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Examples of different kinds of "pivot" for lean start-up

In 'Lean Start-Up' terminology, a “Pivot” is a deliberate adjustment to the basic assumptions about a new product, system, service or process.  Implementing the notion of pivots, a company seeks feedback from existing or potential customers and users, early and often, and uses the feedback to change direction, either marginally or fundamentally.  

 

The pivot allows the business, whether it is a start-up or well-established to try things out, to make minimal investments for maximum information.  For example, do people want to look at the product on the web and buy in the shop, or look at the product in the shop and buy on the web?  These assumptions and what affects them are pretty important.  To what extent are people looking for a product, off the shelf and plug and play, or for a service, with advice, support and training? 

 

Who knows?  It may only be a small detail in one way or the other that could have significant impact on customer behaviour.   Or it could be something more radical, that would enable you to make a breakthrough in technology, marketing and to amend the whole business model.  For example, what will users want to do on a phone, a tablet, a PC or in the cloud?  The point of a ‘pivot’ is that not only trial and error, but managed learning and revisions, called ‘pivots’ will provide the answers.

 

Here are some explanations and examples of different types of pivots, inspired by the Eric Ries book “The Lean Start-Up” and also by Osterwalder and Prigneur in their "Business Model Generation" canvas.

 

(By the way, lean does not mean starved or starving.  It means 'fit for purpose', avoiding the useless in favour of useful work, and working on what customers are prepared to pay you for doing, either sooner than later, rather than making up unnecessary things just to look busy.  If we were all lean at home, for example, we’d have more time to do the things that we really enjoy and less time on chores and fixing mistakes.)





Micro-payments: is it a valid business model?

There are several web-based business models.  Is micro-payments a valid alternative?  Micro-payments can allow small payments for valuable intellectual property, which still preserve the generosity of the web, but without dependence on the advertising model. 

 

The question is well addressed in this Stanford project on micro-payments

 

In my analysis at present, the predominant web-based business models are:

1) All web-site content is free and revenue is derived from data collection (i.e. via advertising based on consumer knowledge) and viral communication.

2) ‘Freemium’, (i.e. free, but pay for added premium value, which could be extra features, enhanced performance, better aesthetics, more user guidance…)

3) A join-up subscriber fee gives access to content, which is sometimes organised in categories according to the value of the subscription.

4) The web site is used as a shop window or as a marketing brochure, which is a supplement to traditional sales and marketing activities.

5) The web site is a service centre to support core activities and develop customer loyalty.

6) The web site as an integral part of the customer and supplier interface (i.e. in essence some effort and costs gets outsourced to customers and/or suppliers).

7) “Brand-me” aims to create a celebrity or brand effect with doses of excitement and ingenuity (it lies somewhere between the blog and the conference model, and often ties to a best seller.)

 

So the use of micro-payments is possibly an eighth model, and I'm sure there are many others.

 

Micro-payments compete against free, and like newspapers on the street compared to on-line newspapers, micro-payments can offer content and performance in an agreeable and easily accessible format.  

 

(For example, Apple charges about 1€ or $1 for songs, even though people can download music for free elsewhere, but Apple aims to offer an aesthetic user experience, both on the ipod and on the itunes web site.)  

 

However, the newspaper on-line subscription model has struggled, perhaps because of the aesthetic appeal of paper, the habit and convenience of picking up a paper in a newsagent or due to competition from free news sheets. 

 

For the benefit of small content providers, I hope that micro-payments will grow, but only if it is sufficiently convenient and not all of the ingredients are there yet.  It seems to me that it’s still a work in progress.  

 

There is the issue of friction by creating road humps in the flow, surf, crawl and trawl across the Internet.  Micro-payments also requirs people to become more accustomed to using a PayPal style account; or alternatively for pioneering credit approaches to develop such as payment via telephone credits, which already flourishes in Africa.

 

The search is on for the best mix of micro-payments and ‘freemium’ now.





