Categories
Business 101

Langer’s Copy Machine Study

In this post I am going to talk about a research conducted by Ellen Langer at Harvard in 1978 to demonstrate the power of the word “because”.

How was the research structured?

The researchers would observe someone waiting in line, at the copy machine of the library.  

They would intentionally cut this innocent bystander waiting in line and use any one of the 3 questions mentioned below:

  1. Type 1 ( Plain Request):  “Excuse me, I have 5 pages. May I use the xerox machine?”
  2. Type 2 ( Plain Request + Lame Reason):  “Excuse me, I have 5 pages. May I use the xerox machine, because I have to make copies?”
  3. Type 3 ( Plain Request + Legitimate Reason) : “Excuse me, I have 5 pages. May I use the xerox machine, because I’m in a rush?”

I know, you might be thinking Type 2 wouldn’t have worked as it had such a lame reason “because I have to make copies”. Why do you think I am standing in line mate? But, surprisingly it worked too!!!!!

The Result

Conclusion

Using the word “ because” and following that up with a reason resulted in greater compliance.

The same was true even when the reason was as lame as “ I have to make copies”.

This resulted in a hypothesis that people go on automatic behavior and that hearing the word because followed by a reason (however lame) would cause them to comply. 

They repeated the experiment for a request to copy 20 pages rather than five. In that case, only the “because I’m in a rush” reason resulted in heightened compliance.

In his best-selling book, Influence, Robert Cialdini explained this phenomenon by saying, “A well-known principle of human behavior says that when we ask someone to do us a favor we will be more successful if we provide a reason. People simply like to have reasons for what they do.”

So what does this all mean? When the stakes are low people will engage in automatic behavior. If your request is small, follow your request with the word “because” and give a reason.

If the stakes are high, then there could be more resistance, but still not too much.

A genuine reason goes a long way. If you have a genuine and honest reason then people generally will comply.

References

Langer, E., Blank, A., & Chanowitz, B. (1978). The mindlessness of Ostensibly Thoughtful Action: The Role of “Placebic” Information in Interpersonal Interaction. Journal of Personality and Social Psychology, 36(6), 635-642.

Categories
Thinking

The Medici Effect

In 2004, the American management guru and entrepreneur Frans Johansson published his book ‘The Medici Effect’.

Johansson’s book owes its name to the rich bankers family De Medici, which had a lot of influence in Italy in the 15th century. This family unleashed an explosion of creativity during this period and encouraged painters, sculptors, poets, scientists, philosophers and architects to come up with inspiring ideas.

By supporting them financially, they were given freedom, which ultimately laid the foundation for the Renaissance. It was precisely the combination of different disciplines that brought a lot of innovation to art, which in turn led to innovation and renewal in that time period.

AQUAVIT

One of the lengthier examples cited in the book is that of Marcus Samuelsson, chef at Aquavit, a Swedish restaurant in New York, who is one of the pioneers of what we now know as fusion cooking.

In the mid-90s, the 24 year old chef introduced a series of dishes -oysters with mango curry sorbet, caramelised lobster with seaweed pasta – that resulted in the New York Times’ food critic raising Aquavit’s rating from a respectable one star to a rare three star, turning it into one of the city’s most popular restaurants.

Samuelsson is now one of America’s most famous chefs and according to Johansson, his talents stem from low associative barriers – a child-like ability to draw associations that adults tend to lose.

Samuelsson’s familiarity with world cuisine comes in part from his early experience on a cruise liner and he connects this with his base knowledge of Swedish ingredients and cooking techniques to great effect. “He’s placed himself at the intersection of cultures, where creativity is at its best,” says Johnansson.

The other postulate of the Medici Effect is more ideas lead to better ideas – and that, diverse teams generate more ideas.

One company that leverages the Medici Effect is Hewlett Packard, whose Lab in the US has 32 scientists from 13 countries and 13 disciplines.

Johansson says the company has a rule that new hires should never have the same background as any existing member of the team.

“They recognise that diversity drives innovation,” he says. “That’s because different cultures think of the same things differently.”

COMPARING APPLES AND ORANGES

Our resistance to comparing seemingly dissimilar or unrelated things stifles the cross-pollination of ideas from different disciplines.

Life, it turns out, doesn’t happen in compartmentalized silos. There’s little to be learned from comparing similar things.

To facilitate cross-pollination, your team should comprise of people with diverse interests.

The fit often won’t be perfect, but the act of comparing different perspectives will spark new lines of thinking.

To compare different ideas, you have to collect them first.

The more diverse your collection, the more interesting your output.

