I always hear about the various events that people participate in. I managed to get a good list of such events. I probably call it as the Geek Hangout.
Here is a list of some of these conferences where the fun happens:
Game Developers Conference
CeBIT
LAUNCH Festival
SXSW Interactive
London Web Summit
Signal
Ignition West
Structure Data
Microsoft Dev Connection
Combinator Demo Day
VentureBeat Mobile Summit
Where
Data 2.0 Summit
ad:tech
Ad Age Digital
DEMO
The Next Web
Future Insights Live
Wired Business Conference
BlackBerry World
D10
E3
Tech Policy Summit
Microsoft TechEd North America 2012
LeWeb London
Structure Data
Velocity
Microsoft TechEd Europe
Google I/O
Microsoft Worldwide Partner Conference
Techmeme does a complete list
Techmeme events list
Friday, March 9, 2012
Thursday, March 8, 2012
Linkedin Adverstising
As I am writing this blogpost I am on a train journey back to Washington DC. The Acela express provides free internet connectivity but at the same time probably optimizes the use of internet by blocking the ads.
One example of this was the double click/Dart iframe actually shows the call made to doubleclick but has no display ad being served.
What is interesting is the data about me that LinkedIn passes to Double click and which I think is pretty specific segment information as it is accurate and provided by me :)
lang=>Language
u=>Encoded user id?
func=>my job function first word in the title
func=>my job function
coid=>Company ID
csize=>Company Size
zip=>My Zip code
cntry=>Country
edu=>My grad school
edu=>My undergrad school
gy=>Graduating Year
gdr=>Gender
age=>Age
seg=278http://www.blogger.com/img/blank.gif
seg=>Target Segment
grp=>Target Group
Just thought this is exciting. For a free service I do not mind LinkedIn using my data. Also for what it matters I will probably never click on a display ad and thus the ad spend is a waste for the advertiser as my propensity to act on the message provided by the ad is ZERO :)
Also if you would like to opt out here is a video:
One example of this was the double click/Dart iframe actually shows the call made to doubleclick but has no display ad being served.
What is interesting is the data about me that LinkedIn passes to Double click and which I think is pretty specific segment information as it is accurate and provided by me :)
lang=>Language
u=>Encoded user id?
func=>my job function first word in the title
func=>my job function
coid=>Company ID
csize=>Company Size
zip=>My Zip code
cntry=>Country
edu=>My grad school
edu=>My undergrad school
gy=>Graduating Year
gdr=>Gender
age=>Age
seg=278http://www.blogger.com/img/blank.gif
seg=>Target Segment
grp=>Target Group
Just thought this is exciting. For a free service I do not mind LinkedIn using my data. Also for what it matters I will probably never click on a display ad and thus the ad spend is a waste for the advertiser as my propensity to act on the message provided by the ad is ZERO :)
Also if you would like to opt out here is a video:
Friday, February 24, 2012
Set comScore debugger
I got a comment from a user few days back. I want to mention that this works only for comScore's scorecardresearch.com tracked traffic.
To setup the Digital Aanaltix/comScore beacon Debugger
1) Open any browser and then go to any website.
2) Browse to any page on the internet and set a bookmark.
3) Edit the bookmark and change the URL. The following shows the steps in Mozilla.
Step 1: Find your bookmarks and right click to see the properties option.
Step 2: When you click on properties the following window opens and the location/URL needs to be updated.
Step 3: Copy the following javaScript
javascript:void(window.open("","daxDebug","width=600,height=600,location=0,menubar=0,status=1,toolbar=0,resizable=1,scrollbars=1").document.write("script%20language=\"JavaScript\"%20id=dbg%20src=\"http://webmetrictools.com/dax/debugger.js\">"));
Step 4: Replace the URL with the javaScript. The final screen looks like:
Okay now that I have it, how do i use it?
1) Go to the website where you want to see the comScore beacon values
2) Click on the bookmark list while on the website and then click the bookmark for debugger.
3) Here is what you should see.
To setup the Digital Aanaltix/comScore beacon Debugger
1) Open any browser and then go to any website.
2) Browse to any page on the internet and set a bookmark.
3) Edit the bookmark and change the URL. The following shows the steps in Mozilla.
Step 1: Find your bookmarks and right click to see the properties option.
Step 2: When you click on properties the following window opens and the location/URL needs to be updated.
Step 3: Copy the following javaScript
javascript:void(window.open("","daxDebug","width=600,height=600,location=0,menubar=0,status=1,toolbar=0,resizable=1,scrollbars=1").document.write("script%20language=\"JavaScript\"%20id=dbg%20src=\"http://webmetrictools.com/dax/debugger.js\">"));
Step 4: Replace the URL with the javaScript. The final screen looks like:
Okay now that I have it, how do i use it?
1) Go to the website where you want to see the comScore beacon values
2) Click on the bookmark list while on the website and then click the bookmark for debugger.
3) Here is what you should see.
Thursday, September 22, 2011
Are you a Black Belt in Web Analytics?
I came across this quiz on one of the LinkedIn groups I subscribe to. I think that the title of "Black Belt" doesn't mean much as different things work for different people. What is interesting though is that all of us as practitioners should be asking these questions.
So check out the quiz
Web Analytics Black Belt quiz
Questions:
1) Do you know why your website exists?
2) Do you know how you make money on your site?
3) Do you know whats people's experience of your site?
4) Do you know how many manage to accomplish the task?
5) Do you know what people like or dislike with your site?
6) Do you know the monthly return rate?
7) Do you know the volume of your returning visits?
8) Do you know how important your various traffic sources are?
9) Do you know your top 10 entry pages?
10) Do you know their conversion and bounce rate over time?
11) Do you know what type of content is consumed most?
12) Do you know the value of the visitors that consumed various content?
13) Do you know how many of your visits use internal search?
14) Do you know what type of searches your visitors do?
15) Do you know your head vs long tail?
16) Do you know the value of your long tail?
17) Do you know your best converting keywords?
18) Have you grouped the keywords in various buckets based on volume or value?
19) Do you know your top referring URLs?
20) Do you know how these URLs perform on conversion, bounce and revenue?
21) Do you know where people lick on your most people click on your most important pages?
22) If you have a desired path funnel do you know where people drop out?
23) Do you track your social media efforts?
24) Do you know how much ROI your social media engagements bring?
25) Do you know your most profitable online ad campaigns?
26) Do you know your most profitable offline ad campaign?
27) Do you use a bid management tool to maximize your online campaign ROI?
28) Do you know how your adwords cannibalize on your organic traffic?
29) Do you track your email marketing campaigns correctly?
30) Do you evaluate and optimize the content of your emails?
31) Do you have a KPI dashboard and how frequently do you monitor it?
32) Do various part of the organization use various dashboards?
33) Do you know the type of segments that are important for your business?
