Tag Archives: Strategic management

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

Playing It Backward

I spend a fair amount of time working with startup companies. By definition, these businesses have a lot of planning and building to do. What problem are we solving? How will we make a product or service that accomplishes that solution? What will that cost and what’s the financial plan? How do we gain enough traction to scale? It often seems overwhelming, even to someone with my years of experience. When I can see that there is a fair amount of frustration on my clients’ faces, I’ll usually ask if they know how great golfers think about how to attack a hole.

Stay with me here – this isn’t yet another excuse to talk about golf here on the screed. Great golfers will play a hole backward. They start by thinking about where the pin is on the green (front, middle, back, left, center, or right) using the pin sheet every caddie and player carries. That sheet gives them the location – how many feet on from the front, how many feet from one edge. That allows them to figure out the best angle for the approach shot, which then dictates where they want to land the tee shot. Backward.

I think great business people often play their businesses backward. Some might call it starting with the end in mind but I think it’s more than that. For example, I think it’s a better and more accurate method if you begin with what number of customers get you to sustained profitability and go backward to find out how you’ll scale to that number (I generally use 10x growth per year) than to begin with where you think you might be now and guess at growth rates. The former gives you targets that will get you where you want to go and an ability to formulate marketing and other budgets to support that growth. The latter is reacting to where you might find yourself without a clear path or guidance for budgeting.

I try to play most decisions backward. Where is the pin (my goal)? Where is the best place from which to attack it and how do I get to that place? Execution then becomes simpler – I’m only focused on the next shot – the next task – because I know I have a plan. Do you?

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