Categories
Humanity and Technology

Design for Extreme Affordability

In this post I am going to talk about Embrace, a baby warmer that was created by the students of The Design for Extreme Affordability course at Stanford University.

Embrace was developed to solve the problem of high mortality rates in premature and low-birth-weight babies in developing countries.

The Problem

Each year, 20 million premature and low-birth-weight babies are born

In developing countries the mortality rate of these children is quite high as incubators in these countries are quite rare. 

Moreover, hospitals and clinics in these countries don’t have enough incubators to cater to the extreme demand.

Last but not least, to purchase new incubators was overwhelming from a cost standpoint and incubators received by way of donations lacked simplicity of use and were very difficult to maintain. 

So the Extreme Affordability students were challenged to design a better incubator for the developing world.

The Insight

The Embrace team began their need finding in Kathmandu, the capital city of Nepal.

After spending several days observing the neonatal unit of the Kathmandu hospital, the team asked to be taken outside the city to see how premature infants were cared for in rural areas.

They learned two alarming things: First, the overwhelming majority of all premature Nepalese infants were born in these rural areas. And second, most of these infants would never make it to a hospital.

They realized that no matter how good their design for a new incubator was, it would never help these babies if it stayed in a hospital.

To save the maximum number of lives, their design would have to function in a rural environment.

It would have to work without electricity and be transportable, intuitive, sanitizable, culturally appropriate, and perhaps most importantly—inexpensive.

The Embrace Incubator

By the end of class, the team had created their first prototype of the Embrace Incubator.

The design looked something like a sleeping bag.

It wrapped around a premature infant, and a pouch of phase-change material (PCM) kept the baby’s body at exactly the right temperature—and maintained this temperature for up to four hours.

After four hours, the PCM pouch could be “recharged” by submerging it in boiling water for a few minutes.

The Embrace Incubator is small and light, making it easy and inexpensive to transport to rural villages.

The entire sleeping bag can be sanitized in boiling water.

It is far more intuitive to use than traditional incubators, and fits well into the recommended practice of “Kangaroo Care,” where a mother holds her baby against her skin.

Finally, compared to the $20,000 price of a traditional incubator, the Embrace incubator only costs $25.

The product uses an innovative wax incorporated in a sleeping bag to regulate a baby’s temperature.

It stays warm without electricity, has no moving parts, is portable and is safe and intuitive to use.

The Embrace Infant Warmer can be used in a clinical setting, for transporting babies, and in a community setting.

Conclusion

The whole philosophy of Embrace is that you have to be close to your end user to make a really good design.

Last but not least, according to Nobel prize winning economist Muhammad Yunus, reducing the rate of infant deaths actually helps to control population growth.

The theory is that as parents become more confident of their babies’ survival they are more willing to use contraceptives and have fewer children.

In India, a country of over 1.1 billion people, this is a welcomed side effect.

Credit: https://extreme.stanford.edu ( Impactful Solutions for Low Resource Communities)

Categories
Business 101

Kill the company

Creativity coach Lisa Bodell is the founder and CEO of Futurethink, an innovation consultancy.

Over the years, she has developed a system of turning tired, risk averse corporate cultures into inventive powerhouses.

In her system Bodell tells you to kill the company before someone else does.

She urges you to look at your company from the eyes of a ruthless competitor. Find your weaknesses, think about the future of your industry and imagine innovative ways of getting there.

Key takeaways

Ideas are never an issue. All employees in an organisation are brimming with ideas. It’s the bureaucratic culture that stifles innovation.

Employees should be given thinking time. Just sit and think. Do nothing but think.

Forget imagining a bright future. Instead don the hat of a ruthless competitor and think about the various ways in which they can kill your company.

Identify ways to circumvent the challenges posed by the step above.

Have a “Created by the employees. For the employees” culture. Your employees know the problems innately and are better equipped to come up with innovative solutions to solve them.

Take tiny steps. Focus on small quick wins. It’s always consistency over intensity. Be consistent.

The only thing constant is change. So create a burning platform. A fire that rouses your people to envision threats and come up with innovative solutions.

A complacent culture is worse than a negative one. In such a culture complacency sets in. Your people are satisfied but not engaged because the firm seems to be performing fine. And even if they have ideas to offer, the firms leadership will not welcome it. Keeping their heads down is safer. When people give up like this they soon don’t care anymore. In such a scenario you end up having a workforce of drones who may do what you ask but little else.

Stop the ASAP habit. Exactly when are your people going to find time to think and innovate when every task is labelled urgent and was due yesterday.

Be inspiring as the leader of your firm. Walk the talk. If you want to inspire innovation then you have to be inspiring.