34) Do you break down your numbers per segment?
35) Do you know what actions directly affects your conversion?
36) Can you tell how the factors that affect conversion correlate with each other?
37) Have you done A/B test on your top entry pages?
38) Do you have a systematic methodology for A/B testing?
39) Do you have a long term strategy for your testing?
40) Do you document your findings?
41) Do you spread the knowledge of your findings?
42) Do you know what your competitors do?
I think if you know answers to most of these questions you have indepth knowledge of your web analytics program.
So check out the quiz
Web Analytics Black Belt quiz
Questions:
1) Do you know why your website exists?
2) Do you know how you make money on your site?
3) Do you know whats people's experience of your site?
4) Do you know how many manage to accomplish the task?
5) Do you know what people like or dislike with your site?
6) Do you know the monthly return rate?
7) Do you know the volume of your returning visits?
8) Do you know how important your various traffic sources are?
9) Do you know your top 10 entry pages?
10) Do you know their conversion and bounce rate over time?
11) Do you know what type of content is consumed most?
12) Do you know the value of the visitors that consumed various content?
13) Do you know how many of your visits use internal search?
14) Do you know what type of searches your visitors do?
15) Do you know your head vs long tail?
16) Do you know the value of your long tail?
17) Do you know your best converting keywords?
18) Have you grouped the keywords in various buckets based on volume or value?
19) Do you know your top referring URLs?
20) Do you know how these URLs perform on conversion, bounce and revenue?
21) Do you know where people lick on your most people click on your most important pages?
22) If you have a desired path funnel do you know where people drop out?
23) Do you track your social media efforts?
24) Do you know how much ROI your social media engagements bring?
25) Do you know your most profitable online ad campaigns?
26) Do you know your most profitable offline ad campaign?
27) Do you use a bid management tool to maximize your online campaign ROI?
28) Do you know how your adwords cannibalize on your organic traffic?
29) Do you track your email marketing campaigns correctly?
30) Do you evaluate and optimize the content of your emails?
31) Do you have a KPI dashboard and how frequently do you monitor it?
32) Do various part of the organization use various dashboards?
33) Do you know the type of segments that are important for your business?
34) Do you break down your numbers per segment?
35) Do you know what actions directly affects your conversion?
36) Can you tell how the factors that affect conversion correlate with each other?
37) Have you done A/B test on your top entry pages?
38) Do you have a systematic methodology for A/B testing?
39) Do you have a long term strategy for your testing?
40) Do you document your findings?
41) Do you spread the knowledge of your findings?
42) Do you know what your competitors do?
I think if you know answers to most of these questions you have indepth knowledge of your web analytics program.
Thursday, July 21, 2011
Building Analytics/Decision Management Capabilities in your organization
I just finished reading the book: The Deciding Factor: The Power of Analytics to Make Every Decision a Winner written by Larry Rosenberger, John Nash and Ann Graham. All three of them were associated with Fair Issac (FICO) at one point.
The authors seem to have great amount of experience in the the field of building analytics and decision management capabilities for their client. Most of the book has generalizations about how to do this. I found the last chapter of the book very useful, other than that it seemed like a listing the facts session.
The last chapter definitely is a good read for someone at a Manager Analytics or Director Analytics/decision management role.
The first thing I am going to list is the high level steps in building the decision management capabilities in your organization. I am only listing the high level steps, please read through the details in the book to get the complete perspective of the authors. All copyrights to the methodology belong to the authors/fico.
Decision Management Methodology
Stage 1: Set Strategy and identify the business opportunity.
- Identify and prioritize opportunities
- Assess the scope of the opportunity
- Create a high level plan to address opportunities and scope
Stage 2: Identify critical decisions and potential decision yield
- Create decision inventory and business process flow
- Identify and design pilot model to address the objectives
- Capture your baseline decision yield
- Quantify potential improvements to your decision yield
Stage 3: Design the business architecture for your decision environment
- Determine the best analytic approach
- Design your decision environment
- Design your decision platform
- Define the decision management roles, responsibilities and decision rights
Stage 4: Build the data environment required to inform decisions
- Design data flow: sources and sequences
- Assess and address gaps
- Map connectivity to third-party data providers
Stage 5: Build mathematical models to improve decisions
- Gather data required for modeling
- Build your models
- Test Model performance
Stage 6: Build and modify the operational environment to enable decision execution
- Build your decision management application
- Build decision rights: organization structure, skills and compensation
- Roll out decision process and rules
Stage 7: Continually improve the decision environment
- Operate your new decision environment
- Confirm realization of your decision yield
- Identify and implement changes to your decision environment
- Feed new knowledge back into your decision environment
- Identify new decisions to improve
These are the questions that everyone in a decision management team should be asking to their colleagues across the organization at one point or the other
- What are the possibilities?
- What are the important opportunities in alignment with company strategy or problem to be solved?
- What are the most important decisions related to these opportunities?
- How should opportunities be pursued based on priorities?
- Making decisions: exactly how long does it take?
- Making decisions: For which product or product line is this an issue?
- Making decisions: Is the delay/issue with decisions across the product lines?
- What are the important decision points?
- Who is making the decisions?
- How are the decisions made?
- What is the current decision performance?
- Can the financial, functional, and technical decision making be improved?
- What are the improvements possible?
- How well do we know our customers?
- Is our strategic segmentation approach integrated into our operating environment?
- Is our customer segmentation granular enough to enable customer specific treatment?
- Are we using analytic capabilities to enhance effectiveness? are we making decisions using judgmental best practices, standardized rules, predictive models, or real-time optimization?
- Who is making which decisions and who executes which functions? based on what criteria and authority?
- How consistently does this play out across channels, product lines, geographies, and so on?
- How coordinated are our marketing activities across different product lines?
- Are our customers or prospects receiving conflicting messages from our organization?
- What is the impact of introducing new strategies into our operating environment? how much retraining is required? What modifications are required in our underlying systems infrastructure?
- Is our organization adept at assimilating change?
- What is the quality of our organizational communication vehicles?
- Are we making decisions through manual intervention or human review, or though scalable, automated rule systems?
- What is our sense of cost versus quality for this area, and what is the optimal balance?
- Are our customers being lost because of ineffectiveness and slow turnaround times in our organization?
- How much time do we need to return a decision to a customer or prospect?
- What is the potential gain of an incremental increase in system processing time for a decision?
- How strong are the current analytic capabilities and what new analytic capabilities are needed?
- What existing models are outdated and need updating or redevelopment?
- Are we periodically updating business logic based on market learning?
- What changes are required to improve the performance of our business logic?
- Do we have the right skill sets and resources assigned to the most valuable priorities?
- What changes to organizational structure, roles, responsibilities, and requisite skill sets have we identified?
- What training and communication vehicles are required to ensure a successful and ongoing rollout of new initiatives and strategies?
