The Industries Plagued by the Most Uncertainty

Originally posted on HBR Blog Network - Harvard Business Review:

It’s a cliché to say that the world is more uncertain than ever before, but few realize just how much uncertainty has increased over the past 50 years. To illustrate this, consider that patent applications in the U.S. have increased by 6x (from 100k to 600k annually) and, worldwide, start-ups have increased from 10 million to almost 100 million per year.  That means new technologies and new competitors are hitting the market at an unprecedented rate.  Although uncertainty is accelerating, it isn’t affecting all industries the same way. That’s because there are two primary types of uncertainty — demand uncertainty (will customers buy your product?) and technological uncertainty (can we make a desirable solution?) — and how much uncertainty your industry faces depends on the interaction of the two.

Demand uncertainty arises from the unknowns associated with solving any problem, such as hidden customer preferences. The more unknowns there are…

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Make Getting Feedback Less Stressful

Originally posted on HBR Blog Network - Harvard Business Review:

Much of my work as an executive coach and an instructor at Stanford’s Graduate School of Business involves helping people improve their abilities to deliver feedback more effectively. It’s a critical skill, particularly for both leaders in flat organizations where giving orders is generally counter-productive and for anyone who needs to manage up or across by influencing their bosses or peers. And it’s a topic on which I’ve written extensively, not only in posts on my site and at HBR.org, but also in the HBR Guide to Coaching Your Employees.

But a recent exchange with my colleague and former Stanford student Anamaria Nino-Murcia made me realize that I’ve been neglecting the other half of this equation: How to receive feedback more effectively.

First, we need to recognize that receiving feedback is inherently a stressful experience. As Sheila Heen and Douglas Stone wrote in “Find the Coaching in…

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Book Reveiw: How Not to Be Wrong

The author, Jordan Ellenberg has written an intense and interesting book: How Not to Be Wrong: The Power of Mathematical Thinking. Do you think you’ll ever stop using mathematics? Below is an excerpt.

When am I Going to Use This?How Not to Be Wrong

The lessons of mathematics are simple ones and there are no numbers in them: that there is structure in the world; that we can hope to understand some of it and not just gape at what our senses present to us; that our intuition is stronger with a formal exoskeleton than without one. And that mathematical certainty is one thing, the softer convictions we find attached to us in everyday life another, and we should keep track of the difference if we can.

Every time you observe that more of a good thing is not always better; or you remember that improbable things happen a lot, given enough chances, and resist the lure of the Baltimore stockbroker; or you make a decision based not just on the most likely future, but on the cloud of all possible futures, with attention to which ones are likely and which ones are not; or you let go of the idea that the beliefs of groups should be subject to the same rules as beliefs of individuals; or, simply, you find that cognitive sweet spot where you can let your intuition run wild on the network of tracks formal reasoning makes for it; without writing down an equation or drawing a graph, you are doing mathematics, the extension of common sense by other means. When are you going to use it? You’ve been using mathematics since you were born and you’ll probably never stop. Use it well.

 

3 Behaviors That Drive Successful Salespeople

Originally posted on HBR Blog Network - Harvard Business Review:

Most people consider selling to be an art rather than a science: some people have it and some people don’t. But this leaves a lot of uncertainty in what is often a company’s most profitable department, and it makes managing a high-functioning sales force notoriously difficult. The prevailing thinking is that the amount of time salespeople spend with customers is the most important determinant of how much they are able to sell. But recent research has uncovered an even more powerful leading indicator: the size and quality of a salesperson’s network inside their own company.

People analytics can help organizations learn more about what behaviors differentiate their most successful salespeople. At VoloMetrix, we recently studied the sales force of a large B2B software company using six quarters of quota attainment data for a several thousand employees. We then correlated it against 18 months of VoloMetrix-created People Analytics key performance indicators…

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Book Review: The Race Underground

The Race Underground: Boston, New York, and the Incredible Rivalry That Built America’s First Subway by Doug Most is an excellent book. I can’t imagine how much lumber and steel when into building these two subways. Below is an excerpt about Manhattan.