The Book

The above takeaways are just the tip of the iceberg. I would highly recommend the book ‘Kill The Company’ if you are interested in a deep dive about this concept and the tools required to run this exercise in your organisation.

In Conclusion

By asking your employees to don the hat of a ruthless competitor exploiting your weakness and grabbing opportunities you may get more truth and insights about your business.

Until we look under the hoods at our own companies and examine the structural elements that are hindering employees abilities to question and challenge and think, we are not going to get results.

Instead of “If it ain’t broke, don’t fix it” try “If it ain’t broke, break it“

Categories
Thinking

Six Thinking Hats

Six Thinking Hats. A Parallel Thinking Process. Maximize productive collaboration. Make meetings much shorter and more productive. Spot opportunities where others see only problems. 

Six Thinking Hats Slide Show

Categories
Business 101

Amazon’s Mayday Button

Amazon unveiled the Mayday button in 2013 to differentiate Amazon Fire tablets from the competition. And users loved the Mayday button, with a reported three-quarters of Fire HDX owners using it in the first year.

Mayday is available 24 hours a day, 365 days a year. It is accessed by a dedicated button found right in the tablet’s Quick Settings menu. A tap on that button connects the user with a live support representative in 15 seconds or less, no matter what time or day of the year it is. Once connected, the user can see the support representative in a small window on their screen, and the representative can see whatever app or screen is on the user’s tablet. Support techs can guide users with visual cues and auditory prompts, and if those fail, they can even control the tablet remotely to resolve the issue.

But in June of 2018 Amazon killed the feature completely.

However the point that I want to make is that a feature that was geared towards tech support for a tablet ended up not just doing that but quite a lot of other things as well.

Heres an excerpt from the book Invent and Wander:The Collected Writings of Jeff Bezos, in which Jeff Bezos writes about the Mayday Button:

The Mayday Button

“Not only is the device awesome but the Mayday feature is absolutely FANTASTIC!!!!! The Kindle team has hit it out of the park with this one.”

“Just tried the mayday button on my hdx. 15 second response time … amazon has done it again. Thoroughly impressed.”

Nothing gives us more pleasure at Amazon than “reinventing normal”—creating inventions that customers love and resetting their expectations for what normal should be.

Mayday reimagines and revolutionizes the idea of on-device tech support.

Mayday is available 24/7, 365 days a year, and our response time goal is fifteen seconds or less. We beat that goal—with an average response time of only nine seconds on our busiest day, Christmas.

A few of the Maydays have been amusing.

Mayday Tech Advisors have received thirty-five marriage proposals from customers.

475 customers have asked to talk to Amy, our Mayday television personality.

109 Maydays have been customers asking for assistance with ordering a pizza. By a slim margin, Pizza Hut wins customer preference over Domino’s.

There are forty-four instances where the Mayday Tech Advisor has sung Happy Birthday to the customer.

Mayday Tech Advisors have been serenaded by customers 648 times.

And three customers have asked for a bedtime story. Pretty cool.

On a side note

Serenaded means to sing or play an instrument expressing love for somebody, especially for a woman while standing outside her window at night

So in conclusion, you can introduce features in your product/service with this obsession of serving your customers to the best of your ability. However, your customers can totally surprise you, pleasantly, by taking the feature to a totally new level.

Categories
Business 101

Nike’s Phil Knight on High Performance Marketing

In an Harvard Business Review Article (from the Magazine Dated July-August 1992) Phil Knight explains how Nike discovered the importance of marketing and what difference that discovery has made. 

This interview was conducted at Nike, Inc.’s Beaverton, Oregon offices by HBR associate editor Geraldine E. Willigan.

While the article is very elaborate, I have picked up 5 questions and their answers that resonated with me the most.

It’s been 29 years since this article was published, but the marketing principles articulated by Phil Knight are still so relevant.

I have highlighted them below:

  • Your product is the most important marketing tool.
  • Marketing knits the whole organisation together.
  • We have to innovate for a specific reason, and that reason comes from the market. 
  • Focusing on your core customers is crucial but you got to cater to the top, middle and bottom of your customer pyramid for growth. Else your sales will plateau over time.
  • To understand the customer pyramid, you have to do a lot of work at the grass-roots level.
  • You can’t create an emotional tie to a bad product because it’s not honest, it doesn’t have any meaning and people will find that out eventually.
  • You have to convey what your company is really all about.

With that said lets now dive into the 5 questions.

1.

HBR:

Nike transformed the athletic shoe industry with technological innovations, but today many people know the company by its flashy ads and sports celebrities. Is Nike a technology company or a marketing company?

Phil Knight:

I’d answer that question very differently today than I would have ten years ago. 