- What new information needs have we identified?
- Do we have the right information available at the point of need?
- What additional input data, internal or external, is required?
- What core business process changes or improvements have we identified?
- How will we manage these to ensure consistency, optimal performance and agility?
- What are the best analytic methods to apply to our decision sets?
- Which specific decision areas must we address?
- What capabilities do we need to create and modify?
- What organizational changes do we need to make in terms of roles, responsibilities and structures?
- Could a forecast of future outcomes or customer behavior help us?
- Is manual review of data part of this decision or business process?
- Is the decision complex enough that modeling the results of these decisions could lead us to make better decisions?
- How do we efficiently and effectively integrate the necessary data into our decision environment?
- Is this data accurate?
- What processes are in place to ensure that it is correct?
- What are the methods for identifying and correcting inaccurate data?
- Are we using the best sources of external data?
- Are only partial customer records available for this decision?
- Are we appropriately collecting, logging, and storing data acquired through our transactions and interactions, both to guide later decisions we make and for reporting purposes?
- At what point in the process should we acquire and pay for the data?
- What should the contractual terms be to support long-term use?
- How do we integrate the necessary data into our decision environment, with sufficient service level agreements to meet our processing requirements?
- How much can we improve our analytic performance?
- Which characteristics have the greatest impact on model outcomes?
- Is it operationally feasible?
- Who owns the ongoing management and maintenance of our decision-making environment?
- Who needs to be trained in using these capabilities?
- Are we realizing the improvements we expected?
- Can we identify areas for additional improvement?
- Are these new decision areas we should address?
Saturday, June 25, 2011
Customer Centric Organization, Value Proposition Management, Segmentation
I just finished read a great book:
Angel Customers and Demon Customers: Discover Which is Which and Turbo-Charge Your Stock by - Larry Selden and Geoffrey Colvin
The theme of this book is about how to identify your customers, based on the profitability achieved from these customers. A financial modeling tool based on the customer segments further allows you to identify the good customers (with whom you have profitable business) and bad customers (who despite of their business bring a loss to your company). Although the book is written about overall products, using the same principles to segment your online customers should bring a positive change to your business.
If you are a person whose group is tasked with making money from existing customers this is a must read for you. I have some notes to share, but this is powerful material in a very concise format. I highly recommend reading the book.
My notes
•With the organization the accountability should be switched from being in-charge of a territory/product segment to being in-charge of a customer segment. This results in accountability and profits related to each customer segment and thus putting the resources to be responsible for making a segment profitable.
•Setting accountability around customer segment also makes organization flexible and allows manager to serve customers need in better way and reduces the costs for the organization.
•On a very high-level the customers can be segmented as Profitable OR Non-Profitable, High Potential – Low Potential.
•KPI: Spread = (Return on Invested Capital – Cost of Capital)
•Three principles the a customer centric company should follow:
Principle #1: Think of your company not as a group of products or services or functions or territories, but as a portfolio of customers.
Principle #2: Every company’s portfolio of customer can and must be managed to produce superior returns for shareowners – meaning a consistently better than average share price appreciation – not just to produce earnings per share or EBITDA or revenue growth or customer satisfaction or anything else.
Principle #3: Companies enhance customer profitability and drive their stock by creating, communicating and executing competitively dominant customer value proposition.
• Capital today travels around the globe instantly, continually, relentlessly seeking its best use. Every company now gets a daily report card in the form of its share price, on how it’s doing when compared its competition to attract capital.
•There is first mover advantaged to be gained for a company that organizes itself to be customer centric before its competition.
•Customer centric is good news and bad news. Bad news as it requires a lot of hard systematic work. Good news because your competitors also face the same challenge and hence your effectiveness determines the advantages you could gain being ahead of your competition. Remember, customers are where the money comes from.
•In essence customer centric is shift from products made, functions carried out, and territories served to how profitable customer segments are.
•New technology requires companies to shift corporate power and redesign business process as they face the inevitability of putting customers at center.
•Capitalizing on customer data is creating value from what you already have.
•“Good will” is the most valuable of intangible assets in the value of the acquired companies, profitable or high potential customers.
•Rate you readiness(for customer centric business):
-A premium P/E multiple as the measure of success.
-Value proposition management.
-Creating a customer centric enterprise.
•Common excuses that employees pose when making changes to organization structure:
-The privacy issues are too tough.
-We are in regulated industry.
-We’ve already got a lot of customer focused initiatives.
-We’re under too much short term earning pressure to do it now.
•Metrics: Shareholder value, Customer Acquisition Cost, Number of Customers, Churn Rate.
•When calculating the profit from customers it’s not the actual profit but the economic profit from each customer.
•If you can’t earn more than the return on your invested capital your business is failing. Thus increased revenues are not always equal to shareholder value. Also, wasting money on efforts to attract and retain unprofitable customers does harm to the bottom-line of the business.
•4 Factors that determine your P/E
-Return on invested capital
-Capital Cost
-Investments
-Spread Duration
•You have reached the premium P/E Sweet Spot if:
-Return on invested capital > 25%
-Capital Cost < 12%
-Investment (in excess of depreciation)>70% of earnings
-Spread duration>Ten Years
•Why is being customer centered so important?
-Customers are the only source of revenue and profits
-Knowing each customer’s profitability, and the reasons for it, is critically important to creating value propositions that drive success.
-Understanding customer’s different needs and behaviors is central to serving them most profitably.
-Obtaining and analyzing this information used to be overwhelmingly difficult but now it’s practical.
•In a product centered company, a manger has an answer – a product – and is seeking customers with the right question. In a customer-centered company, a manager has customers with specific needs and is seeking winning value proposition for them.
•Top management must be continually vigilant so that in creating customer segment business units, it doesn’t simply replace product, territory, or functional silos with a new variation, since customer segments are always changing and customers often move from one segment to another.
•In customer centric company, product managers are still accountable for product P&L, properly calculated with all appropriate customer cost, as noted above. That’s because they must be incentivized to supply their internal customers at reasonable cost, and they must be responsible for earning a satisfactory return on the company’s investment in products. They remain company’s product experts, a necessary and vital role.
•Some of the objections that managers usually have with making changes to the organization structure are:
-May cause corporate identity crisis.
-Feasibility of Customer Centric model
-Doubtful about the cost of the IT change
-Objection with the disruptive changes
-What about other high priority tasks
-Low confidence in the change initiative
-Passive resistance.
•At a certain point adding incremental segments adds costs and wipes out the gains from the economic profit.
•Competitively superior customer segmentation is a five step process:
-Grouping all customers into deciles by profitability
-Studying customer behavior within these profitability deciles to begin to understand why some customers are more profitable than others.
-Using this understanding, defining needs based segments.
-Dividing each of these segments into profitability deciles.