How to manage people like entrepreneurs

Most creative people are motivated by the potential of what they want to achieve and the competences they wish to acquire.   They are looking for transformational business opportunities, rather than transactional relationships.  Why treat project teams as if they were disinterested contractors when you can treat them as they are: entrepreneurial stakeholders?

  • Providing that you pay them enough, i.e. the market rate, they will be motivated by the potential of achievement, yours and theirs.
  • Don’t delegate in a remote uninvolved fashion when you can benefit from real engagement and frequent communication.
  • Don’t adopt a superior to subordinate posture, when you can develop a generous, committed and rewarding partnering arrangement.
  • Respect the creative process, develop trust not defensiveness, coach each other, and empower them to empower you.
  • Share your vision and purpose, explain ‘why’ when you explain something, encourage leadership at every level, stoke the energy and smooth the stress.




The art of innovation with a creative dialogue

The art is to create a dialogue between market and technology with an evolved attitude of co-responsibility and partnership.  This is where to find the opportunities to make significant gains in performance.

 

What are some elements of a creative and constructive dialogue Y or not X ?   '(see below)

 

Y  What it is    

 

 What it isn’t  

  

Y  "This is the purpose and the benefit of what we are trying to achieve"

 

X  "I pay; you just get the job done"            

                        

Y  "These are the outcomes we seek; help us to define the most suitable options"

 

X  "These are my needs; just deliver"              

      

Y  "We evaluate the options together and educate each other"

 

X  "I tell you what to do; you execute"    

                                         

Y  "We both think about the price" 

 

X  "The value is my secret, the cost is your secret"        

                  

Y  "We are as transparent as we can be about value and cost"

 

X   "I told you once; don’t ask again"        

 

Y  "Understanding is a constant dialogue"

 

X   "I know the answer before we start"

 

Y   "There’s usually more that we don’t know than what we do know"

 

X    "Do it right first time"

 

Y   "Do the right thing and on time"

 

X   "We work with best suppliers; they should do what they are told"

 

Y   "We work with best suppliers; and we endeavour to be a best customer"

 

X   "We have defined our requirments perfectly clearly"

 

Y   "There is no such thing as a perfectly defined requirment; unless we check understanding together"

 

X   "We only progress when everything is ready"

 

Y   "We go forward knowing the risks; and clarifying who is responsible for the risks"





Easy wins in project management

Amongst all the processes in a business, project management offers the best possible opportunities for easy wins. However, whilst project management is recognised as being vital to innovation and change management, it is often underinvested due to its perceived difficulty.
 
These are some of my suggestions for actions that can be implemented in an organisation: 
-         taking the time to develop a thorough understanding by each of the partners of what the others are doing, both between organisational functions and between clients and suppliers
-         performing teambuilding with the tools that will actually be used on the project and then practising using the tools to become familiar with each other’s way of working
-         seriously reinforcing the ability to structure the lessons learned from past projects in order to furnish future estimates and anticipation of risks (doing this well is quite rare)
-         intensifying the overall understanding of business constraints, benefits and needs, value and costs, opportunities and threats at various organisational levels and across disciplines
-         deliberately specifying ambitious constraints that serve as stretch objectives to stimulate creative and integrating solutions and those that necessitate process improvements
-         acknowledging that, a project being the essence of disruption, something will change, and even be broken, in the existing procedures and processes in order to achieve success
-         taking out the administrative pain from the process and procedures in order to make the process much more attractive and potent through an appropriate and focused minimalism
-         beating ‘Students Syndrome’ (doing things at the last minute) by managing the start and finish of activities, and by planning and managing milestones (feet and inch stones)
-         overcoming ‘Parkinson’s Law’ by ensuring that trust and transparency allows information about contingency, motivation and competencies to be pooled
-         ensuring tighter handovers, fluent transfers and catalyzed interfaces by running the project like a relay race that allows activities to start early if the previous activities are early
-         enhancing the culture for visual communication, for using an exploratory scientific approach, graphical instruments, enriched conceptual modelling and tangible prototyping
-         integrating methods from program management, problem solving, service and quality management, in order to synchronise best practices instead of a piecemeal approach
-         underlining and emphasising core values, such as openness, data focus and no-blame attitude, that allow decision making to be more informed, consistent and sustainable. 
 