For years, we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. 

But now we understand that the most important thing we do is market the product. We’ve come around to saying that Nike is a marketing-oriented company, and the product is our most important marketing tool. 

What I mean is that marketing knits the whole organization together. 

The design elements and functional characteristics of the product itself are just part of the overall marketing process.

We used to think that everything started in the lab. 

Now we realize that everything spins off the consumer. And while technology is still important, the consumer has to lead innovation. 

We have to innovate for a specific reason, and that reason comes from the market. 

Otherwise, we’ll end up making museum pieces.

2.

HBR:  

Didn’t Nike understand the consumer right from the start?

Phil Knight:

In the early days, when we were just a running shoe company and almost all our employees were runners, we understood the consumer very well. There is no shoe school, so where do you recruit people for a company that develops and markets running shoes? The running track. It made sense, and it worked. We and the consumer were one and the same.

When we started making shoes for basketball, tennis, and football, we did essentially the same thing we had done in running. We got to know the players at the top of the game and did everything we could to understand what they needed, both from a technological and a design perspective. Our engineers and designers spent a lot of time talking to the athletes about what they needed both functionally and aesthetically.

It was effective—to a point. But we were missing something. Despite great products and great ad campaigns, sales just stayed flat.

3.

HBR: 

Where did your understanding fall short?

Phil Knight:

We were missing an immense group. We understood our “core consumers,” the athletes who were performing at the highest level of the sport. We saw them as being at the top of a pyramid, with weekend jocks in the middle of the pyramid, and everybody else who wore athletic shoes at the bottom. Even though about 60% of our product is bought by people who don’t use it for the actual sport, everything we did was aimed at the top. We said, if we get the people at the top, we’ll get the others because they’ll know that the shoe can perform.

But that was an oversimplification. Sure, it’s important to get the top of the pyramid, but you’ve also got to speak to the people all the way down. Just take something simple like the color of the shoe. We used to say we don’t care what the color is. If a top player like Michael Jordan liked some kind of yellow and orange jobbie, that’s what we made—even if nobody else really wanted yellow and orange. One of our great racing shoes, the Sock Racer, failed for exactly that reason: we made it bright bumble-bee yellow, and it turned everybody off.

4.

HBR: 

What’s different now?

Phil Knight:  

Whether you’re talking about the core consumer or the person on the street, the principle is the same: you have to come up with what the consumer wants, and you need a vehicle to understand it. To understand the rest of the pyramid, we do a lot of work at the grass-roots level. We go to amateur sports events and spend time at gyms and tennis courts talking to people.

We make sure that the product is the same functionally whether it’s for Michael Jordan or Joe American Public. We don’t just say Michael Jordan is going to wear it so therefore Joe American Public is going to wear it. We have people who tell us what colors are going to be in for 1993, for instance, and we incorporate them.

Beyond that, we do some fairly typical kinds of market research, but lots of it—spending time in stores and watching what happens across the counter, getting reports from dealers, doing focus groups, tracking responses to our ads. We just sort of factor all that information into the computer between the ears and come up with conclusions.

5.

HBR: 

How do Nike’s TV ads create emotional ties with the buying public?

Phil Knight: 

You have to be creative, but what really matters in the long run is that the message means something. That’s why you have to start with a good product. You can’t create an emotional tie to a bad product because it’s not honest. It doesn’t have any meaning, and people will find that out eventually. You have to convey what the company is really all about, what it is that Nike is really trying to do.

That’s something Wieden & Kennedy, our advertising agency, is very good at. Lots of people say Nike is successful because our ad agency is so good, but isn’t it funny that the agency had been around for 20 years and nobody had ever heard of it? It’s not just that they’re creative. What makes Wieden & Kennedy successful with Nike is that they take the time to grind it out. They spend countless hours trying to figure out what the product is, what the message is, what the theme is, what the athletes are all about, what emotion is involved. They try to extract something that’s meaningful, an honest message that is true to who we are. And we’re very open to that way of working, so the chemistry is good.

People at Nike believe in the power of emotion because we feel it ourselves. A while ago there was a book published about Nike, and one person who reviewed it said he was amazed that a group of intelligent, talented people could exert so much passion, imagination, and sweat over pieces of plastic and rubber. To me, it’s amazing that anyone would think it’s amazing. I can’t say I would be that passionate about cigarettes and beer, but that’s why I’m not doing cigarettes and beer.

If you would like to read the full interview, click the link below:

High-Performance Marketing: An Interview with Nike’s Phil Knight

Categories
Digital Transformation

5 Reasons Why Digital Transformation fails in most companies

laptop connection on cloud storage for collaboration work with remote team. Cooperation work via internet and work with project in shared access. Isometric infographic concept.
Digital transformation closes the gap between what digital customers already expect and what analog businesses actually deliver – Greg Verdino.

