Consider the problem of problem ambiguity and the solution that analytics brings to the Lean Startup - "letting thousands decide what millions do". Time to unpack that.
The problem of problem ambiguity refers to the creation of a business models or products which are intended to solve fuzzy, low-defined, problems. Yes! It really does happen!
One of the mentalities within the Y-Combinator hive mind is to simply produce a product and get it out there. Iterate. Dominate. Be capital efficient. Be lean. Ponies. Stickers. Double Rainbows.
And so, there are any number of firms out there that are generating solutions to problems that they don't fully understand and loads of potential customers that are aware of ambiguous problems.
The behavior is explained by The Garbage Can theory that I've referenced before. An organization is an organized anarchy - a Garbage Can into which a stream of problems, solutions, energy and participants flow in. Solutions look for problems. Problems look for solutions. Everything's made up and the points don't matter anyway.
Perhaps the market itself is an organized anarchy too, and that just like March and Olsen back in the seventies, a Fortran program just might capture the complexity nicely and offer predictive value. Certainly, a glance at the #HBR Behavioral Economics craze would suggest that everything ancient is new again and that it can be done.
It might seem amazing that people produce things intended to solve a problem that doesn't really exist. They do. It brings me around to this notion of The Lean Startup.
In the Lean Startup, the problem is iterated upon in addition to the design and code base. The Agile Methodology assumes the problem is defined. The Lean Methodology questions everything. It's a point that is explained very well by Croll and Power.
I really like what Alistair Croll (@acroll) and Sean Power (@seanpower) have been doing. They communicate in a way that I get (209 slides with low word density), and there's evidence of really strong thinking and genuine insight. They acknowledge complexity and deconstruct it. It's great stuff.
"Letting Thousands Decide What Millions Do"
That quote originates from Claude C. Hopkins, who wrote that "before testing and sample statistics, advertising disasters were really quite common" (or something to that effect). Those words still cause me to smile, 80 years later. How I wish it was true.
This is where the analyst can go from being the reporter on progress towards goals, to becoming the strategic collaborator on problem definition. The rise of sophisticated analytical software enables analysts to understand the efficacy of marketing, perception, competitive sets, and usability. In effect, without analytics, the Lean Methodology and approach to problem solving collapses. The feedback loop is broken without the strategic collaborator.
Letting thousands decide ensures that an experience can be iterated upon quickly, as the user base isn't large enough to generate institutional lock-in. There's less risk and a better chance of actually learning enough about the problem to actually solve it, or one of its sub-variants, successfully.
In sum, the problem of problem ambiguity can be solved through analytics, in conjunction with a Lean Methodology.
Friday, July 30, 2010
Monday, July 12, 2010
Analytics, Strategy, Strategic Analytics
Jim Novo wrote:
Strategy formulation, from the C-suite, ought to be informed with facts. Ideally, there's a mix of aspiration and forethought involved in there. So resolved:
Yes, analytics should play a role in the formulation of strategy.
What of strategy 'on the way down'? Something has to connect the 500,000 foot view with the 10,000 foot view. What is that glue?
I've been fairly frustrated, with creative strategy in particular but also other types of things that are 'strategic'. It's disjointed. It could be summed up with the meme:
1. Identify key market segments
2. Engage them
3. ?????
4. Profit!
My previous solution was to simply GAS the ambiguity. The KPI identification process, all called the Goal Alignment Strategy (GAS), would rapidly focus attention down to the tactical level. The GAS is successful, and it can be a very painful process for others.
For one, when confronted with a practical question, it's far easier to reply "that's tactical" or "you don't get it", than it is to really answer the question. Effort must be exerted to ensure that you're not seen as questioning somebody's belief system, you're just trying to understand why they believe a sequence of choices will result in positive return.
The word GAS contains 'strategy'. Some have argued (weasel words!) have argued that GAS is really a tactical exercise. Of course, there seems to be a civil war over the definition of 'strategy' and 'tactic'. The word 'tactic', as enunciated by some people, is pronounced like they've just eaten a cigarette whole. Ownership of the word 'Strategy' is sometimes jealously guarded. Ambiguity persists. I think it's a very small debate, and I don't believe anybody can ultimately win it.