-Based on experience over time, redefining or subdividing segments.
•Model on Value Proposition Management:
Creation
-Synthesizing customer segment knowledge
-Hypothesis formulation
-Hypothesis testing and verification
Communication
-Communicating winning value proposition to organization and customers
Execution
-Scaling successful experiments
-Knowledge accumulation from the whole experience.
•Six foundation stones to become truly customer centered:
-Mind set
-Preliminary data
-Customer centered people
-A service culture
-Explicit recognition of customer segments
-Committed leadership
•Changes in three dimension
Technical
From:
-Tracking product P&L
-Product development
-Developing product strategy
-Calculating product net present value
-Product Sales
-Managing Product Life Cycle
-Running Product business reviews
To
-Tracking customer P&L
-Customer needs assessments
-Developing customer value
-Developing customer value propositions
-Calculating customer net present value
-Relationship management
-Managing customer life cycle
-Running customer business reviews
Political
From:
-Strategy driven by product organization
-Products and territories are dominant in resource allocation
-Function heads or product business unit heads are best compensated
-Incentives reward product profitability
-CEO successor comes from functional area or product business unit.
To:
-Strategy driven by customer segment CEOs
-Customer segments are dominant in resource allocation
-Best performing customer segment heads are best compensated
-Incentives reward customer profitability
-CEO successor comes from customer business unit
Cultural
From:
-Products matter most
-Internal efficiency leads to success
-Product data is key
-Employees want to be functional or product innovation stars
-Customers are demanding and an annoyance
-All customers are created equal
To:
-Customer experiences matter most
-Engaging customers lead to success
-Customer data is key
-Employees want to be on teams that win with customers
-We value making a difference in customer experience
-High Profit and high potential customers deserve a superior experience.
•Better way to do M&A
-To see if an acquisition will succeed or fail, look at the balance sheet, not just the income statement.
-In most mergers, the acquirer is buying customers
-In most companies, the distribution of customer profitability is much wider than manager’s suspect.
-Corporate acquirers are buying customers in bulk rather than one by one, so they should logically get a discount; instead they usually pay a premium.
-Buying profitable customers at premium prices can be far superior to buying a company.
Here are the basic questions I gathered by reading this book. I am going to get answers to these questions so that I can understand the customer segmentation needs better.
1)Who in the company owns the customers?
2)Who is responsible for the profitability of any given customer/segment?
3)How significantly does the company differentiate its interaction with different customers?
4)What is the revenue per customer segment and how profitable those customers are? (rather than just looking at the overall revenue figures)
5)Are you product managers looking at the profitability of individual customer segments to make changes to the products and services? This ensures that you make money from all customer segments.
6)What is net promoter score of your products?
7)What is your customer acquisition channel? Are there different possibilities to it? Can you change the acquisition process?
8)How much should we spend on attracting, serving and knowing the customers?
9)How can we make an unprofitable customer a profitable customer?
10)What if we spend less on service?
11)Are we better off attracting customers who spend a little every year for many years, or customers spend a lot for a few years and leave?
12)What is the value of a particular customer, or customer segment?
13)Can a customer’s value really be calculated?
14)If the customer value can be calculated how can we affect the value?
15)Which customers of current or potential are attractive and which not?
16)How can we attract additional valuable customers?
17)How much share holder value does a customer create? (Spread/# of customers)
18)Can your customers pay for employee training (indirectly) for developing new products and services?
19)What customers get discounts? Are you willing to encourage them buying other products on discount? How are you going facilitate this?
20)What customers cover your fixed operational cost and whom do you bank on for covering incremental costs?
21)Do the unprofitable customers bring some value to your company? Is this value helping the perception of profitable customers?
22)How is the current, new, lost customer segment is contributing to your portfolio (the hard numbers)
23)Are we gaining the kinds of customers we want to gain?
24)Are our current customers responding to our value propositions in the way we want, or do we have to make changes?
25)Are we losing valuable customers?
26)Who are your “best” customers?
-How do you define best?
-What is the economic profitability (in $) and return on invested capital (in %) of your best account?
-How do you set your profitability target for each account?
-Who are your worst accounts? What are their profitability levels?
-What is the minimum required profitability per account?
27)How do you define the level of your customer knowledge?
-How do your products and services affect your accounts strategy?
-How do your products and services affect your accounts revenue, asset and income?
-How strong is the senior management relationship between your company and your accounts? CEO to CEO?
-Who are the real decision makers in each customer organization?
-What is your company’s share of wallet with your accounts?
-Who are your major competitors? What are their killer value propositions?
-If you were to increase your prices by 10 percent, how many customers would you lose?
28)Do you segment your customers?
-What is your basis for customer segmentation – industry geography, size, other?
-How are you serving each segment differently from the others?
-What profitability goals per segment do you set?
-What are the benefits of serving segments differently – improved profitability? Something else?
29)How do you target new accounts?
-Why do you target those accounts?
-How will you serve each one of them differently from the others?
-What will be the results of serving them differently?
-How do you decide how much of your resources to invest in target segments?
30)What are your churn rates by customer segments?
-What are the top reasons for the churn? How do you win back lost accounts?
-Do segments constitute a certain concentration of products and services? Why?
31)Which accounts are in each decile by revenue and profitability?
-What are the noticeable similarities and differences between customers in the different deciles?
-What percentages of your accounts contribute 80% of your profitability? Or revenue?
32)What are you churn rates by decile?
-What are the top reasons for churn in each decile? What do you do to win back lost accounts?
-Do top deciles constitute a certain concentration of products or services? Why?
33)What can be done to increase your retention rate?
-What are the differences in retention among profitability deciles?
-Are the business units structured to retain profitable customers for long time?
34)How much do you know about your customers purchasing behavior?
-What is their frequency of visit?
-What is their conversion rate?
-What is their average spend per transaction?
-What was their total spend with you during the past five years?
-What is the size of their wallet? What percentage is spent with you?
-Do they prefer your value propositions over your competitors? And if so why?
-If you were to increase your price by 10 percent, how many customers would you lose?
35)How are you segmenting your customers?
-What is your basis for customer segmentation – needs, lifestyle, geography, other?
-How are you serving each segment differently from others?
-What are the benefits of serving segments differently – improved profitability? Something else?
36)What is your customer segment profitability?
-What is customer’s or segments frequency of transaction, transaction amount, longevity, recency, etc?
-What do you do to affect customer’s behavior? How do you monitor the changes?
-What are the differences in profitability between customers or segments?
37)What aren’t more customers buying our high margin services?
Monday, March 7, 2011
A note to my fellow knowledge workers
The following are some lines selected from the book: The Essential Drucker by management guru Peter F. Drucker. In this book Drucker tries to give the managers, executives and professionals of tomorrow the understanding of both the society and economy they inherit, and the tools to perform the tasks with which the next society and the next economy will confront.