It is evident that some of these wins are easier than others, but they are also mutually supporting. Taken as a whole, it would be hard to find other areas in an organisation where investment in methods and learning can have such a large impact (bang for the buck.)




How to present project management to school students

This is the kind of thing I would prepare if asked to present project management to school students. And I would probably adopt a flipchart style. (This would save having to present a monotonous deck of slides.) I would do something really simple.

First the students would want to hear something about the kind of projects that are done and why they are important all over the world. Students like to hear about the exciting real world and there's nothing more 'real' than a good project! Then I'd explain that projects always bring something new, to the world or to an industry, and they need to be well managed, especially when they are complex and difficult (and they usually are). 

Much can go right or wrong, and you can easily rub some people up the wrong way because you are usually replacing one set of things by something else. This means managing the stakeholders' expectations - including customers, but also project participants and team members, other people in the company, investors, the public, etc.

I would explain that projects are always about managing people and their reactions, that is the benefits, as well as the very important triple constraint. I would explain the triple constraint, by saying that delivering quality is about quantifying the expectations of the stakeholders and agreeing on the priorities. I would say that the project has to be organised so that we know what work has to be done to meet expectations and even to give people some nice surprises so that they will want to work with us again in the future.

And I'd say a few words about the work breakdown structure and how you need people to be responsible for all of the different parcels of work that are defined to make sure you meet the objectives. In the triple constraint I would say that sometimes the technical requirments are very well defined, the budget quite fixed and managing the project is mostly about managing time. I would give some examples - e.g. building a metro system or a new airport.

And I would mention the critical path method. I would say that sometimes the date is very fixed and the project content is quite well known, like with the Olympic Games. In these cases, the project is mostly about managing costs and resources: methods such as the critical chain, and performance management (measuring the value of work done) could be mentioned.

I would say that very often in modern business projects the budget is fixed and the time very tight as well, as in launching a new product ahead of the competition. With these projects scope needs to be managed carefully and the project designed so that the most important things are delivered in early versions, according to the critical purpose of the project, which has to be agreed and worked upon with the stakeholders.

I would select one of these projects and talk about it a bit more, making it look and sound and feel very interesting, explaining why it is important, and talking about what can go right and wrong, and why it is a challenge for the companies concerned. I would say a word about how the project manager's job depends upon their ability to operate in a complex organisational context, with the support of a sponsor and listening to the voices of customers and experts.

Then I would say that in general projects are fascinating, interesting, engaging and a good career choice because all over the world, in every industry and in every company and in every department of every company you have new things going on that need good managers.

You don't need to understand all of the technical details, but you have to be able to get people to work together and remember to ask the stupid questions that inspire people to think: like, "What will it have to do to be useful?", "What do I need in order to get started?" and "How will I know when I have succeeded? How can I measure that?" I'd say that it isn't usually very easy to manage a project, because all projects go through a storming phase when people don't agree, and everyone starts to think that everyone else on the project is an idiot. And the students will know this! But, I would explain that the work breakdown structure helps to define all the work leads the project through this stage.

As a conclusion, I would claim that project managers are the people who are needed to turn the problems and challenges of this world into solutions.





Another look at quality

Quality is usually defined as meeting requirments and satisfying the customer; no more, no less. 

http://stats.oecd.org/glossary/detail.asp?ID=5150

In this definition ‘too much quality’ is judged to be as bad as too little.  There are good reasons for this:
1)      Any extra value to the customer should be compensated
2)      An excess of unpaid functionality is unnecessary gold-plating
3)      Funds would be spent on superfluous requirments
4)      There is no way to manage the progress and delivery of excessive functionality
 
‘Meeting requirments’ means that quality depends uniquely upon specifications and non-specified outcomes are equivalent to defects that reduce quality.
 
However, my experience is that in practice things are slightly different. 
 
