Predictive Analytics vs. Historical Measurement

A student in my Business Research Methods and Metrics course, started out his recent paper with the following:

Peter F. Drucker in his book “Managing In A Time of Great Change” dedicates an entire chapter entitled “We Need to Measure, Not Count” and poignantly states that “quantification has been the rage in business and economics these past fifty years.  Accountants have proliferated as fast as lawyers.  Yet we do not have the measurements we need.”   Drucker raises the awareness that the more traditional measurements such as balance sheets and profit-and-loss statements do not show the much needed detail of “loss of market standing or a failure to innovate” as these are not reflected in the “accountant’s figures until the damage has been done”.  

This is a fitting introduction to a paper for a course that is focused primarily on predictive analytics. The world and business is changing too fast (even in this new economy) to wait for quarter-end and annual-end results to think and make decisions. New competitors that don’t even exist today are coming; new government policies never seen before are potentially on the horizon; new centers of economic growth are popping up (and some constants are fading; etc. Organizations need to begin to look into the future, identify trends, and think through how to address the scenarios. Otherwise, they will be left on the side of the road.

One of the ways organizations can stay on top of the changes and look into the future is through the proper use of measurement – that is predictive more than it is historical. It is no longer realistic to believe past performance is indicative of future results. For example, I was with a firm today that had a record year in 2006 and today is only 25% of that volume. Fortunately for them, they did their study and made strategic decisions that put them into position to manage this 75% decrease in volume and remain profitable (and keep many employees).

What is the basis of your measurement system?

Creativity

“The great majority of men are bundles of beginnings.”
- Ralph Waldo Emerson

An old English proverb states that “some men go through a forest and see no firewood.” How true! Opportunities are missed because we don’t make time to think about them. We don’t even see them!

Ideas are lost because we are too busy.  To-do lists are too long.  Too many demands are placed on already demanding schedules.

As I was preparing for some speaking engagements this week, I decided to buy some new “props” so I purchased 6 items I have never bought before.  I did not know they existed until I decided to search for something new and different, at least to me!  How often do you search for something new?  Really new?!?

We need new ideas.  Creative ideas.  Creative thoughts and ideas seem to come easier to some than others.  However, creativity can be something found in virtually all leaders today. It isn’t.  But it should be.  I really don’t believe it is an innate talent that some leaders are gifted with and others are not.  Rather, it is the result of time, discipline, and hard work.

Creativity takes time.  If creativity is lacking, check the commitment to making time for creative and innovative ideas.  It will also be lacking.  Guaranteed.

When I was in graduate school, the Chair of my major area advised me to read one article a day in my field.  It would keep me current.  It would expand my knowledge base, maybe even make me an emerging expert, in some specialty areas.  I’d be challenged to think.  My writing and communication skills would improve.  Solid advice.  I was never able to meet that standard, but many weeks I came close.  It helped my creativity.

I have found that creativity comes from reading.  Lots of reading!  Today, my interests are more varied than ever.  This is because I read.  I find that I get many ideas from what I read.  I read both fiction and non-fiction.  Sometimes, I cannot tell the difference.    I read business and non-business.  I read the serious and the humorous. 

I often find ideas from reading that seem to be just what I am looking for to solve a particular problem or issue.  Find what you can do to keep your creativity.  Keep current and fresh in your areas of interest.  Make time to think and be innovative. 

For some, it is reading.  For others, creative ideas come from travel, art, writing, school, sports, and other forms of recreation and entertainment.  Find something that works and make room for it.  Plan to keep yourself creative.

“Some men go through a forest and see no firewood.”  Expand your horizons and be creative.  Otherwise, you may miss the firewood!  You might even miss the forest!!

What “firewood” can you find around you today?
What was the last really good idea that you had? How did it develop?
Is creativity more or less important to you today than what it used to be?

Proverbs 16:26  The laborer’s appetite works for him; his hunger drives him on.

Thoughts from Managing by Henry Mintzberg

Attention!  Learning Leaders!

If you are looking to add just one book to the shelves this month, I recommend Managing, by Henry Mintzberg (San Francisco: Berrett – Koehler Publishers, Inc., 2009). 

I first became familiar with Mintzberg’s work during my Ph.D. days at the University of Arkansas.  His text on Strategy and Structure is still one of my favorites.  Mintzberg is an excellent writer who loads his work with thoughts that deserve more attention than most of us can give to reflective thinking.  We do need to make more time to think. 