The Knowledge Worker
Effectiveness must be learned
•The knowledge worker is, first of all, expected to get the right things done. And this means simply that the knowledge worker is expected to be effective.
•High intelligence is common enough among knowledge workers. Imagination is far from rare. The level of knowledge tends to be high. But there seems a little correlation between a man’s effectiveness and his intelligence, his imagination, or his knowledge.
•Intelligence, imagination and knowledge are essential resources, but only effectiveness converts them into results.
Why we need effectiveness?
•Effectiveness is specific technology of knowledge worker within an organization.
•Knowledge worker, the person who puts to work what he has between his ears rather than brawn of his muscles or the skill of his hands.
•Working on the right things is what makes the knowledge work effective. This is not capable of being measured by any of the yardsticks for manual work.
•Knowledge workers cannot be supervised closely or in detail. They can only be helped. But they must direct themselves, and they must do so toward performance and contribution, that is towards effectiveness.
•One can indeed never be sure what the knowledge worker thinks and yet thinking is his or her specific work; it is knowledge workers “doing”
•The motivation of knowledge worker depends on him being effective, on him being able to achieve. If effectiveness is lacking in his work, his commitment to work and to contribution will soon wither, and he will become time server going through motions from nine-to-five.
•The greatest wisdom not applied to action and behavior is meaningless data.
Who is an executive?
•Every knowledge worker in modern organization is an “executive” if, by virtue of his position or knowledge, he or she is responsible for a contribution that affects the capacity of organization to perform and to obtain results.
•He may be overridden; he may be demoted or fired. But so long as he has the job, the goal, the standards, and the contributions are in his keeping.
•Knowledge work is not defined by quantity. Neither is knowledge work defined by its cost. Knowledge work is defined by its results.
•Throughout every one of our knowledge organizations, we have people who manage no one yet are executives.
•Peter Drucker has called “executives” those knowledge workers, managers or individual professionals who are expected by virtue of their position or their knowledge to make decisions in normal course of their work that have impact on performance and result of the whole.
•Executives should plan, organize, integrate, motivate and measure.
Executive realities: Unless the executives work at being effective, the realities of their situation will push them into futility.
•The executive’s time tends to belong to everybody else.
•Executives are forced to keep on “operating” unless they take positive action to change the reality in which they live and work.
•Third reality is pushing the executives toward ineffectiveness is that he is within an “organization”. This means that he is effective only if and when other people make use of what he contributes. Each has to be able to use what others produce.
What happens inside an organization is efforts and cost. To speak of “profit center” in a business as we are wont to do is polite euphemism. There are only effort centers. The less an organization has to do produce results, the better it does its job.
An organization is an organ of the society and fulfills itself by the contribution it makes to the outside environment.
Outside changes to an organization have to be perceived they cannot be counted, defined, or predicted.
The promise of effectiveness
•A senior executive, we are told, should have extraordinary abilities as an analyst and as a decision maker. He or she should be good at working with people and at understanding organization and power relations, be good at mathematics and have artistic insights and creative imagination.
•If one cannot increase the supply of a resource, one must increase its yield. And effectiveness is one tool to make the resources of ability and knowledge yield more and better results.
Can effectiveness be learned?
•A knowledge worker who by definition has no authority other than that of knowledge must himself be effective – or else his nothing.
•The most effective knowledge worker depends on people with the organization to get things done.
•Their effectiveness therefore determines in the last analysis whether a knowledge worker contributes and achieves results, or whether he is pure “cost center” or at best a court jester.
•Effectiveness, in other words, is a habit; that is, a complex of practices. And practices can always be learned.
Focus on contribution
•The effective person focuses on contribution. He looks up from his work and outward towards goals. He asks, “What can I contribute that will significantly affect the performance and the results of the institution I serve?” His stress is on responsibility.
•The great majority of people tend to focus downward. They are occupied with efforts rather than the results. They worry over what the organization and their superiors “owe” them and should do for them. And they are conscious above all of the authority they “should have.” As a result, they render themselves ineffectual.
Own Commitment
•To ask, “what can I contribute?” is to look for the unused potential in the job. And what is considered excellent performance in a good many positions if often but a pale shadow of the job’s full potential of contribution.
•Knowledge workers who do not ask themselves, “what can I contribute?” are only likely to aim too low, they are likely to aim at the wrong things. Above all, they may define their contribution too narrowly.
•The next generation of knowledge workers should take for granted what the hard work and dedication of this generation has accomplished. They should then, stand the baseline for the generation after them.
•The most common cause for failure is inability or unwillingness to change the demands of a new position. The knowledge worker who keeps on doing what he has done successfully before he moved is almost bound to fail.
Contribution of knowledge
•Knowledge workers do not produce a “thing”. They produce ideas, information, and concepts. The knowledge worker, moreover, is usually a specialist. In fact, he can, as a rule, be effective only if he has learned to do one thing very well, that is, if he has specialized.
•It is to enable the specialist to make himself and his specialty effective. This means that he must think through who is to use his output and what the user needs to know and to understand to be able to make productive the fragment the specialist produces.
•Effective people fine themselves asking other people in the organization, their superiors, their subordinates, but above all, their colleagues in other areas, “what contribution from me do you require to make your contribution to the organization? When do you need this, how do you need it, and in what form?
The right human relations
•The focus on contribution by itself supplies the four basic requirements of effective human relations
-Communications
-Teamwork
-Self development
-Development of others
•The harder the superior tries to say something to his subordinate, the more likely is that the subordinate will mishear. He will hear what he expects to hear rather than what is being said.
•What are contributions for which this organization and I, your superior, should hold you accountable? What should we expect of you? What is the best utilization of your knowledge and your ability?
•The focus on contribution leads to communications sideways and thereby makes team work possible. The question, who has to use my output for it to become effective? Immediately shows up the important people who should be communicated about the work.
•What is the most important contribution I can make to the performance of this organization? As in effect, what self-development do I need? What knowledge and skill do I have to acquire to make the contribution I should be making? What strengths do I have to put to work? What standards do I have to set for myself?
•The executive who focuses on contribution also stimulates others to develop themselves, whether they are subordinates, colleagues, or superiors. They grow according to what they consider to be achievement and attainment.
Know your strengths and values
•Workers, especially knowledge workers outlive any employer, and will have to be prepared for more than one job, more than one assignment, more than one career
What are my strengths?
•Concentrate on your strengths. Place yourself where your strengths can produce performance and results.
•Work on improving your strengths.
•Identify where intellectual arrogance causes disabling ignorance.
•Remedy your bad habits – things you do or fail to do that inhibit your effectiveness and performance. They quickly show up in the feedback analysis.
•Waste as little effort as possible on improving areas of low competence.
