Because I said so: How to measure what matters

Metrics are misunderstood by many business leaders, mainly because it is tough to get our arms around what to measure to make sure it’s something that truly matters. The Fundamental Catechisms of Metrics According to the Business Genome provides an easy how-to tool.

The wrong stuff is now the right stuff: Teaching Tiger Woods to play World of Warcraft

by Andrea Kates, Founder, Business Genome™

When three different business leaders from three different coasts representing three different industries quote the same example to me in the same week, it’s worth taking note.

What’s with the Mozart and Tiger Woods 10,000 hours image that is striking a chord with so many sharp business minds?

For people who aren’t familiar with the reference, there are two best sellers out now that tell similar stories about expertise: Talent is Overrated by Geoff Colvin, and Outliers by Malcolm Gladwell, both loosely based on research that appeared in the Harvard Business Review as The Making of an Expert and research compiled in The Cambridge Handbook of Expertise and Expert Performance. It turns out that the genius of Mozart has something in common with the genius of Tiger Woods—each one owes his success not only to an innate talent, but even more to the investment of 10,000 hours, which equates to four hours a day for six days a week, for ten years. Since they both started so young, they had a chance to cut their teeth on the tough losses at a young age, but they still hit their stride only after hours and hours of hard work.

It takes 10,000 hours to become an “overnight success.”

What is it that a California-based builder of hospitals, a Washington DC-based marketing guru, and a global leader in chemical manufacturing have in common that puts the same story on the tip of their tongues at the same moment? It’s the appeal of expertise finally having its day. Finally, the dirty secret of accomplished leaders is out: It takes a ton of hard work to get ahead of the pack in business. Especially in a week filled with scandals and stories of excessive rewards and bonuses, it is important to be reminded of the not-so-glamorous school of hard knocks and swings that takes true talent to the level of expert.

So much for today’s common wisdom. Important, yes. But before everyone puts in the ten years of four hours a day of six days a week to perfect his or her game, it’s worth considering the deeper question: “Are the 10,000 hours you’re about to invest in expertise focused on the right stuff?” Or, simply stated, how would Tiger Woods do at World of Warcraft?

10,000 hours of expertise in the old stuff or the new stuff?

The first time I learned this lesson was in 5th grade, when I was learning the basics of basketball. Our teacher spent a couple of weeks teaching us the basics and it was a hell of a lot of fun. Shooting the perfect hoop, running fancy footwork drills, passing the ball, dribbling—easy to become addicted to and picture doing four hours a day, six days a week, for ten years, and just having a ball with that kind of hoopla.

Until the teacher explained that on Monday, we’d be facing the other team. What?! You mean we have to do all the stuff we just learned with someone else blocking us? Sticking their arms in our faces and screaming to distract us? Good thing I learned that early, so that my four hours a day, six days a week for ten years could include the skill of training my peripheral vision for the unexpected jab or the distracting jump.

Or, in my case, with a 98-pound, five foot two frame, give up on basketball altogether and move on to a life in business.

But, the point is, sometimes we as business leaders get focused on hard-driving, nose-to-the-grindstone commitment without reflecting on the right stuff that is required for the business challenge at hand.

Breaking the “Other” Sound Barrier

Which brings us to Chuck Yeager, the guy who broke the sound barrier and was the inspiration for The Right Stuff.

The right stuff or yesterday’s stuff?  Are our companies wired for the wars to come?

It’s easy for Chuck Yeager to be everyone’s hero—he was mine for years, an inspiration because he represented the perfect combination of instinct, moxie, attitude, and machismo that inspired us all to be bad-asses in the day.

But last week, in the same week that everyone around me was quoting Gladwell and Colvin, I heard Chuck Yeager talking about warfare. Real warfare. And dogfights. With planes. And what he said blew me away (I’m paraphrasing): “With all the robotics of war these days, there’s a new kind of guy (gal) that will win wars—a person with manual dexterity and attitude, yes, but also the well-trained trigger finger of a gamer and the mental skills of a robotics expert.”

What? You mean it might be the Poindexters of the world, with their taped glasses, pocket protectors, ivory-white skin from sitting indoors all day, un-cut muscles, who have been playing those damn video games all day long for four hours a day, six days a week, for the past decade who might have the new right stuff?

P.W. Singer pointed out at a recent lecture I attended, that modern wars are way more likely to be fought by robots controlled by geeks in cubicles than by soldiers with bayonets on the ground. So, four hours a day, six days a week, for ten years training in jumping over fences and holding a weapon, will now include training new instincts with new reflex responses.

This is news that is too painful to admit.

Almost like when I realized that the cool artistic types who drew their lower-case “a’s” like architects and had fingers covered with charcoal were soon to be replaced by the binary code toting AutoCad-ers.

But, we’re not in the business of fighting wars. Not literal wars. Or drawing pictures. We’re in the business of creating shareholder value. So, it’s more about Steven Johnson’s book, Everything Bad is Good for You, where he made the point that young Poindexters, with over-developed thumbs from gaming, might be smarter than we think. And, better-prepared to lead in business in the future than we thought.

What is the secret weapon that we can insert into our arsenal that will prepare our companies for the coming era?

Which questions do we need to ask ourselves before we embark on a company-wide initiative that will require four hours a day, six days a week for years level of effort? How can we instill a sense of the right stuff attitude in our companies that incorporates a forward-view of the forces that will face us sooner than we admit: global competition, scarcer resources, a need for innovative product design, pressure to accelerate time to market for new service offerings?