Digital Transformation isn’t just about technology.

It’s about your Customers and your Employees.

It’s about Leadership and Culture.

Introducing new technology is the easier part; it’s the cultural and process changes that can thwart the progress of Digital Transformation.

You can have all the cool technologies in the world that give you everything i.e. the customer view, product and services data etc. But if leadership and culture aren’t at the heart then Digital Transformation fails.

It’s a synergy of People, Process and Technology.

The 5 primary reasons why digital transformation fails in most companies are highlighted below.

1

2

3

4

5

Categories
Business 101

Thinking Clearly About Growth

Roberto Críspulo Goizueta Cantera was Chairman, Director, and Chief Executive Officer of The Coca-Cola Company from August 1980 until his death in October 1997. In the 1980s he had a simple yet powerful insight that he shared with his senior executives. He asked a very simple question: What was the average per capita daily consumption of fluids by the worlds 4.4 billion people? The answer was: 64 ounces. He then proceeded to ask the next question which was: What is the daily per capita consumption of Coca Cola? The Answer: Less than 2 ounces.

Finally, he asked the following question: What’s our market share of the stomach? This question made the entire team realise that of all the fluids everyone drinks in a day, Coca-Colas share was minuscule. Coca-Cola had invested a lot in the idea of PepsiCo as their main enemy. Goizueta with a few simple questions, redefined the entire market of Coca-Cola. He led his team to believe that the competition is not just with PepsiCo but it was with coffee, milk and tea. It was with water.

Growth is a hot topic today. Business leaders are now realising that apart from operational excellence it’s extremely important to focus on growth as well. To create growth opportunities, you must first start to think clearly about growth.

The following 5 points will enable you to get started:

  1. Abandon the idea of a mature business: You got to come to terms with the fact that there is no such thing such as a matured business. Whatever business you are in, no matter how matured the industry is, you can grow once you learn how to look beyond the factors that define your market space and industry ( refer the Coca-Cola example above)
  2. Growth for the sake of growth: Growth for the sake of growth can be disastrous. Good growth is slow (think compounding), sustainable, profitable and capital efficient. Don’t confuse growth with some momentary spikes in sales orders leading to increased sales volumes. It’s about consistency over intensity.
  3. It starts with the leadership at the top: It starts with a idea or a point of view that the leadership puts forward, which then gains momentum when everybody buys into what the leaders in the company are teaching and coaching.
  4. Balanced Growth is key: Balanced and sustainable growth i.e. growth for the long haul requires meticulous attention to the basics: cost structure, quality, product development cycle time, asset utilisation, quality, supply chain innovation, cash flows, sales, marketing, customer service and all other aspects of operational excellence. An unwavering focus on these aspects generates the resources for growth.
  5. Growing is less risky: From a personal stand point yes its risky because it takes courage to put an idea out there and stick with it. But if your strategy is based upon long term sustainable growth that is tightly coupled with your customers needs and also with the basics of operational excellence as outlined in point 4 above then growing your business becomes far less risky than rearranging the furniture when your competition is growing and you are not.

So start with a clear point of view about growth and make it a part of your company’s DNA. Here’s to growth.

Credit: Every Business is a Growth Business: Ram Charan and Noel Tichy.

Categories
Business 101

Sales Velocity

What is Sales Velocity?

In simple terms, it’s a measurement of how fast your company is making money. It tells you how fast your leads are moving through your pipeline and getting converted to customers.

Why is Sales Velocity important?

The less time your team takes to convert a lead into a customer the more revenue they are clocking in. So essentially, a higher sales velocity means more revenue in less time.

Hence, it’s the most important metric that you can measure to analyse the performance of your sales force. 

How to measure Sales Velocity?

The four key factors that help you determine sales velocity are as follows:

  1. Number of Opportunities: How many high quality leads your team is working on.
  2. Conversion Rate / Win Rate: The rate at which you are converting your leads. For example, if out of 100 leads 35 get converted into customers then your conversion rate is 35%.
  3. Average Deal Size:  On an average what is the value of a deal that your team works on.
  4. Length of Sales Cycle:  How much time does it take for you to convert a lead into a paying customer.

With the above key factors in place, the sales velocity is calculated as follows:

So for example, you have 100 opportunities in the pipeline with an average deal size of $2000 clubbed with a 25% conversion rate and a sales length cycle of 30 days then your sales velocity is:

Sales Velocity (V) = (Number of Opportunities * Average Deal Size * Conversion Rate) / Length of Sales Cycle

V = (100*2000*0.25)/30 = $1,666.67 

This means you are bringing in roughly $1,666.67 revenue everyday into your business. 