•Do not try to change yourself- it is unlikely to be successful. But work, and hard, to improve the way you perform. And try not to do work of any kind in a way in which you do not perform, or perform poorly.
What are my values?
•Organizations have to have values. But so do people. To be effective in an organization, one’s own values must be compatible with the organization’s values.
Where do I belong?
•Successful careers are not “planned”. They are the careers of people who are prepared for the opportunity because they know their strengths, the way they work, and their values.
Know your time
•Effective knowledge workers do not start with their tasks. They start with their time. And they do not start out with planning. They start by finding out where their time actually goes. Then they attempt to manage their time and to cut back unproductive demands on their name.
•3 step process for analyzing time:
-Recording time
-Managing time
-Consolidating time
•Everything requires time. It is the only truly universal condition. All work takes place in time and uses up time. Yet most people time for granted this unique, irreplaceable, and necessary resource. Nothing else, perhaps, distinguishes effective executives as much as their tender loving care of time.
•Effective person therefore knows that to manage his time, he first has to know where it actually goes.
Time diagnosis
•The first step toward effectiveness is therefore to record actual time-use. The specific method in which the record is put together need not be of concern.
•One has to find the nonproductive, time-wasting activities and get rid of them if one possibly can.
•First one tries to identify and eliminate the things that need not be done at all, the things that are purely waste of time without any results whatever.
•All one has to do is to learn to say no if an activity contributes nothing to one’s own organization, to oneself, or to the organization for which it is to be performed.
•The next question is, which of the activities on my time log could be done by somebody else just as well, if not better?
•Delegation, as the term is customarily used, is a misnomer in the situation. But getting rid of anything that can be done by somebody else so that one does not have to delegate but can really get to one’s own work- that is a major improvement in effectiveness.
•Common cause of time-waste is largely under the executives control and can be eliminated by him. This is the time of others he himself wastes.
•What do I do that wasters your time without contributing to your effectiveness? Is one question one should ask directly?
Pruning time wasters
•The first organizational time-waster results from lack of system or foresight.
•Time-waste often results from overstaffing.
•Another common time-waster is malorganization. Its symptom is an excess of meetings.
•The last major time waster is malfunction in information.
Effective decision making process
•The clear realization that the problem was generic and could only be solved through a decision that established a rule, a principle.
•The definition of the specifications that the answer to the problem has to satisfy, that is, of the “boundary conditions”
•The thing through what is “right”, that is, the solution that will fully satisfy the specification before attention is given to the compromises, adaptations, and concessions needed to make decision acceptable.
•The building into the decision of the action to carry it out.
•The feedback that test the validity and effectiveness of the decision against the actual course of events.
Four type of occurrences
•Is this a generic situation or an exception? Is this something that underlies a great many occurrences? Or is the occurrence a unique event that needs to be dealt with as such? The generic always has to be answered through a rule, a principle. The exceptional can only be handled as such as it comes.
•There is first the truly generic, of which the individual occurrence is only a symptom.
•Then there is the problem that, while a unique event for the individual institution, is actually generic. For these, however one has to look to the experience of others.
•Next there is the truly exceptional, the truly unique event. Truly unique events are rare, however. Whenever one appears, one has to ask, is this true exception or only the first manifestation of new genus? And this, the early manifestation of new generic problem, is the fourth and last category of events with which the decision process deals.
•By far the most common mistake is to treat a generic situation as if it were a series of unique events, that is, to be pragmatic when, one lacks the generic understanding and principle. This inevitably leads to frustration and futility.
Specification of decisions
•The second major element in the decision process is clear specification as to what the decision has to accomplish.
•What are the objectives the decision has to reach? What are the minimum goals it has to attain? What are the conditions it has to satisfy?
•The effective person knows that a decision that does not satisfy the boundary conditions is ineffectual and inappropriate.
What is right?
•One has to start out with what is right rather than what is acceptable (let alone who is right) precisely because one always has to compromise in the end. But if one does not know what to satisfy the specifications and boundary conditions, one cannot distinguish between the right compromise and the wrong compromise- and will end up by making wrong compromise.
•For there are two different kinds of compromise. One kind is expressed in the old proverb, Half a loaf is better than no bread. The other kind is expressed in the story of the judgment of Solomon, which was clearly based on the realization that half a baby is worse than no baby at all. In the first instance boundary conditions are still being satisfied. The purpose of bread is to provide food and half a loaf is still food. Half a baby, however, does not satisfy the boundary conditions. For half a baby is not half of a living and growing child. It is a corpse in two pieces.
Converting into Actions
•Converting the decision into action is the fourth major element in the decision process. While thinking through the boundary conditions is the most difficult step in decision-making, conversion the decision into effective action is usually the most time consuming one. Yet decision will not become effective unless the action commitments have been built into the decision from the start.
•Converting a decision in to action requires answering several distinct questions: Who has to know this decision? What action has to be taken? Who is to take it? And what does the action have to be so that the people who have to do it can do it?
Feedback
•Finally, a feedback has to be built into the decision to provide continual testing, against actual events, of the expectations that underlie the decision.
•Futility is that lot of feedback processes just don’t function correctly.
Opinion rather than fact
•A decision is a judgment. It is a choice between alternatives. It is rarely a choice between right and wrong. It is at best a choice between “almost right” and “probably wrong” – but much more often a choice between two course of action neither of which provably more nearly right than the other.
•The effective person therefore, asks, what do we have to know to test the validity of this hypothesis? What would the facts have to be to make this opinion tenable? And he makes it a habit - himself and in the people with whom he works – to think through and spell out what needs to be looked at, studied, and tested.
•The effective decision maker assumes that the traditional measurement is not the right measurement. Otherwise, there would generally be no need for decision; a simple adjustment would do. The traditional measurement reflects yesterday’s decision. That there is need for a new one normally indicates that the measurement is no longer relevant.
Develop disagreement
•What does this fellow have to see if his position were, after all, tenable, rational, and intelligent?
Is a decision really necessary?
•One has to make a decision when a condition is likely to degenerate if nothing is done.
•Act if on balance the benefits greatly outweigh cost and risk.
•Act or do not act, but do not hedge or compromise.
•There is no inherent reason why medicines should taste horrible but effective ones usually do. Similarly, there is no inherent reason why decisions should be distasteful – but most effective ones are.
•Cowards way: All the coward achieves is to die a thousand deaths where the brave man dies but one.
Functioning Communication:
•Functioning Communication is
-Communication is perception
-Communication is expectation
-Communication makes demand
-Communication and information are different and indeed largely opposite – yet interdependent.
•Before we can communicate, we must, know what the recipient expects to see and hear.
•Where communication is perception, information is logic. As such, information is purely formal and has no meaning. It is impersonal rather than interpersonal.
•Information is always encoded. To be received, let alone to be used, the code must be known and understood by the recipient. This requires prior agreement, that is, some communication.