It turns out that the secret weapon is a question, not an answer. It’s actually a state where we, as business leaders, force ourselves to Aim before we Fire. We need to insert new questions into the equation before we blindly (or deaf-ly) go about copying the Mozart model:

1. Have we scanned the business landscape first so that we are certain we’re practicing discipline in the right areas?
2. Before we take on a new initiative designed to streamline our processes (like a Six Sigma optimization process), have we thought about whether the processes we’re trying to perfect are the ones that matter most to our customers?
3. Before we rigorously pursue a business-to-business market strategy, have we looked beyond what our suppliers are telling us and touched the people who are using our stuff?
4. Insert your questions here.

What are the questions that you’ll ask yourselves the minute before you embark on your next turnaround? How will you know that you’ve got to change course on your four-hour a day, six-day a week initiatives? How will you know that you’re leading your teams down a road where their huge efforts will pay off? How will you know that your stuff is the right stuff for the future?

Most of us aren’t facing Doomsday Missions, at least not right now. But, it turns out that these questions are the proven remedy in the area of Doomsday-Avoidance, where we train ourselves four hours a day, six days a week not in one particular skill, but in one very important mindset: looking ahead and making sure we’ve asked the right questions about our stuff.

So, in the spirit of Doomsday-Avoidance, we present Elvis Perkins, who turns a funeral dirge into a real butt-kicker.

Musical Coda
Doomsday by Elvis Perkins

And while I forget your name
I forget your sweet face
Till Doomsday fell out again.

Man I went wild last night
Oh yes I’ll pay tonight
but I don’t let Doomsday bother me.
Does it bother you?

I know you told me again and again
will it mean that we won’t be friends
when Doomsday rears her ugly head again?

Not in all my wildest dreams it never once was seen
that Doomsday might fall anywhere near a Tuesday.

But flight across the skies seein’ fate before my eyes
there isn’t any sense to feel the light
for I don’t plan to die
nor should you plan to die

when Doomsday rears her ugly head again.

The Waterbed Effect: What goes up when the tide goes down?

by Andrea Kates, Founder, Business Genome™

I love the food industry. It teaches the basic meat and potatoes of consumer demand, even without performing fancy calculations. At its very core, the food industry demonstrates to any business leader some of the most important lessons of the market, partly because people eat three times a day, so there are frequent checks on strategy, and partly because people choose where to eat or how to eat based on how they’re feeling that day or that week. Which makes the entire industry, from high-end restaurants to casual dining to fast food to grocery stores, a great litmus test for the mood of the market.

There’s one classic way to read the food industry that applies to many industries if we stop to think about it very simply. I call it the Waterbed Effect, the phenomenon where you can see where your customers have gone after they’ve left.

The Waterbed Effect is based on the fact that if you push down on one corner of the waterbed, the water shifts to another corner; it generally doesn’t leak out. In math, it’s a closed set.

With certain exceptions, you can look at people’s eating habits and make some observations that describe this type of closed set:

1. On average, people eat approximately the same amount of calories per week (despite the supersizing and 4th meal trends).
2. If money gets tight, people will trade one option for another. A high end restaurant might lose customers during tight times; low end restaurants might lose customers to grocery stores. However, except in extremely dire times, the customers have not stopped eating.

Therefore, if you are in the food business, it is safe to assume that you don’t have far to look to see where your market has shifted and to interpret the clues about what’s happening with consumer demand and consumer preferences.

Of course, if you’re a restaurant chain, it’s not that easy to turn on a dime and respond immediately to the changing market. However, whether you’re in the food business or any other business, it’s important to read the signs of the Waterbed Effect to learn about what matters most to your bread-and-butter customers and change as quickly as you can.

Many times we don’t realize that we’re living in a waterbed. We can blame slumps in sales on a softening economy. We sometimes even make the leap (in non-food industries) directly from “people have stopped buying certificates of deposit” to “people have stopped saving money.” But, it’s critical to look at the closed set of options and see which other players are benefiting when we’re at a loss.

Looking at the clues, we can uncover what is really happening, and we can adapt to the market shifts.

In this dreadful economy, it’s sometimes too depressing to study the details of where dollars are being spent and what’s being traded for what. Common sense tells us what we see in the numbers at first glance: during tough times, people trade food away from home for food at home.

But, digging deeper into food trends, there are some clues about what goes up when the tide goes down. For example, the American Italian Pasta Co reported a 5 percent rise in sales last year:

It’s like a certain number of people rediscovered pasta, according to the CEO of New World Pasta, maker of Ronzoni, American Beauty and Creamette. They reported that this rise in pasta sales reversed the former downward trend, caused partly by the high-protein diets.

Or, in Waterbed terms, push down on beef, push up on pasta.

How would the Waterbed Effect predict chocolate sales? Staples up? Luxuries like chocolate down? Not so. Market Watch reported, Hershey’s fourth-quarter net income rose by 50% as sales edged up and its chocolate business weathered the economic downturn better than many.

So, what lessons to learn from those results? Dig deeper and discover what went down as Hershey’s was riding high.

Market Watch explained: “Pressure in the high-end chocolate market may benefit Hershey, which sells more less-expensive sweets.”

It’s easy to jump to the wrong conclusions, or to forget to read the simple signs of change in a Waterbed world. But, training yourself to watch the water shift and interpret the implications will provide valuable lessons about how to tap into the trends and regain customer loyalty.