First of all, customers may be unable or unwilling to express their requirments. They cannot express their requirments when they have no experience of the product and don’t yet understand the possibilities. 
 
Unable: If I was asked to specify a whiteboard, I’d be fairly ignorant of the possibilities, especially if asked to look several years ahead. Technology might make it possible to draw pictures like an artist, but should I put this in the requirments? I’d certainly like the feature, but am I asking for something that is too expensive?   Compared to people’s likely expectations of what should happen on a whiteboard and the integration of the physical with the virtual, is this likely to be desirable, or mandatory in a few years time? 
 
Unwilling: I may not want to request something for a number of specific reasons. Many people feel that they should buy fair-price, or ecological, or social products, but in practice they buy something else. They may not wish to display disloyalty, or ignorance, or fussiness, or carelessness, or greed, or slothfulness, or for any other reason they may not wish to be thoroughly candid. Thus, many more people claim that they would buy fair-price products, for example, than actually do in practice. Many more people consume fast food than admit to it. People are more likely to vote for re-cycling of materials than actually spend their money on it in practice. 
 
‘Satisfying customers’ implies a price set at where value and price is equal or, as we learned at school, supply equals demand. Hence we converge with micro-economic theory. 
 
Again my experience is different, when it comes to value for money, especially in a service environment.
 
In a service business it’s easy to think of small details that have a big impact. A smile costs nothing, but it has a big effect on a customer. 
 
The appetizer given by a restaurant that wasn’t on the menu may help the tip.  A seat by the window doesn’t cost more to the provider but means more to the customer.  That extra glass of champagne in first class doesn’t cost much more, but makes the customer feel special. In second class the same glass of champagne makes the customer feel treated beyond their expectations. Is this bad, if it secures future custom? Luckily there’s a curtain between the two. Meanwhile the cost to the airline is more in the weight than in the cru or the brand. 
 
People don’t say “Oh, yesterday I went to a restaurant that was really satisfying.” If it’s worth talking about, they’re much more likely to say “That was the best meal I’ve had in a long time” (or the worst). And people listening are much more likely to take note and resolve to visit a restaurant that is more than just satisfying. An excellent experience will be retold and may influence several other people, whilst an ordinary experience that’s no more than satisfactory, is more likely to be forgotten.
 
The fact that someone remembers your name when you go back to the shop, that on the pillow in your hotel you find your favourite chocolate, the hairdresser who knows how you like your hair, the newspaper vendor who knows you prefer not to talk in the morning. A well-run service business is close to a craft. Craftspeople understand that every customer is different. Craftsmanship is not mass production. A true craftsperson puts heart and soul into the details. These small touches that make the object unique and precious, though not always expensive, add more value than they cost.
 
In my metier as an instructor and facilitator, if I pay 2 euros more for higher quality paper, then that works out at one cent for two and a half sheets, and for that I get the more lustrous feel of the paper, slightly more weight and a noticeable feeling of extra quality, especially for those who are tactile and aesthetic in their appreciation, which is hard to achieve through what I say or do. If I buy coloured post-its and flipchart pens with a nice feel, bold colours and even a pleasant aroma, then at a negligible extra cost, I have an easy win – an enhanced customer experience, and possibly superior to the alternatives.
 
A craftsman is like an artist. Some, like Van Gogh, paint fabulously, but never get the appreciation during their lifetime. Others, like Picasso, understand how to extract the value in what they do. The story goes that when he found himself short of cash in a restaurant he produced a quick sketch in lieu of payment. The host asked for a signature. Picasso’s reply was that he was paying for the meal, not buying the restaurant. Chutzpah yes, but he knew how to appeal to customers.
 
Many of us holiday in far corners of the world and have been charmed by beautiful painting, weaving, and carving and sculpture that we have been unable to carry home, due to customs duties or bulkiness. The value exists, but is too costly to extract. Musicians produce music that is as fine as ever and yet current business models don’t enable them to extract so much value. So clearly the perceived value of a product depends upon many other factors, including competitive pressure and the value of alternatives, and these are constantly changing right up to the moment of delivery and payment. 
 