The Knowledge Worker
Effectiveness must be learned
•The knowledge worker is, first of all, expected to get the right things done. And this means simply that the knowledge worker is expected to be effective.
•High intelligence is common enough among knowledge workers. Imagination is far from rare. The level of knowledge tends to be high. But there seems a little correlation between a man’s effectiveness and his intelligence, his imagination, or his knowledge.
•Intelligence, imagination and knowledge are essential resources, but only effectiveness converts them into results.
Why we need effectiveness?
•Effectiveness is specific technology of knowledge worker within an organization.
•Knowledge worker, the person who puts to work what he has between his ears rather than brawn of his muscles or the skill of his hands.
•Working on the right things is what makes the knowledge work effective. This is not capable of being measured by any of the yardsticks for manual work.
•Knowledge workers cannot be supervised closely or in detail. They can only be helped. But they must direct themselves, and they must do so toward performance and contribution, that is towards effectiveness.
•One can indeed never be sure what the knowledge worker thinks and yet thinking is his or her specific work; it is knowledge workers “doing”
•The motivation of knowledge worker depends on him being effective, on him being able to achieve. If effectiveness is lacking in his work, his commitment to work and to contribution will soon wither, and he will become time server going through motions from nine-to-five.
•The greatest wisdom not applied to action and behavior is meaningless data.
Who is an executive?
•Every knowledge worker in modern organization is an “executive” if, by virtue of his position or knowledge, he or she is responsible for a contribution that affects the capacity of organization to perform and to obtain results.
•He may be overridden; he may be demoted or fired. But so long as he has the job, the goal, the standards, and the contributions are in his keeping.
•Knowledge work is not defined by quantity. Neither is knowledge work defined by its cost. Knowledge work is defined by its results.
•Throughout every one of our knowledge organizations, we have people who manage no one yet are executives.
•Peter Drucker has called “executives” those knowledge workers, managers or individual professionals who are expected by virtue of their position or their knowledge to make decisions in normal course of their work that have impact on performance and result of the whole.
•Executives should plan, organize, integrate, motivate and measure.
Executive realities: Unless the executives work at being effective, the realities of their situation will push them into futility.
•The executive’s time tends to belong to everybody else.
•Executives are forced to keep on “operating” unless they take positive action to change the reality in which they live and work.
•Third reality is pushing the executives toward ineffectiveness is that he is within an “organization”. This means that he is effective only if and when other people make use of what he contributes. Each has to be able to use what others produce.
What happens inside an organization is efforts and cost. To speak of “profit center” in a business as we are wont to do is polite euphemism. There are only effort centers. The less an organization has to do produce results, the better it does its job.
An organization is an organ of the society and fulfills itself by the contribution it makes to the outside environment.
Outside changes to an organization have to be perceived they cannot be counted, defined, or predicted.
The promise of effectiveness
•A senior executive, we are told, should have extraordinary abilities as an analyst and as a decision maker. He or she should be good at working with people and at understanding organization and power relations, be good at mathematics and have artistic insights and creative imagination.
•If one cannot increase the supply of a resource, one must increase its yield. And effectiveness is one tool to make the resources of ability and knowledge yield more and better results.
Can effectiveness be learned?
•A knowledge worker who by definition has no authority other than that of knowledge must himself be effective – or else his nothing.
•The most effective knowledge worker depends on people with the organization to get things done.
•Their effectiveness therefore determines in the last analysis whether a knowledge worker contributes and achieves results, or whether he is pure “cost center” or at best a court jester.
•Effectiveness, in other words, is a habit; that is, a complex of practices. And practices can always be learned.
Focus on contribution
•The effective person focuses on contribution. He looks up from his work and outward towards goals. He asks, “What can I contribute that will significantly affect the performance and the results of the institution I serve?” His stress is on responsibility.
•The great majority of people tend to focus downward. They are occupied with efforts rather than the results. They worry over what the organization and their superiors “owe” them and should do for them. And they are conscious above all of the authority they “should have.” As a result, they render themselves ineffectual.
Own Commitment
•To ask, “what can I contribute?” is to look for the unused potential in the job. And what is considered excellent performance in a good many positions if often but a pale shadow of the job’s full potential of contribution.
•Knowledge workers who do not ask themselves, “what can I contribute?” are only likely to aim too low, they are likely to aim at the wrong things. Above all, they may define their contribution too narrowly.
•The next generation of knowledge workers should take for granted what the hard work and dedication of this generation has accomplished. They should then, stand the baseline for the generation after them.
•The most common cause for failure is inability or unwillingness to change the demands of a new position. The knowledge worker who keeps on doing what he has done successfully before he moved is almost bound to fail.
Contribution of knowledge
•Knowledge workers do not produce a “thing”. They produce ideas, information, and concepts. The knowledge worker, moreover, is usually a specialist. In fact, he can, as a rule, be effective only if he has learned to do one thing very well, that is, if he has specialized.
•It is to enable the specialist to make himself and his specialty effective. This means that he must think through who is to use his output and what the user needs to know and to understand to be able to make productive the fragment the specialist produces.
•Effective people fine themselves asking other people in the organization, their superiors, their subordinates, but above all, their colleagues in other areas, “what contribution from me do you require to make your contribution to the organization? When do you need this, how do you need it, and in what form?
The right human relations
•The focus on contribution by itself supplies the four basic requirements of effective human relations
-Communications
-Teamwork
-Self development
-Development of others
•The harder the superior tries to say something to his subordinate, the more likely is that the subordinate will mishear. He will hear what he expects to hear rather than what is being said.
•What are contributions for which this organization and I, your superior, should hold you accountable? What should we expect of you? What is the best utilization of your knowledge and your ability?
•The focus on contribution leads to communications sideways and thereby makes team work possible. The question, who has to use my output for it to become effective? Immediately shows up the important people who should be communicated about the work.
•What is the most important contribution I can make to the performance of this organization? As in effect, what self-development do I need? What knowledge and skill do I have to acquire to make the contribution I should be making? What strengths do I have to put to work? What standards do I have to set for myself?
•The executive who focuses on contribution also stimulates others to develop themselves, whether they are subordinates, colleagues, or superiors. They grow according to what they consider to be achievement and attainment.
Know your strengths and values
•Workers, especially knowledge workers outlive any employer, and will have to be prepared for more than one job, more than one assignment, more than one career
What are my strengths?
•Concentrate on your strengths. Place yourself where your strengths can produce performance and results.
•Work on improving your strengths.
•Identify where intellectual arrogance causes disabling ignorance.
•Remedy your bad habits – things you do or fail to do that inhibit your effectiveness and performance. They quickly show up in the feedback analysis.
•Waste as little effort as possible on improving areas of low competence.