To increase your sales velocity you can either increase the numerator or decrease the denominator or both.

How can I improve my sales velocity?

There are 3 things you can do to start with:

  1. Improve your conversion rate: Make sure you are prospecting your leads correctly and working on leads of good quality with a high probability of conversion.
  2. Shorten your sales cycle:  Audit your sales process and try to identify bottlenecks that are adding to the closure time. Try to eradicate them by revamping your process and/or use software to help speed up the process. The key is, more sales in less time.
  3. Optimise your deal size: We all like high value deals. However, we all know for a fact that larger deals take longer to close. So if your organisation is solely focused on high value deals alone then you will certainly see your sales velocity number plummet. Try to strike a right balance between large and small deals to enable you to derive an optimal sales velocity number.

One last thing

A high sales velocity number means more revenue in less time. However, revenue doesn’t pay bills. Cash does.

So while getting a high sales velocity number is crucial but keeping a laser sharp focus on cash flows is paramount.

Profit is an Opinion. Cash is Fact.  

Categories
Business 101

Theory E and Theory O approaches to Change Management

While there are many types of change programs, 2 primary goals typically drive a change initiative:

  • Near term economic improvement or
  • Improvement in organisational capabilities

Harvard Business School professors Michael Berr and Nitin Nohria coined the terms Theory E and Theory O to describe these two goals.

Theory E: An economic approach

The primary focus of Theory E is to immediately increase shareholder value. The same is measured by improved cash flows and share price. Popular notions of employee participation and the ” learning organisation” take a back seat in this approach.

According to Theory E all implicit contracts between the company and its employees are suspended during the change effort. Individuals and units whose activities fail to provide tangible value creation (example: R&D and Planning) are particularly vulnerable in this approach.

The CEO and the executive team along with the help of some external consultants drive this type of change. The various departments, business units and employees of the organisation are like pieces in the managements strategic chess board wherein they are rearranged or combined or occasionally cashed out.

Theory O: An Organisational Capabilities Approach

The goal of theory O change is to develop an organisational culture that supports learning and an high performance employee base. In this approach the companies invigorate their cultures and capabilities via individuals and organisational learnings. This promotes a flatter organisation, encourages employee participation and fosters strong bonds between the organisation and its people.

Implicit contracts in this approach are too important to be broken as this approach banks on employee participation which is quite the opposite of a Theory E approach.

Companies taking the Theory O route don’t subscribe to concentrated power and directions from the top. Leaders that drive Theory O change are less interested in driving the change themselves. They are more focused in developing employee attitudes and behaviours that will sustain the change that they (the leaders) intend to bring.

Theory E or Theory O?

Most companies studied by professors Michael Berr and Nitin Nohria preferred a mix of the two to suit their needs.

The table below explains why

(Image Credit: Harvard Business Review)

So which approach is best for your company? Well, only the people familiar with the inner workings of your company can say with authority. However, you may use the content above as a good starting point.

Categories
Thinking

Fermi Thinking

Named after Enrico Fermi, the Italian-American physicist who created the world’s first nuclear reactor, Fermi thinking is designed to help us to make fast, useful calculations with little concrete information. 

It was Fermi’s belief that the ability to make educated guesses when facing unknowns or complex problems was a crucial skill, not just in science but across many domains.

Example:

How many piano tuners are there in Chicago?

Take a minute to think about how you might approach this problem. How do you estimate this quantity without looking up anything online?

At first glance, this might seem like a really hard question to answer without additional information. However, we can produce a reasonable estimate by making a few sensible assumptions.

Let’s say that Chicago has around 5 million people. Pianos are generally owned by families rather than by individuals, and perhaps each family in Chicago has 4 people. Then there are around 1.25 million families in Chicago.

Let’s assume that one in every ten families owns a piano that is tuned regularly. That would mean that there are around 125,000 pianos in Chicago.

How many piano tuners do we need to maintain these pianos? We can assume that each piano should be tuned once per year, so there are 125,000 piano tunings in Chicago each year.

If each piano tuner works 8 hours per day on each weekday, and if each piano takes around 2 hours to tune, then a piano tuner can tune around 4 pianos per day for 250 days per year. That’s around 1,000 piano tunings per piano tuner each year.

So we can estimate that we need around 125 piano tuners to perform the 125,000 piano tunings in Chicago each year.

While we can’t claim this answer is exactly accurate, we can claim that it is a fair estimate of the actual value. That’s the goal of a Fermi estimation problem.