Good strategists are abductive thinkers. They ask 'what's possible' and then construct a narrative around their opinion. Good C-suiters are abductive thinkers too. They should ask 'what's possible' and then construct a narrative around their opinion. That's very different from the exercise of a Goal Alignment Strategy. To be sure, you there's a lot of abductive thinking that must go on in that construction, but it's by and large a deductive exercise.
I've spent time in this space talking about the 'library of smith'. The library in which all business plans exist and we just assume that a business is a turing machine that is capable of competently executing those instructions. Now, more than ever, I'm truly seeing this gap between the out-of-space strategic thinking, which is great and needs to be done - and strategic translation - as being so important.
I think that strategic analytics can help on both sides.
"The people that come to the party with relevant facts are the people who get to contribute to Strategy. That's not to say that all Strategic decisions are fact-based, but these decisions begin with facts.
So, if R & D and the CFO have relevant facts, they get to play. If Marketing does not have relevant facts, they don't get to play.
If Marketing s not involved in the Strategic decision making, they end up being "handed" problems rather than having a chance to solve them."
Strategy formulation, from the C-suite, ought to be informed with facts. Ideally, there's a mix of aspiration and forethought involved in there. So resolved:
Yes, analytics should play a role in the formulation of strategy.
What of strategy 'on the way down'? Something has to connect the 500,000 foot view with the 10,000 foot view. What is that glue?
I've been fairly frustrated, with creative strategy in particular but also other types of things that are 'strategic'. It's disjointed. It could be summed up with the meme:
1. Identify key market segments
2. Engage them
3. ?????
4. Profit!
My previous solution was to simply GAS the ambiguity. The KPI identification process, all called the Goal Alignment Strategy (GAS), would rapidly focus attention down to the tactical level. The GAS is successful, and it can be a very painful process for others.
For one, when confronted with a practical question, it's far easier to reply "that's tactical" or "you don't get it", than it is to really answer the question. Effort must be exerted to ensure that you're not seen as questioning somebody's belief system, you're just trying to understand why they believe a sequence of choices will result in positive return.
The word GAS contains 'strategy'. Some have argued (weasel words!) have argued that GAS is really a tactical exercise. Of course, there seems to be a civil war over the definition of 'strategy' and 'tactic'. The word 'tactic', as enunciated by some people, is pronounced like they've just eaten a cigarette whole. Ownership of the word 'Strategy' is sometimes jealously guarded. Ambiguity persists. I think it's a very small debate, and I don't believe anybody can ultimately win it.
Good strategists are abductive thinkers. They ask 'what's possible' and then construct a narrative around their opinion. Good C-suiters are abductive thinkers too. They should ask 'what's possible' and then construct a narrative around their opinion. That's very different from the exercise of a Goal Alignment Strategy. To be sure, you there's a lot of abductive thinking that must go on in that construction, but it's by and large a deductive exercise.
I've spent time in this space talking about the 'library of smith'. The library in which all business plans exist and we just assume that a business is a turing machine that is capable of competently executing those instructions. Now, more than ever, I'm truly seeing this gap between the out-of-space strategic thinking, which is great and needs to be done - and strategic translation - as being so important.
I think that strategic analytics can help on both sides.
Friday, July 9, 2010
The Influence of Marketing Departments on Strategy
Verhoef and Leeflang (2009) come forward with some pretty compelling evidence about the state of marketing departments and their influence on strategy. I stopped reading JAM in 2009, so the original paper escaped my attention. The updated 2010 version in "New Theories" did capture it though. You can get the paper from either source. You can also read the following summary:
There's an issue with marketing departments themselves and their relationship with strategy at the C-suite. Its influence within an organization, on strategy, is waning as compared to R&D and the CFO. I thank Peter and Peter for writing the piece and will now shove into analytics.
So, marketing has an issue. There's good evidence to support that assertion.
I'm concerning myself purely with what those with an analytical mindset could contribute.
Do you believe that those with an analytics toolkit can, or even should, make a major contribution to the formulation of strategy beyond the provision of fact and insight?
There's an issue with marketing departments themselves and their relationship with strategy at the C-suite. Its influence within an organization, on strategy, is waning as compared to R&D and the CFO. I thank Peter and Peter for writing the piece and will now shove into analytics.
So, marketing has an issue. There's good evidence to support that assertion.
I'm concerning myself purely with what those with an analytical mindset could contribute.
Do you believe that those with an analytics toolkit can, or even should, make a major contribution to the formulation of strategy beyond the provision of fact and insight?
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