•Do not try to change yourself- it is unlikely to be successful. But work, and hard, to improve the way you perform. And try not to do work of any kind in a way in which you do not perform, or perform poorly.
What are my values?
•Organizations have to have values. But so do people. To be effective in an organization, one’s own values must be compatible with the organization’s values.
Where do I belong?
•Successful careers are not “planned”. They are the careers of people who are prepared for the opportunity because they know their strengths, the way they work, and their values.
Know your time
•Effective knowledge workers do not start with their tasks. They start with their time. And they do not start out with planning. They start by finding out where their time actually goes. Then they attempt to manage their time and to cut back unproductive demands on their name.
•3 step process for analyzing time:
-Recording time
-Managing time
-Consolidating time
•Everything requires time. It is the only truly universal condition. All work takes place in time and uses up time. Yet most people time for granted this unique, irreplaceable, and necessary resource. Nothing else, perhaps, distinguishes effective executives as much as their tender loving care of time.
•Effective person therefore knows that to manage his time, he first has to know where it actually goes.
Time diagnosis
•The first step toward effectiveness is therefore to record actual time-use. The specific method in which the record is put together need not be of concern.
•One has to find the nonproductive, time-wasting activities and get rid of them if one possibly can.
•First one tries to identify and eliminate the things that need not be done at all, the things that are purely waste of time without any results whatever.
•All one has to do is to learn to say no if an activity contributes nothing to one’s own organization, to oneself, or to the organization for which it is to be performed.
•The next question is, which of the activities on my time log could be done by somebody else just as well, if not better?
•Delegation, as the term is customarily used, is a misnomer in the situation. But getting rid of anything that can be done by somebody else so that one does not have to delegate but can really get to one’s own work- that is a major improvement in effectiveness.
•Common cause of time-waste is largely under the executives control and can be eliminated by him. This is the time of others he himself wastes.
•What do I do that wasters your time without contributing to your effectiveness? Is one question one should ask directly?
Pruning time wasters
•The first organizational time-waster results from lack of system or foresight.
•Time-waste often results from overstaffing.
•Another common time-waster is malorganization. Its symptom is an excess of meetings.
•The last major time waster is malfunction in information.
Effective decision making process
•The clear realization that the problem was generic and could only be solved through a decision that established a rule, a principle.
•The definition of the specifications that the answer to the problem has to satisfy, that is, of the “boundary conditions”
•The thing through what is “right”, that is, the solution that will fully satisfy the specification before attention is given to the compromises, adaptations, and concessions needed to make decision acceptable.
•The building into the decision of the action to carry it out.
•The feedback that test the validity and effectiveness of the decision against the actual course of events.
Four type of occurrences
•Is this a generic situation or an exception? Is this something that underlies a great many occurrences? Or is the occurrence a unique event that needs to be dealt with as such? The generic always has to be answered through a rule, a principle. The exceptional can only be handled as such as it comes.
•There is first the truly generic, of which the individual occurrence is only a symptom.
•Then there is the problem that, while a unique event for the individual institution, is actually generic. For these, however one has to look to the experience of others.
•Next there is the truly exceptional, the truly unique event. Truly unique events are rare, however. Whenever one appears, one has to ask, is this true exception or only the first manifestation of new genus? And this, the early manifestation of new generic problem, is the fourth and last category of events with which the decision process deals.
•By far the most common mistake is to treat a generic situation as if it were a series of unique events, that is, to be pragmatic when, one lacks the generic understanding and principle. This inevitably leads to frustration and futility.
Specification of decisions
•The second major element in the decision process is clear specification as to what the decision has to accomplish.
•What are the objectives the decision has to reach? What are the minimum goals it has to attain? What are the conditions it has to satisfy?
•The effective person knows that a decision that does not satisfy the boundary conditions is ineffectual and inappropriate.
What is right?
•One has to start out with what is right rather than what is acceptable (let alone who is right) precisely because one always has to compromise in the end. But if one does not know what to satisfy the specifications and boundary conditions, one cannot distinguish between the right compromise and the wrong compromise- and will end up by making wrong compromise.
•For there are two different kinds of compromise. One kind is expressed in the old proverb, Half a loaf is better than no bread. The other kind is expressed in the story of the judgment of Solomon, which was clearly based on the realization that half a baby is worse than no baby at all. In the first instance boundary conditions are still being satisfied. The purpose of bread is to provide food and half a loaf is still food. Half a baby, however, does not satisfy the boundary conditions. For half a baby is not half of a living and growing child. It is a corpse in two pieces.
Converting into Actions
•Converting the decision into action is the fourth major element in the decision process. While thinking through the boundary conditions is the most difficult step in decision-making, conversion the decision into effective action is usually the most time consuming one. Yet decision will not become effective unless the action commitments have been built into the decision from the start.
•Converting a decision in to action requires answering several distinct questions: Who has to know this decision? What action has to be taken? Who is to take it? And what does the action have to be so that the people who have to do it can do it?
Feedback
•Finally, a feedback has to be built into the decision to provide continual testing, against actual events, of the expectations that underlie the decision.
•Futility is that lot of feedback processes just don’t function correctly.
Opinion rather than fact
•A decision is a judgment. It is a choice between alternatives. It is rarely a choice between right and wrong. It is at best a choice between “almost right” and “probably wrong” – but much more often a choice between two course of action neither of which provably more nearly right than the other.
•The effective person therefore, asks, what do we have to know to test the validity of this hypothesis? What would the facts have to be to make this opinion tenable? And he makes it a habit - himself and in the people with whom he works – to think through and spell out what needs to be looked at, studied, and tested.
•The effective decision maker assumes that the traditional measurement is not the right measurement. Otherwise, there would generally be no need for decision; a simple adjustment would do. The traditional measurement reflects yesterday’s decision. That there is need for a new one normally indicates that the measurement is no longer relevant.
Develop disagreement
•What does this fellow have to see if his position were, after all, tenable, rational, and intelligent?
Is a decision really necessary?
•One has to make a decision when a condition is likely to degenerate if nothing is done.
•Act if on balance the benefits greatly outweigh cost and risk.
•Act or do not act, but do not hedge or compromise.
•There is no inherent reason why medicines should taste horrible but effective ones usually do. Similarly, there is no inherent reason why decisions should be distasteful – but most effective ones are.
•Cowards way: All the coward achieves is to die a thousand deaths where the brave man dies but one.
Functioning Communication:
•Functioning Communication is
-Communication is perception
-Communication is expectation
-Communication makes demand
-Communication and information are different and indeed largely opposite – yet interdependent.
•Before we can communicate, we must, know what the recipient expects to see and hear.
•Where communication is perception, information is logic. As such, information is purely formal and has no meaning. It is impersonal rather than interpersonal.
•Information is always encoded. To be received, let alone to be used, the code must be known and understood by the recipient. This requires prior agreement, that is, some communication.
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