Randomness

When we live our daily lives, we often talk about 'luck' - you get a lucky break; come into some money by sheer chance; tell the story of meeting your wife as 'pure luck' and how different your life would have been if that day your car hadn't blown a tire.

In our daily lives, we embrace 'luck' - we embrace randomness.

In the business world it's different. When have you ever heard a CEO talk about the great year their company is having and explaining it as 'we're some lucky SOBs!'. Or the budget that didn't get met as just 'unlucky'. Or the viral Marketing campaign that just happened to be 'in the right place at the right time' (ok, so some people do acknowledge the luck in this one).

Of course we don't explain business success or failure like this as there is always either credit to take, or blame to assign. Politics takes over. Everything needs an explanation. Everything needs to fit into a narrative that describes what happened - in precise terms, so we can either repeat it or avoid it. Test, retest, learn, advance (plan). This is what we do in business.

Starting your own company exposes the fallacy of this process. With no politics to navigate, no explanations to give to management, no preconceived notions to restrict you, you are exposed to luck in its rawest form. You see randomness in everything - the people you meet, contacts you make, decisions that get altered, then altered again, competitive moves, the list goes on. In all of this there is a large element of luck, of randomness.

As businesses scale up, you don't remove this uncertainty, it just gets aggregated together. In the aggregate, it looks smooth, looks like it's a result of good 'planning'. We give post-hoc explanations for our success or failure, and say we've learned from the experience. Most of the time we've just learned how to weave better stories that we know will be palatable to whomever they need to be palatable to.

This is not to say that your own hard work, thoughtfulness or effort has nothing to do with what you achieve, it's just that not everything is achieved this way. Accepting that luck and randomness play a role in business is important. It releases you from the shackles of strict 'cause and effect' planning.

Good business people, whether they know it or not, maximize their exposure to positive random events and minimize their exposure to negative ones.

Bad CEO's constantly ask them to explain these events when they happen so they can figure out how to make sure they keep happening (at least the positive ones).

Good business people simply chuckle under their breath and weave a good story.

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To Plan or not to Plan, that is the question...

Starting a business quickly, and thankfully, relieves you of many bad habits. One in particular is the tendency to over-plan. I can only guess at the number of hours I spent working for larger corporations talking about WHAT we were going to do, coming up with a PLAN to do it, then never getting anything off the ground.

Oh God how I hated that.

And why does running your own business, thankfully, relieve you of this bad habit? Because when no one is paying you a dime for your work, you very quickly hone your skill for determining what labor is and isn't valuable.

If everyone in all businesses were forced to evaluate their efforts in light of the actual value they were creating, half of all business planning would cease to exist. It's amazing what we waste when the consequences are borne by others.

We're mindful of this right now as we are developing a business plan ourselves. Guy Kawasaki (the most ubiquitous name in 'start-up' planning) posted an interesting article on this not long back. What I like about it was the distinction Tim Berry (his guest and a planning guru) made between 'planning' and a 'plan':

Planning is exactly what you need to deal with the speed of change. You have to remember that your business plan is always wrong—it has to be because it’s predicting the future and we’re human, we don’t do that very well. But it’s still vital because it’s the way you lay down tracks so you can follow up on the constant difference between plan and assumptions.

Without a plan, when assumptions are wrong you don’t even know what they were, how were they wrong, in what direction, and what can you do about it. With a plan, you use plan versus actual all the time to manage the difference between what you thought and what actually happened.

I feel some great metaphor about 'recipes', 'cakes', Napoleon and the invasion of Russia coming into my head, but I am going to stop because sometimes metaphor is neither wanted nor needed - and is just a waste of, valuable, time :)

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Google Analytics and Sparklines

I was interested to see that the last re-launch of Google Analytics (the tool that lets you see all the activity on your website) included Sparklines.

For those of you not fascinated by visual analysis tools, this is probably not a huge revelation. But for someone (like myself) who suffers from actually caring about how we display information, it's a bit of a (pleasant) surprise.

Sparklines were invented by Edward Tufte. They are small, high resolution graphics placed before text to describe a trend. One of those really simple and highly useful-once-implemented tools.