The Race UndergroundThe Race Underground

FOR AN ISLAND THAT STRETCHED only seven miles long, Manhattan presented an unusual array of engineering nightmares. The softer rock had a grainy texture, almost like sugar, and was known as dolomitic marble. It was mostly at the island’s northern end. The more solid, challenging rock, Manhattan schist, was dangerous to bore into because it could fracture more easily and collapse on workers. It was at the southern portion. The island’s widest point stretches only about two miles, from river to river, near 125th Street, but just north of that it narrows quickly like a soda bottle. And though it appears flat to pedestrians, most of the city’s terrain is actually quite rolling and rocky, especially between Twenty-Third Street and the northern tip of Central Park. North of 110th Street the island has a steep rise in elevation that tops out at 268 feet above sea level, Manhattan’s peak, in Inwood near Fort Washington Avenue and 185th Street. In this northern portion, there were two hurdles for major digging. The bedrock of Manhattan has two major cracks, or fault lines, one at 125th Street and the other further north near what is now Fort Tryon Park, that have existed for millions of years. Although gravel, sand, and silt deposits have mostly filled them in, the faults weaken the structure of the bedrock hundreds of feet beneath the sea.

A Quick Guide to Breakeven Analysis

Originally posted on HBR Blog Network - Harvard Business Review:

In a world of Excel spreadsheets and online tools, we take a lot of calculations for granted. Take breakeven analysis. You’ve probably heard of it. Maybe even used the term before, or said: “At what point do we break even?” But because you may not entirely understand the math — and because understanding the formula can only deepen your understanding of the concept — here’s a closer look at how the concept works in reality.

Managers typically use breakeven analysis to set a price to understand the economic impact of various price- and sales-volume scenario. Pricing matters. Having the right price for a product or service can boost profit much faster than increasing volume. Setting a price is, of course, complicated but breakeven analysis can help.

It’s a simple calculation to determine how many units must be sold at a given price to cover one’s fixed costs. You’re typically solving for…

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S+B: How Old Industries Become Young Again

The Building Supply /Lumber industry is an old industry. Which is dematuring. What are you doing to make our industry young again? Are you aware of your changing customer’s habits? What technology are you using to be more effective and cost efficient? Do you know what your competition is doing? Below is an excerpt from strategy+business: How Old Industries Become Young Again.

 

How Old Industries Become Young AgainWordle: dematurity

Five indicators reveal when your sector is about to be transformed by dematurity.

Leading in Dematurity

One of the few certainties in business today is that dematurity is coming to your industry, and soon. Responding effectively requires that you throw out old assumptions about how value is built and sustained in your markets. You need to ask questions about your industry that others believe have already been fully, inexorably, answered: What makes for efficient scale? Who is the competition? Who are the customers? What do customers want? Who owns what? Where is the risk?

If asking these questions and pursuing untraditional answers seems like an unlikely path to success, consider this fact: More than 80 percent of the self-made billionaires who are profiled in my upcoming book, The Billionaire Effect, made their billions in mature industries that they reinvigorated by tackling one or many of the factors identified above. They either introduced a product attuned to new consumer habits, changed the technologies of production, adopted ideas from another industry, adapted to new regulation, changed the distribution system, or made some combination of those moves. Elon Musk, CEO of Tesla Motors and SpaceX, challenged the internal combustion engine’s dominance in the auto industry by developing a customer-friendly electric car. Farallon Capital Management founder Tom Steyer worked laterally: He created an investment vehicle for university endowments and changed how those customers defined profitable investing. Alibaba founder Jack Ma created one of the largest e-commerce sites in the world by taking advantage of production and distribution changes inherent in the Web to provide platform and infrastructure services to thousands of small businesses.

Although dematurity is inevitable, your business can be the one that benefits most. Half the task is recognizing the facets of impending change early enough to prepare. The five indicators in this article provide you with a starting point, a way to begin honing your judgment and identifying the real threats to your industry. The other half of the task is to respond in a way that makes you stronger: by assembling and integrating the capabilities you’ll need in this new, rejuvenated marketplace. The right capabilities will probably be a combination of what you already do well and what you must learn to do from scratch. If you can set your company up to sense and respond to dematurity ahead of time, then you’ll be one of the first to catch the big wave of small changes—before everyone else in your industry gets on board. … Read More