Conclusion

Fermi thinking often requires us to make reasonable assumptions and estimates about the situation in order to come up with an approximate answer. 

Also you need to be able to explain and justify what you did when coming up with the solutions like in the example above.

In business, it is often necessary to make quick estimates when neither time nor resources are available for making traditional assessments. 

At this juncture, even a gross estimate is very useful to head off ill-advised expenditures, which are unlikely to generate a baseline profit. A back-of-the-envelope determination of market size, costs, or technical feasibility may be needed. 

Such a calculation ignores details, focuses only on major factors, and aims at an estimate.

Until recently, business educators interested in teaching students to use Fermi questions would find it difficult to locate published questions related to the business world. Fermi questions and their solutions tended to involve physics, chemistry, biology, and other so-called hard science

However, this may be changing as the trend is for consulting firms and corporations such as Google and Microsoft to ask applicants to try to answer Fermi questions, as part of the job interview process, with the goal of identifying creative thinkers

Categories
Humanity and Technology

Augmenting Humanity with Technology

Moravec’s paradox is the observation by artificial intelligence and robotics researchers that, contrary to traditional assumptions, reasoning requires very little computation, but sensorimotor skills require enormous computational resources. 

The principle was articulated by Hans Moravec, Rodney Brooks, Marvin Minsky and others in the 1980s. 

Moravec wrote in 1988, “it is comparatively easy to make computers exhibit adult level performance on intelligence tests or playing checkers, and difficult or impossible to give them the skills of a one-year-old when it comes to perception and mobility”.

Hans Moravec laid the basis of this paradox and considers one possible explanation to be rooted in evolution.

Evolution has taken millions of years to evolve the current sensorial abilities of humans. 

Some examples of skills that have been evolving for millions of years: recognizing a face, moving around in space, judging people’s motivations, catching a ball, recognizing a voice, setting appropriate goals, paying attention to things that are interesting; anything to do with perception, attention, visualization, motor skills, social skills and so on.

These skills that we possess are mostly unconscious and come to us without any thought; we seem to do them without any strain, making what looks difficult to be fairly easy. These unconscious processes are difficult to reverse-engineer and teach to the computers, thus increasing the complexity of the problem.

Some examples of skills that have appeared more recently: mathematics, engineering, human games, logic and scientific reasoning. These hard things that we make computers solve are based on a deliberate process we call reasoning. This process is conscious, one of abstract thought and closely related to brain functions in humans that have evolved recently (less than 100,000 years ago) in the context of the long evolutionary process. 

A compact way to express this argument would be:

  • We should expect the difficulty of reverse-engineering any human skill to be roughly proportional to the amount of time that skill has been evolving in animals.
  • The oldest human skills are largely unconscious and so appear to us to be effortless.
  • Therefore, we should expect skills that appear effortless to be difficult to reverse-engineer, but skills that require effort may not necessarily be difficult to engineer at all.

Human & Machine Augmentation

Despite the huge amount of enterprise data available, half the picture is missing. Systems of records like ERPs only record what happened. And what happened is the results of human decisions made “outside” systems based on a context which can soon be forgotten or lost.

Example: You detect an oversell situation and expedite replenishment, but due to external factors some customers are cancelling their orders, and you end up with excess costs and stocks. A bad outcome for the replenishment decision, and a lesson to remember if it happens too frequently.

The real world is different, and context can make a lot of difference. We’re able to assess and understand context (because of evolution) in ways that machines cannot. 

The lesson for the business world is that utilizing AI is not just about replacing manual work by computation. Instead, it’s about respective augmentation between humans and machines – leveraging each other’s strengths, timely and consistently. 

We sense danger, threats, rewards and apply judgment, unconsciously most of the time. We make decisions based on context that may violate rules or convention – sacrificing the queen at chess, driving through red light if necessary, or expediting a drug by helicopter for a life-threatening emergency.

With a human/machine augmentation model, we are moving from people doing the work supported by machines to machines doing the work guided by people. 

It’s not about us v/s them

The concept that humans and machines have different strengths played out in a research from Harvard. In the study, a breast cancer detection algorithm was able to detect cancer cells 92% of the time. However, the doctors were able to identify cancer cells 96% of the time.

This clearly shows that humans are better, right? But wait—the next finding was perhaps the most telling part of the study. By combining the algorithm with human experience and intuition, the team was able to identify more than 99% of cancer cells. This blending of strengths of humanity and technology points to an incredible opportunity to solve the most complex problems that the world is facing today.

The idea that “technology will fix things” is misguided. 

