Wednesday, September 18, 2013

What is the problem you are trying to solve? Assessment and action.

Most business improvement plans are based on the "Plan-Do-Review" cycle:  
You plan something, you do it and then you decide if it worked. While elegantly simple and adequate for most purposes I find a small glitch in the methodology, missing  "feedback" it's not enough to plan or do something without some mechanism to permit course correction quickly.

For example, speeding up production to reduce costs in your buggy whip factory will do very little to address your real issue. You can introduce 1,000  processes to get just in time delivery of leather, oak and rivets; develop incentive plans for safe good work and even flatten your middle management ranks to put them closer to the customer, yet you will fail because nobody owns a buggy anymore.

Without data and in particular, feedback loops, you may not realize, as you shovel another scuttle of coal onto your Rumford hearth that the real problem is you have taken 75 years longer than you should to see that buggy whips are obsolete.

I wish this were simply an absurdity, yet if you look around you will see innumerable examples of buggy whip thinking in companies that roll ponderously along simply by inertia.

Newspapers and cable TV providers come immediately to mind. A great example of a near death buggy whip like organization is the "auto-trader". Not so long ago, for $50.00 you could put a picture of your car in a book, people who were looking for a car would buy the book and phone you, you, of course also had to buy a copy just to proof your ad.

Then along came kijijji, an on line service that let's you post 10 pictures, for free and people looking for a car just cruise the website, also for free.
No ink, no waiting a week for your misspelled ad to come out, no paper, 24 hour access, just better all around. Almost overnight  "auto-trader" became the advertising media nobody cared about. 
As for cable or satellite: Ever heard of Roku or Apple TV? I like Roku,  that plus  digital rabbit ears and I am set. I pick what I watch when I want and as far as local TV is concerned;  really? Global news in the morning and that's about it.
Same thing with Travel Agents:  Doomed to obsolescence thanks to Expedia and on line bookings.
A good example of a bloated lumbering industry that managed to survive being  forced to change with the times  are Realtors. 
After being  forced, by government, to end their monopoly and share all their listing data with the buying public, including allowing 'For Sale By Owner" companies, who's whole business model is based on no commissions to nasty sales people.
You  can shop on to your hearts content, call your realtor (or better yet, call Barb Grodaes at Discover Realty DM me for the #)  with the houses you want to see.   No need to mumble about how gross the red shag rug is at some For Sale by Owner house.
Being married to the aforementioned realtor has not influenced my opinion on this, it took a forced reinvention of the industry, based on service to survive.
The For Sale By Owner  companies demanded access to MLS and got it, in exchange, Realtors who don't like zero commission deals find lots of reasons not to sell FSBO listings, thus effectively, creatively and terminally damaged the FSBO business model.
I will talk about that in my blog on unintended consequences.
Its important to note that the survival of Realtors  has more to do with public limitations than anything else;   people hate to negotiate and in the FSBO model negotiation is up close and personal.  Using a Realtor it becomes comfortably anonymous, that anonymity is really why people chose Realtors.
Business too often  is about commitment and belief in the face of overwhelming evidence to the contrary. It can be hard, in the face of the desperate media to know if blackberry is a good deal or not and it's even harder on the inside. (It's a buy in my portfolio) The right data has to  be understood and acted upon.
Plan-do-review with data and feedback lets you measure and understand what is really going on, your speed of failure increases, you get out before you become the next buggy whip maker and your successes are based on more than luck. No industry or activity is exempt, proper feedback loops and data are critical to all decisions that matter and many that don't.
My particular interest is with the champions of industry on who's shoulders rest the livelihoods of far more than the directly employed. Being entrenched in an idea, any idea without knowing why is fraught with peril, thinking with your ego is even worse.
Data wins. Feedback is a gift. Learn to fail quickly.  
Three maxims that are tough to dispute and even harder to adopt.

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