Making Decisions Is Hard

Should you view the video below or not? To make that decision you need to be able to estimate two things for yourself:

  1. What are the odds of benefiting from watching it?
    • You may have watched the other videos I’ve posted in this blog and hated them all, therefore the odds are low you’re going to benefit; or you’ve loved the other videos and the odds are high.
  1. What is the value of the benefit?
    •  You’re probably going to get this one wrong.

In 23 minutes, author and lecturer, Dan Gilbert discusses how we often get confused with valuing our options. Particularly valuing options over time, and making value comparisons to the past.

Comparison changes the value of things.  And while this talk was given 5 years before the launch of the iPad, I couldn’t help but see how well Apple do out of using comparison to sell products. With one iPad model, it’s very easy to value  it, much harder for Apple to get you to spend more. So for the first 3 years of the iPad, Apple introduced three models: 16gb, 32gb, and 64gb. Now comparison makes it easy to miscalculate value when decision making. If I buy the cheapest model then I’ll feel cheap, but hell the most expensive model is pricey and I’m going to feel a little ripped off. That 32gb middle option (that Goldilocks option neither too hot nor too cold) that’s the one I’ll buy, I won’t feel cheap but I will feel like I’ve saved some money. Apple, of course, just sold me the same thing with £8 worth of additional memory for £80 more. It’s a very prevalent and effective retail concept. I wonder now with a 4th option of 128g super priced iPad Air added to the comparison, how many more 64gb models Apple will sell, dragging more of us to a higher spend.

A facscinating discussion that goes beyond just retail, and touches on our response to everyday danger, terrorism, and buying lottery tickets.

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The Paradox Of Choice

Modern life presents us with so many choices we can no longer be happy with any of them. I yearn for the days when you could get expert advice and trust it. Today we have Google or Wikipedia to check before we believe our plumber, electrician, doctor, or chiropractor and the only person to blame when things go wrong is ourselves. A pressure that can often stop us making the decision at all; and yet we are told that more choice is a good thing.

Barry Schwartz, the author of The Paradox of Choice gives you the 20 minute version here.

Is Your Business Safe?

These days it seems we learn of more customer facing companies in difficulty every day; and I see lots of discussion about can they or will they be saved?

In the UK the recent list of companies falling into administration includes a lot of household name retailers like Comet, Clintons, JJB Sports, Peacocks, Game, HMV and Blockbuster. Retail week in April 2013 detailed how the biggest retail administrations leave creditors with £1bn of unsecured debt.

I understand when people question if a business can be saved when it goes into administration with all the uncertainty for their employees and customers and the question about a process of sale or wind-down that has a finite time to run. I am a little more confused when that question is asked of ongoing concerns or post administration as Philip Beeching has done recently when he posed can Hilco save HMV?

I’m not sure I agree with the concept of ‘saving a business’ rather just simply ‘running it’. If the answer to the question “Can we save a business?” is ever “yes”, then what have we saved it from and for how long is it safe? I don’t think any business is safe in the sense that it is ever free from harm or risk, financial ruin, aggressive competition or unhappy customers. In some sense every business needs to save itself every day.

Take Apple. After their first 20 years they were in serious financial difficulty, their product line in 1997 was a disaster, their customers leaving them, they even got a hand out from Microsoft. Few thought they could hang on; and even with Steve Jobs return in that same year (also the year of the first MP3 player on the market) the iPod was still 4 years away and iTunes 6 long years away. I’m sure it was a hard road back to success, as their share price over those years suggests. The first six years after Steve returned saw share price never get above $8 (split adjusted), today it is $390. And Apple didn’t invent the MP3 format or the digital music player but well done to them in taking other’s ideas and making a lot of money out of doing it better.

I think most people consider Apple safe. Safe to work for and safe to buy products from. However, do Apple have a patent on innovation? I don’t think so. Is it likely one day someone will think of something better than they can and do it faster and cheaper? History tells us that’s almost always the case. Could they be in trouble again in 20 years? Are they really safe? Why would we think so? Remember Motorola? They had 20% of the global mobile phone market and were growing rapidly when in a single quarter in 1997 they announced losses of $1.2bn, then came over 7000 redundancies and most of their talented workforce running off like rats from a sinking ship. Their party was over, eventually they were swallowed by Google and their global share sits around 2% today.

The point I am trying to make is that rather than ask can our business be saved, perhaps it’s better to ask are we saving our business today?

Success is driven by always looking to do it better for your customers. Smarter, cheaper, quicker. If you don’t think like that tomorrow, someone else definitely will. No business can afford to forget it. We see examples of those that do forget, and those that can come back from the brink by refocussing on it. Safety is an illusion, one that successful companies and successful people will never feel they can rely on.