Machines expertly handle repetitive and automated tasks and will always be faster and more precise. They might be good at tasks closely related to brain functions in humans that have evolved recently(Algebra, Logic, Abstract Thinking etc.), less than 100,000 years ago, in the context of the long evolutionary process. 

However Technology cannot fix bad processes, poor management practices, or failing employee morale. Without people, there is no innovation, no strategy and no connections with customers. 

The uniquely human skills of creativity, innovation, adaptability, empathy, integrity, and imagination which have evolved over a million years are becoming increasingly critical to success, and these skills cannot be taken over by machines.

The new era is going to be about the handshake between humanity and technology wherein machines will be doing the work guided by people.

 

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Business 101

5 Critical Reasons why CRM Projects Fail.

Consider this: 

55% of all CRM projects don’t produce results, according to Gartner Group, a research and advisory firm.

In 2017, CIO magazine reported that around one-third of all customer relationship management (CRM) projects fail. That was actually an average of a dozen analyst reports. The numbers ranged from 18% to 69%. 

So how do we define CRM?

CRM aligns business processes with customer strategies to build customer loyalty and increase profits over time. (Note the absence of the words “technology” and “software” in the above definition.) CRM is not a software tool that will manage customer relationships for you. The CRM software is just a conduit that connects an organizations customer strategy and its processes with the goal of improving customer loyalty and increased profitability. 

5 Critical Reasons why CRM projects fail

  1. Lack of a Robust Customer Strategy: For a CRM program to succeed, you first need to create a robust customer strategy. Identify which customers you want to build relationships with and which you don’t. Every customer is unique and has a different current and potential value to your company. The outcome of your customer strategy should be customer groups spanning from the most profitable to the least profitable. For the most profitable customers you need to identify ways and methods to broaden and deepen the existing relationship and for the least profitable you need to decide if you really wish to serve them at all. This segmentation is crucial and it is done to achieve specific marketing goals.
  2. Poor Business Process Design: Without business process improvement, you’re just creating another place to enter data. The predictable result is that users will be unimpressed, software utilization will be low and user adoption will steadily wane as users work outside the system using spreadsheets, shadow applications and manual methods. Staff productivity is enabled with technology, but not achieved with technology alone. Business process automation is the #1 contributing factor to increased employee productivity. Some common business process themes to consider along with your CRM strategy would be Quote to Cash, Lead to Customer and Procure to Pay or Record to report. It’s important that an organisation performs process optimisation before cataloging their CRM requirements. The new business processes will introduce new CRM requirements that will otherwise be missed if the CRM requirements are drafted looking at only the existing processes.
  3. Too Much at Once: Trying to do everything at once guarantees that you won’t do any of it well. You end up with chaos and confusion rather than the more efficient business processes you imagined at the outset. Divide your CRM implementation into phases to make the project more manageable. You can work on multiple aspects of your implementation at the same time. Just don’t try to complete the entire enterprise-wide implementation all at once.
  4. Business and tech teams don’t work together: Every department in your company plays a vital role in the overall success of the business. At the same time, these departments also have their own priorities, considerations, and ideas about how to tackle any given problem. When a project comes along that crosses through multiple departments — like a new CRM — one of the biggest hurdles to success is often getting these teams on the same page to reach a mutually beneficial solution. This often means breaking down departmental barriers, freeing data from dedicated department silos, and creating uniform (or at least consistent) processes for accessing and using customer information. Your business and tech teams will need to work together in new ways to make sure that everyone is getting the most from the CRM software.
  5. Lack of user adoption: It can be challenging to accept change, especially when it comes in the form of a new CRM, with new processes, responsibilities, and a steep learning curve. Implementing a CRM means shifting the way your sales team organises its contacts and prioritises its work, which means there could be quite a bit of resistance to this type of change. Users need to be convinced that their old data will still be available, that the new product is easy to use, and that training will be provided. Let them know that you understand that there will be a transition phase and that it takes time to get up to speed. You also need to articulate the problems the CRM solves for them as well as the benefits it offers to them. Users don’t care how a CRM system benefits the management so leave those out. Focus on how your chosen solution will automate their processes, save them time, and generate bigger deals. In short, focus on operational productivity rather than management productivity because in the end its operational productivity that drives management productivity.

Conclusion

Even a relatively successful CRM implementation followed by stagnation will result in a steady decline in CRM usage over time. It won’t take long until users and managers begin working without or around the system.

Therefore it is imperative to understand that like business, CRM is a journey, and successful CRM programs leverage continuous process improvement cycles to constantly refine and optimise the business software system.

Last but the not the least, for a successful CRM implementation, an organisations focus should be in the following order

  1. Customers.
  2. People.
  3. Process and
  4. Technology.