If the price paid by the customer is greater than value perceived by the customer, then value for money is negative and repeat business tends to zero. But if perceived value is greater than price paid, then the sense of positive benefits develops a stock of goodwill that can lead to loyalty from the customer, repeat business, and even new business captured from the competition.  
 
In any case, no organization should invest unless expected benefits exceed expected costs by a calculated amount, and enough to justify spending on this item instead of on something else.
 
Instead of just aiming at meeting requirments, we should aim to meet the requirments in a way that provides value for money and benefits over time. And the life time value of the experience should at least equal the perception of cost paid. Although value is correlated with cost, it is not the same thing, as we are well able to understand when we consume a beverage or a foodstuff, or use a garment, or indeed any other day to day product.
 
When we understand that value is about building relationships then we are more likely to create value that is durable and sustainable. http://www.qualitydigest.com/html/qualitydef.html
 
And when we perceive benefits and cost to be two different curves, then we are more likely to create an environment that accentuates value rather than just interpreting it as being as something that is outside our control, because simply related to cost. In other words, value is the output and cost is the input, two different things.




Managing projects upwards

There is one major skill that does not get mentioned enough on projects and that is about the ability to manage upwards.  Managing upwards on projects is not just about the quality of reporting, and it is certainly not a “kiss up, kick-down” mentality, but rather the opposite.  

Managing upwards means that the project is driven by a dialogue between the technology and the business. It means that the project manager must validate that the business case is genuinely sufficient to justify the existence of the project, that the requirments have been prioritized with an appropriate break down between what is most important and what is least important, and that the users give reliable feedback when they verify deliverables.
 
Managing upwards on projects does not imply that designers and engineers, developers and testers, decide what the customer needs, but that they help the customer to frame their requirments in terms that are adequate to start and to continue developing a useful and usable solution.

Managing upwards uses measures and indicators with enough bravery to communicate not only what is important, but also what is easy to measure.  It gathers and shares knowledge ('known knowns') as early as possible, admits that there are uncertainties ('unknown unknowns'), analyses and takes ownership for risks ('known unknowns'), and understands that it is the lack of communication across disciplines and up and down organisations ('unknown knowns') that can kill off success.

Managing upwards includs understanding the way different managers and decision makers like to receive their information; some like it in visual format, graphic, text or numbers, or in the right combination, the big picture or the detail, the riskrs, the goals, the actions or the options.  It means communicating according to people's preferences.
 
Managing upwards is about the tactics of delivering the appropriate message that leads to the best decisions; showing red when you need help, orange when problems are under control and green when you are getting the progress and the support that you need.  It's about demonstrating that you buy into the strategy and understand the context of the business and not just the project.  It's about being a positive team player and not a moaner, and being a leader by showing that you can generate energy rather than stress.  
 
Managing upwards relies on stakeholder management skills, which is another way of saying that you need to understand the organisational and institutional complexities, that you can communicate, lobby, promote, sell; market, persuade, influence and, in other words, exercise political nous in a way that preserves trust.
 
Managing upwards is a skill that organisations need quite badly as they adapt to a world of changing technological possibilities.




Critical purpose

Critical Purpose is a new term to define an approach that emphasises the key deliverables.  On every project there are a small number of critical questions that must be answered if success is to be achieved.  The goal is to isolate these critical success factors and to remove the uncertainties as soon as possible by producing some tangible output that can be dependably validated and indisputably verified. 

Critical Path technique identifies the longest path through a project which defines the shortest possible time to complete the project, according to the estimates of how long each activity will take and the interdependencies between activities.

Critical Chain methodology concentrates on rare resource, thus giving it more of a cost focus.  By planning around the key constraint and reallocating resources, pressure is reduced on bottlenecks.

 

Critical Purpose will make people think of agile development methods. However, the word agile can conjure up an image of agitation.  The risk is that it over-emphasises reactivity; people may think that if they conceal their intentions, they will be able to make things up as they go along.