Will We Be A Speedboat Or An Oil Tanker?

I’ve heard more than one new leader tell their team why their business needs to be a speedboat and not an oil tanker. Agile, fast, reactive and responsive rather than heavy, awkward, hard to steer, slow to change and slow to start. It’s not a bad metaphor if all you want is to highlight the merits of agility over inertia.

The speedboat however isn’t for me. There are many qualities of a speedboat I don’t like and I can’t put aside. They don’t have room for a lot of people, unless you’re very very rich. The person driving the speedboat rarely needs any expertise or qualifications, In fact as speedboats can have almost no indicators and simple controls most people think they can grab the wheel without any practice at all, which scares me silly. They’re not very suited for long journeys and they’re far from comfortable in rough seas or bad weather. In fact the worse the weather the more exposed and vulnerable you’ll be. And they can whiz round all day long making a lot of noise and waves without actually getting you anywhere.

But I don’t want to work on the Exxon Valdez either.

I want to work on a battleship. The running and maintenance of a battleship has several attributes that a business could mirror to be more effective.

  1. Expertise is essential. Not just the captain, but every man and woman aboard needs to be well trained to perform their role. The bridge of this boat has many systems and indicators, which all need to be interpreted accurately. There is no place for guesswork here.
  2. Don’t panic. Decisions need be informed and best taken without emotion or panic. Panicking does not only slow down reaction time and effectiveness, it’s also contagious and can spread quickly. People tend not to panic when they are skilled at what they do.
  3. Command and control. Every crew member is expected to know their role and perform it to the best of their abilities. Because the hierarchy is clear and every crew member understands thier position in the organisation, orders are relayed to the right destination and actioned.  Because crew members are clear on what is expected of them they take pride in the execution of their duties.
  4. The ability to avoid icebergs. Information needs to be relayed down through the organisation quickly, accurately, to the right destination and people. If that fails you’re sunk. Equally, information needs to be relayed upwards with the same accuracy and efficiency. The bridge’s ability to make correct tactical decisions relies entirely on factual and relevant information received in good time. Everyone understands the danger from the distorting of messages and instructions, or ‘Chinese whispers’.
  5. It’s about teamwork. There may be one captain but the boat can not function without many men and women on the bridge to help steer it and everyone throughout the boat working together. As I’ve already mentioned, it’s about knowing your role, but it’s also about helping the colleague next to you and recognizing that they needed the help. In other words, you’re only as strong as your weakest link so look out for your shipmates.
  6. Target the enemy. I’ve had plenty of experience watching businesses try to take on multiple issues or competitors at the same time with limited resources. A battleship can not fire in four directions at once. It’s a sure way to use all your ammo and hit nothing. So an effective battleship positions itself in relation to a single foe and directs all its fire on that target until it achieves success. And this is possible thanks to good communication where all the crew know what and where the target is.
  7. Built to endure. This boat can take its share of bad weather and enemies’ attacks. It can be months at sea, and still support a large crew of men and women. It can follow a predetermined course, with specific destinations to ensure time to refuel and restock; and maybe a little R&R. But this is not a boat for recreation, it has a purpose, a direction, and a goal.
  8. Fight like your life depends on it. You’re on a warship, this isn’t a game. Everyone on the boat pulls together as I’ve mentioned above: they apply their skills expertly and ‘man their station’, they communicate clearly and calmly, and action the orders they receive, they help each other out and work together to achieve a common goal.  When times are tough they put everything into it, and they demand that of all their fellow crew members.

OK. You’ve probably guessed that I’ve never been in the Navy! But I did see the film last year, and I was quite impressed with a 50 year old battleship with pre-digital systems and a steam engine engaging 3 alien ships that had come from 100s of light years away with advanced technology superior enough to keep the rest of the US Pacific fleet at bay, kicking their asses and saving the world. So there has to be a lesson in there somewhere.

I’ve professed a love for metaphors before. If anyone out there actually has worked on a warship and wants to correct or add to this one, all feedback gratefully received.

Goodbye HMV – A Tribute

I had to share this amusing parody of Elton John’s “Candle In the Wind”. Mark Read (previously a member of the boyband A1) posted his ‘tribute’ on January 18th 2013, almost exactly one month before the real Elton John was reported  in  The Guardian (19/02/2013) to be considering a series of gigs in HMV stores to try and save the retailer. Could Elton have seen this video?

‘GOODBYE HMV’ – A Tribute to HMV (Parody of Elton John ‘CANDLE IN THE WIND’)