This is what it looks like in the Google Analytics tool (yes, that is the pitiful number of people who read this blog, aren't you thankful that you're not following the masses? :).


Over time, the line's history will fill in with information and you will be able to see the trends for each measure. Before Google Analytics, I had never used a data visualization tool that used Sparklines. Good to see some of Tufte's work being used.

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How to build a faster horse

There was a post over at Found+Read (a site that lets people who are starting businesses chat about issues etc.), here, that mentions a very insightful quote from Henry Ford - "If I'd asked consumers what they wanted, they would have asked for faster horses". It turns out this is a pretty popular quote in the marketing world. And with good reason.

It contains a lesson not just for new product development but for any time you want to get feedback - don't ask consumers or customers to try and solve a problem, don't even try and ask them what the problem is. Have a look at how they behave, learn about what makes them happy, understand what motivates them, then figure out how to help them. Sounds easy aye? It's not.

Great creative ideas (either product or brand ones) are hard to come by, really hard. Asking a consumer to do the thinking for you never gets you any closer to that idea. And at worst, you end up with a 'faster horse'.

I like the idea of 'faster horse' products or services - things that are obvious, with little creative thought put into them. Most politicians strike me as 'faster horses'.

I think we're starting a company in an industry full of them.

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The Product Life Cycle of the Music Industry

Despite my comments earlier about the viability of a community built around data, I have been playing a bit on Swivel and discovered some fun stuff (although my original position hasn't changed).

This is a graph I came across on the Blogged links on the Swivel home page. Schiing had a good post on how this graph looks very similar to the Product Life Cycle (PLC) in economics - and it does!



Of course, the data is not complete without the rise of digital downloading - but those figures are hard to come by given the recent rocky history of widespread litigation by the music industry (someone tried to do a graph of ipod sales versus the above, but that's not really a good comparison - ipod demand does not equal 'song' demand, it's very different to buying a CD).

The real question is, when looking at this data, why did the music czars decide to litigate against the emerging technology? Obviously they got scared. And with good reason. The progression from vinyl to cassettes and cassettes to CDs involved a similar economic model. With digital downloads, not only did the marginal cost of production fall incredibly fast, the means of distribution became frictionless - yeah, you could copy a CD and give it to some friends, but a digital song on a peer-to-peer network is accessible to thousands/millions of people, at NO cost!

I guess the point I am trying to make is that if you added digital downloads to the above graph and just looked at the data, it would seem business as usual - digital songs are the natural progression, record companies should embrace them and move on. When in actual fact, the digital age represents a seismic shift in the business model - something the nice smooth graph of CD sales decline and digital growth is not going to tell you.

In fact, given what we know about the change in the demand and supply mechanics, I'd argue that the historical, perfect PLC curves in this industry are meaningless to its future. And that we can learn almost nothing from the historical data in this graph that is applicable to the future of it.

It's a good example of data not telling the whole story. And that in the absence of knowledge about the mechanics of the process, you could come to very wrong conclusions. Something that has plagued the Global Warming debate for years.


PS: yes, I do believe in global warming.

PPS: This argument is getting updated in recent posts regarding FREE - the new business reality of the music industry and other digital (and non-digital) products.

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Do you feel fine?

I first came across this creation by Jonathan Harris about a year ago. I was sitting in a meeting at an ad agency waiting for a client to arrive and one of the other people in the room just put it up on the screen.

www.wefeelfine.org bascially displays human emotions posted to blogs - it does this with fascinating, interactive visuals. The emotions are picked from a list of prescribed words and when a sentence is encountered that looks like it might be an emotional post, the engine does a bunch of processing to try and confirm, and uploads the entry (just the sentence).

My first thoughts were that there was no way this was representative of ALL human emotions in the world at that moment. It was just in English, not other languages. It was younger people posting - representing the blogging world more than the real world. Some of the sentences were obviously not 'real' emotions ("I think I feel a cut behind my ear"). Etc. etc.

In the end, none of that mattered. My first thoughts were getting lost in the aggregate. As we looked at more and more entries, I discovered that it was each individual entry that mattered the most. You connected with them. For a small moment, you were in someone else's world. Felt a little bit of their happiness, or a smattering of their pain.