 

Rapid prototyping, risk-based, test-driven, user-centred and team-based are all terms that are used for agile development and each of them emphasises one aspect, whilst in practice the use of one technique makes the others vital. 

 

If you develop the test plans at the beginning of the project, then you are going to need models and prototypes to test many of the assumptions.  If you build a plan around prototype reviews, then you will need workshops to facilitate the decision making process.  If you focus on risks, then you are going to need the presence of the team and subject matter experts.  If you prioritize the requirments then you need to involve users.  In fact, of course, you need all of these.  It is reassuring to think that if you do one of them, it pulls the others.

 

‘Critical purpose’ is a term that covers all of these approaches, at least as well as agile because it does not lead people to think that they can decide everything at the last minute, or on their own on their way to work, or without informing anyone of their reasoning. 





Improvements and innovation in a world of inter-connectedness

Where do the process improvements come from when you have a mature business, heavy infrastructure, huge capital investments and processes that have been worked upon and ‘optimized’ relentlessly?  

It sounds trite, but the answer is usually via cross-fertilization, between functions, disciplines, companies and industries. 
 
It always astounds me how often initiatives are kept within the boundaries of one functional area and founder on the borders between disciplines.  
 
The difficulties are due to a lack of mutual understanding. And yet it doesn’t take much to enhance understanding.
 
Here are some things worth knowing about finance – the notion of payback period, opportunity cost, and the depreciation of assets; manufacturing – the notion of bottlenecks, volume and production scheduling; design – the notion of proportions, layout and cognitive models; selling – asking open questions, handling objections, and closing a sale.  And it goes on through the legal domain, human resources, marketing, information technology and so on.
 
How much time would it actually take to learn about each other’s methods, measures; tools, constraints and key performance indicators?  We live and work in a world where specialization is still necessary to cope with the complexity, but where general knowledge is more and more important because of the high degree of inter-connectedness.
 
An innovation in music involves consumers, producers, musicians, artists, song writers, web providers, advertisers, studios, distributors, concert halls and venues, television and video companies, and consumers’ families.
 
An innovation in medicine involves patients, friends, families, doctors, nurses, carers, hospitals, pharmacies, medical authorities, regulatory bodies, insurance companies, charitable funds, health organisations, pharmaceutical companies, laboratories, clinical bodies, local health governance, scientists, logistics and communication.
 
An innovation in aerospace involves tourists, business passengers, airports, airline companies and crews, airline service companies, air traffic controllers, air transport authorities, international security, fire and policing authorities, international equipment suppliers, infrastructure requirments, tax and customs authorities, and local law makers.
 
All of these different daffy ducks need to line up before an innovation can materialize and enter the mainstream, the mode stream, the bloodstream or the slipstream. 
 
In the field of climate and environmental activities, the world is in a perpetual ‘storming’ phase, which is a project and team building concept that is worth knowing about in all of these other fields. 
 
To leave the ‘warming’ phase and progress in the ‘storming’ phase, you need risk analysis, needs analysis, benefits analysis and to quit the ‘storming’ phase and reach a constructive ‘norming’ phase you requir an agreed work breakdown structure to carry you and everyone forward together.
 
The challenge for partners in such a dense thicket of interconnectedness is to move through the undergrowth and for that you need a basic understanding of how the other works, and before that the ability to explain lucidly, coherently and with simplicity what one does, why one does it and how one works. How many functions, departments, disciplines, companies, industries and countries are able and really willing to seek to understand and to explain?




The monkey tree and 'design of experiments'

Imagine a children’s game called the Monkey Tree. Players take monkeys out of the box and hang them on the tree, until the overall weight of the monkeys is too heavy for the tree and then the monkeys start to fall off.  Evidently, with the right company and the right number of monkeys, this can be quite entertaining. 

This game really exists apparently.  It works using a magnet.  Here it is described in a letter to New Scientist
 
To calculate the exact power of a magnet, necessary to know how many monkeys will hang on the tree and how many to put in the box, would be quite difficult. Making a magnet involves immersing the magnet in a magnetic field of an appropriate strength, and making sure that during transportation the magnet is not subject to shocks.
 