Here is a sampling of my favorite Mintzberg thoughts in Managing:

“We can talk all we like about a global world, but most organizations – even the most international of corporations – tend to remain rather local at their headquarters.”  (p. 28)

“The manager’s schedule can have enormous influence over everyone else in the unit: whatever gets in the agenda is taken as a signal of what matters in the unit.”  (p. 51)

“The manager becomes the nerve center of the unit – its best-informed member, at least if he or she is doing the job well.” (p. 54)

“Like bees, managers cross-pollinate.”  (p. 55)

“Treating employees as ‘human resources’ means to deal with them as if they are information, not people: they get reduced to a narrow dimension of their whole selves.”  (p. 61)

“All too often, when managers don’t know what to do, they drive their subordinates to ‘perform.’ “ (p. 62)

“Nothing is more dangerous in an organization than a manager with little to do.” (p. 165)

“When these hierarchical slabs become especially thick, often the case in machine organizations, the Quandary of Connecting can take the organization into strategic gridlock: layers of managers sit in their own no man’s land, each one lacking the information or the power necessary to connect adequately to the others.”  (p. 169)

“We have to cease being mesmerized by the numbers and stop letting the hard information drive out the soft, instead combining both whenever possible.”  (p. 178)

“We only notice what is changing, not what isn’t, which includes most of what is around us.”  (p. 189)

“Sometimes a person is well suited to managing and well balanced in his or her approach to the job, but that job is simply undoable – unmanageable – and so the person fails.”  (p. 202)

“Fit can also become a misfit when conditions change, so that positive qualities turn into serious flaws.”  (p. 203)

“A remarkable number of effective managers are reflective: they know how to learn from their own experience; they explore numerous options; and they back off when one doesn’t work, to try another.”  (p. 208)

“We hear a great deal these days about managers having to be global; it is far more important that they be worldly… Worldly is identified in the Pocket Oxford Dictionary as ‘experienced in life, sophisticated, practical.’ “  (p. 212)

“Managers should be selected for their flaws as much as for their qualities.”  (p. 219)

Please join us for the launch of the new “Fast Forward Forum” series next week, October 16th in Fort Wayne. Space is limited so register early to spend the day with experienced business leaders like
Barry LaBov, Greg Siefert, Jeff Leffew, Mike Yoder, Kyle Lacy, and Brandon Coon.

For more information or to register, contact Leah Kimbrell at 260.399.1622 or lhkimbrell@taylor.edu

Self-Examination

I am currently teaching a course titled “Business Research Methods and Metrics.” In the course, we spend a lot of time examining our current organizations, our customers, our competitors, and anything else that can impact our business. As I’ve reflected on this course, I began asking myself, “do I put that much effort and intentionality into examining my own life?” As I reflected on that question, I went searching the Scriptures to see what they say about self-examination. Here is what I found:

2 Corinthians 13:5 (ESV) Examine yourselves, to see whether you are in the faith. Test yourselves. Or do you not realize this about yourselves, that Jesus Christ is in you?—unless indeed you fail to meet the test!

Lamentations 3:40 (ESV) Let us test and examine our ways, and return to the LORD!

We are called to self-examination. However, I also found that we are called to “external” examinationn as well, by the Lord:

Psalm 26:2 (ESV) Prove me, O LORD, and try me; test my heart and my mind.

Psalm 139:23-24 (ESV) Search me, O God, and know my heart! Try me and know my thoughts! And see if there be any grievous way in me, and lead me in the way everlasting!

So, to answer my original question, “no, I do not spend enough time examining myself or allowing the Lord to examine me, BUT I should!”

The Buyer’s Cycle

Have you ever sat in on a presentation or session, where soomething jumps out at you and you say to yourself, “wow – that is so simple and obvious, but yet I never would have visualized it that way.” I had that experience last week. The concept has to do with the Buyer’s Cycle, or the cycle we all go through when making any type of purchase.

Picture a clock, starting at 12 and moving around clockwise. Here are the phases buyers go through on that clock:

1: Needs (opportunities or challenges) arise, whether created by themselves or a company

2: Establish criteria by which the purchase will be made (e.g. cost, quality, the way it makes me feel, etc.)

3: Evaluate options (i.e. consider which companies, products, or services can meet the criteria to address the need)

4: Concerns/Risks: address the concerns and risks of any decision compared with doing nothing (i.e. once I make the decision, I’m committed to it – what might I miss out on or what if I’m wrong type questions)

5: Make decision

6: Implement decision (i.e. buy or act)

7: Evaluate decision over time (e.g. did I make the right decision? did it address the need as I thought it would? did I use the right criteria? did I like the people I did business with? etc.)

8: The process starts over again (just with more information this time from the evaluation)

The beauty of this buyer’s cycle isn’t in the steps though. Here is what was brought to my attention – when selling or working with prospective buyers, you need to know which step or phase they are in. If the buyer doesn’t know they have a need yet, you need to create the demand; you can’t jump to the “make the decision” phase. If the buyer has already evaluated options or has made the decision (and just not implemented it yet) and you weren’t one of the options, you are late to the party and need to move quickly to “interrupt” their process to consider your option. There are a variety of scenarios like those. The point is this – you need to know which phase the buyer is in and match your approach to meet that phase. Doing so will greatly increase your success rate with prospective buyers.

Thoughts on Innovating Design

“Innovating design requires managers to ask, What is the deepest reason people buy our product?  Why is it meaningful to them?  And most of all, How can we gratify people and make them more content by providing products that suggest new meanings?  I know you can immediately provide a long list of answers to these questions.  However, I would not be surprised if these are the same answers your competitors would give.” (Roberto Verganti in Design-Driven Innovation)

In times where we seem to value speed and convenience, we don’t value the time for reflection to drive innovative efforts.  No wonder so many markets have become overly price sensitive.  We look the same as our competitors.  Think like everyone else?  Customers and clients think price.