While the aggregation of these emotions was largely meaningless, their disaggregation was highly meaningful. It was there you found the human connection, the true 'art' of the piece.

Thinking in the aggregate is hard not to do. And it's not always wrong. It's just never complete.

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Predicting the future

One of the first things I did for our startup was take a long hard look at the existing market for Business Intelligence (BI) software packages. To say you could probably throw a cloak over all of the marketing strategies in this space is generous, you probably only need a small towel (maybe a loin cloth).

But of all the product claims and positions I came across, one that struck me the most was the claim of 'predicting the future for your business'. Usually backed up by claims of 'predictive modeling', and 'forward looking metrics'.

Having used statistical tools for a lot of my career, I have no problem with a well specified model based on sound data that illuminates relationships and gets you thinking about how everything works together, and will possibly work in the future. However, having used these tools I know they are almost always overly simplified estimations of reality - especially business reality. And in no way do they predict bursts of creative thinking or 'out of left field' game changing shocks to your business. They just can't. Yet these things (that happen more often than you think) can render the best model obsolete.

Which is why, in good conscience, I could never claim a business tool is 'forward looking' or 'predictive' - it can only be that in a limited way at best. And at worst, can give you a dangerous false sense of security.

My advice is learn to live with uncertainty, and love it!

Of course, that tag probably isn't going to win you as many customers.

Dam I hate marketing.

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Forgot to mention Swivel...

The previous post forget to mention Swivel - a valley start-up that is looking to democratize the world's data. Its premise isn't far from the Many Eyes mission.

I love to see people starting things like this, and it looks as if Dmitry and Brian (the founders of Swivel) are getting quite a bit of recognition - good on 'em.

However, having been back and forth on Swivel for a while (it completely slipped my mind when posting below), it's tough to get a sense for the community. There are lots of graphs and data sets, but little rhyme or easily understood reason to a lot of it. Some groups have discussions, others (it feels like the majority) are void of life.

I think it goes back to the problems of trying to build a community around data - most of it is meaningless without a good deal of context and explanation.

Still, it's only been 7 months since the site launched, so we're in the early days. I'd love to see it succeed, but it needs another hook...

Oh yeah, Freebase is doing something related.

Anyone know of any other sites?

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Visualizing Data - a community task?

A while back I came across this site called Many Eyes - from the people at the Collaborative User Experience (CUE) Research group a the IBM research center. I think it's a great site. Anyone can register, upload a data set and then choose a visualization - a way to display the data.

While I love the site and what it allows users to do, I'm not 100% sold on the idea of a community built around data visualization. Recent efforts in this space by a company called Business Objects, with their Insight website take the idea further - they are actually trying to get a community to write a book on business intelligence and data! Good luck with that.

The tricky thing with information is that the devil is all in the details. Collaborating with other experts in a field who understand nuances (and pitfalls) and have a grasp on the actual problems being addressed is invaluable community collaboration. Asking a bunch of random people on the web to talk about your graph - not as useful.

At least IBM is approaching it in the right way - truly open, pure visualization research. When it's obviously a tactic dreamed up by over zealous marketers hoping to hop on the 'social networking' bandwagon (as Business Object's play looks to be), I'd give it a miss.

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Stretching the concept of ad measurement

Gareth over a Brand New pointed to a recent NY times article on researchers at NBC trying to figure out how to optimize a TV advertisement for fast-forwarding on a DVR?

Call me crazy, but I think the train has left the station on this one. If people are fast-forwarding through the ads, that's indicative of a pretty strong intent to not want to watch them. Anything you are actively trying to avoid is bound to have its value reduced by orders of magnitude, even if, as the article suggests, there is some indication of an emotional reaction to certain images (typically if they are familiar, i.e. seen the ad before).

Now I love Gareth's blog (he is an uber smart guy), but I don't agree that this type of research needs to be regarded as anything other than a footnote to the whole DVR issue. And it certainly shouldn't encourage agencies to optimize ads for fast-forwarding. The consumer is showing a clear intent, let's try and not circumvent that. They won't be happy.