A much easier way is to test the power of the magnet by placing monkeys on the tree. When the monkeys start to drop, then add a few more to the box, package up the game, and ship.
 
There are many instances in business where the only realistic approach is to try it and see.   Business is a feedback game: think about it, plan it, do it and then adjust it on the basis of reactions.  However, there could be much more awareness about the importance of testing and experimentation in business. 
 
Unfortunately, the hardest thing about testing is the psychological aspect, because the art of testing is really in the resolve to find as many faults as possible. When a good tester walks into a room, something breaks, and when the testers know why, they feel good about that.
 
This is not a natural sentiment, it has to be learned. Help a school child to test and you’ll improve their results no end by cutting out some of the stupid mistakes. An entrepreneur sees opportunity. An entrepreneur wants to take out downside risk.  They are risk eradicators. A tester ruthlessly hunts down risk. They are fault exterminators.    
 
It sounds similar, but there is a world of difference. An entrepreneur understands the cost model, the communication, the interface, the customer niche, or a combination of these. But the focus on success means that warning signals can get screened out. The tester doubts everything. 
 
Ostensibly there is a similarity between testing and science. But, science starts from a hypothesis. Real science should seek to disprove the hypothesis. But, just as any hypothesis usually has to overcome overwhelming odds before changing conventional understanding, so entrepreneurs have to battle against walls of distrust before winning through.
 
Science is usually requird to concentrate on one hypothesis at a time (for example, clinical tests deal with one active ingredient and one biological target at a time), where as a business needs to tackle integration and complex interdependent factors. 
 
When there are several factors interacting, the complexity is exponential and potentially beyond reasonable numbers. If you have five factors then each can interact with another a total of 5 x 4 times divided by two, which is ten; but if you have forty-two factors then they can interact 42 x 41 times divided by two, which is more than 861 different two-way interactions, and that’s not counting interactions between several factors at a time. 
 
In the case of the monkey tree, you only have the monkeys and the tree, which is two times one, divided by two is one – pretty simple maths, and very simple for experimentation. However, when there are a number of factors you need to adopt a structured and systematic approach to evaluate enough of the possibilities.
 
The technique which is known as ‘Design of Experiments’ uses a manageable number of experiments to compare relevant selected factors very methodically. The goal is to assess the impact of the different input variables acting independently, in combinations or in concert.
 
A legendary example of this was the search for a cure for scurvy – a particularly unpleasant ailment that struck mariners on board sailing ships in the 18th century. By combining different factors such as cider, acid, garlic and fruits the research demonstrated that the best cure was to introduce citrus fruits into the seaman’s diet.
 
The menu for a ‘Design of Experiments’ approach starts with setting the objective, and defining the variables and finally, having analysed results, selecting the best option.  The variables are defined by identifying which are dependent or independent, by defining the possible combinations and by classifying the possible outcomes. 
 
Best practices to take into account are those of randomization (i.e. a non-biased random sample) and replication (the ability to replicate from one sample to the next).

Many trials examine one factor at a time, but the business world is composed of many factors acting together. The design of experiments involving a carefully chosen set of factors has a big contribution to make. Experimentation before implementation makes sense and savings.





High trauma

People like their drama and their trauma.  They revel in all the excitement.

The histrionics, the temper tantrums, the war metaphors, the plate throwing, the dressing room sulks, the “asshole transplants” *, the scalding of people’s soft bits with cooking implements; this is the way people do their business in high finance, haute cuisine, haute couture, high church, high technology, highly creative arts.  It creates a manic economy.

*  We learn of a certain executive at Lehman’s, whose goal “to be number one in the industry by 2012, whatever the cost” encouraged aggressive bets in surging asset markets and whose rages were described as an experience analogous to being provided with ‘a new asshole’ and who was ‘affectionately’ known as ‘Darth Vader’.

 

Subjectively, the financial mania will be over when people get bored of it. 




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