a customer’s problem works for me every time. You?

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October 24, 2018 · 10:57 am

Ethics And Profits

A bit of a rant today. Suppose you had a friend who lied about things. Maybe they told you that they had a great way to help your business when, in fact, their plan was to use your money to build up their own business. Maybe you gave them money to invest and they lied about the returns. Maybe you tell them information about yourself that you don’t really want public and they tell people anyway. Maybe you let them use your phone or your computer for a few minutes and they installed malware that spied on your constantly. Some friend, right?

Welcome to doing business with Facebook.

Now before you accuse me of hyperbole, let me remind you of the incredible breaches of trust that Facebook has committed over the years. If you look up “Facebook apologizes,” you get over 17 million results. They, like many companies, seem to be focused on one thing: shareholders. As one person put it in speaking about the fall of Sears:

“What’s happened is that shareholders’ interests have squeezed out other stakeholders,” said Arthur C. Martinez, who ran Sears during the 1990s and was credited with a turnaround. “The mantra is shareholders above all else.”

What happens to workers doesn’t matter. Amazon gave raises with one hand and took away stock grants with the other. What happens to partners doesn’t matter. Facebook begged marketers to use their platform to distribute content and then, once the platform had grown to an unimaginable size, cut off marketers who didn’t pay them from access to their audience. What happens to users doesn’t matter. Alphabet, Google’s parent, has over 88% of mobile apps gathering data for them whether users know it or not. Ever wonder how the ads Google serves you with a search seem to tie to something you were doing on a news or productivity app that had nothing to do with Google or search or even ads? Here’s a study that will explain it.

Why is it so hard to follow a moral compass to profitability for many companies? If the bulk of non-tech people truly understood how their data is gathered and used, they’d go back to flip phones. Why not put your customers first and treat them as you’d expect to be treated as a customer? Why not reward employees so that they’re doing better as you’re doing better? Why not put partners’ interests on a level footing with your own so that deals are equitable and profitable for you both? Why not allow vendors to make an honest profit? Without those four things – customers, employees, partners, and vendors – what the shareholders have will be worthless pieces of paper and not an interest in a profitable, growing enterprise.

My friends don’t lie to me and I don’t lie to them. We’ve had our share of messy moments because of that but we’re still friends because of that honesty. We need ethical standards in business every bit as much as we need profits; probably more so. OK, rant over, but do me a favor and think about that, won’t you?

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