Of course, it's easy to criticize NBC, it's hard to come up with a viable solution to the problem. They are, after all, trying to protect their business. But this is not the way to go about it. As I talked about in the post below, this is an example of measuring the wrong thing.

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An assault on knowledge

A while back, I read a book by Bryan Appleyard (the then Science columnist for the Sunday Times in London). It was called "Understanding the Present: Science and the Soul of Modern Man". It described the relentless assault of science on our souls.

I read it at a time when most of my work involved using scientific principles to understand why people made the decisions they did. I had a belief that these techniques (while not perfect), could help us understand behavior. Science and scientific thinking also occupied a large chunk of my 'knowledge', and how I viewed the world. Bryan's book was the first assault on that.

I'm not going to restate the book's various arguments here, I'd just encourage people to read it - it has the added advantage of having been beautifully written. As a nod to the arguments and the prose, the last few paragraphs do nicely:

"I am born and I shall die and, in between, these visions are what they most obviously are: mine. This is the only time span I have and the only one in which my virtue and purpose may be found. I choose not to be written into some history of the future or beguiled by the technological demands of the as-yet-unborn. This is not selfishness, it is the ultimate unselfishness because it means I know what myself is - an expression and creation of my culture, a culture that has come close to sacrificing itself on the altar of one small aspect of itself. But I owe myself to all that culture and it must clearly be defended with my life because it is my life.

Such an avowal means the end of the rule of science because it denies the infinite open-endedness and willingness to change that science needs for its continued invasion of our souls. It also means an insistence that my soul be put back where it belongs - in my body - rather than in the remote realm to which, 400 years ago, science consigned it. This realization alone may not make that soul immortal, nor will it promise me an afterlife or salvation. So you may say it leaves me exactly where I was before - mortal, suffering and as lost as ever. I will reply that there is one vital difference: I shall not be, at the last, alone."

Bryan Appleyard grew up 'in the shadow of science" - an engineer father, a decedent of physicists. So he has seen both sides.

I'm about two thirds of the way through The Black Swan: The Impact of the Highly Improbable. It's an assault on our notion of what's predictable. Because most of what we do (especially in business) is try and predict the future, it's an assault on pretty much everything we hold dear.

There is a long and interesting history of the philosophy of science and scientific knowledge in both these books that I would feel like an impostor to try and comment on as I have no real background in epistemology.

But I believe they represent two modern examples of the growing (and overdue) assault on our concept of knowledge. Appleyard's more spiritual argument and Taleb's more practical one (although Taleb's has a spirituality all his own).

Both these books have profound consequences for how businesses deal with knowledge. A strong dependence on measurement is only useful if you are measuring the things you know are measurable. While a strong dependence on intuition and gut is only useful if you aren't ignoring the things you can measure. And in either case, you can't be too reliant on your expectations of the future if these are based on the narrative you use to describe your past.

There's a Serenity Prayer for measurement in here somewhere...

...give me the grace to accept the things I cannot measure, the courage to measure the things I can, and the wisdom to know the difference.

It's the wisdom we commonly lack.

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First Post

As a huge fan of Steven Colbert, I figured I'd begin this blog with a made-up word - "comminfocating". I think I'll try and make new words a regular part of updates here -you know, adding to the language and all that.

The word 'comminfocating' is confusing in of itself (that's sort of the point), difficult to say three times in a row and generally designed to flabbergast (another great word!). It's this way because I wanted it to convey the frustration I've encountered over years of working with information and ideas. We're just not good at communicating this stuff. Any of it. Business data, business ideas, consumer insights, advertising ideas, the list goes on. Yes, sometimes the stars align and we emerge with wonderful decisions. But in my experience, on balance, more bad ones are made than good. Bad in the sense of just wrong, or weak, safe, or misguided.

Why this is is a matter of your point of view. I think it has something to do with 'lack of design' - in many different ways, and many different respects. Something I will be posting on.

In addition, I'll be posting about our new company! No name yet, but stay tuned. We're not trying to solve all of these problems, but we do want to make access and insight into your basic business and consumer information a cheap and easy journey for the smaller and mid-size businesses out there. And we want to do it without the jargon, fluff and poor design that seems to plague much of the BI world. At least that's the plan...

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