Tag Archive for 'Business Planning'

Business and intuition

We have all had them – premonitions, gut feelings, the sense that something will happen before it does, knowing something we shouldn’t well before it seems logical or sensing something happening to someone close to you that is physically far from us…

Gut feelings… a sixth sense… by whatever name, intuitions can be informative. Many swear by them.

But in the investment world, mysteriously-generated feelings more often than not lead investors to make wealth-destroying decisions. In the business arena, the same is true – very capable, smart, hard working people travel down the wrong path with often devastating consequences. Working harder and harder based on a hunch or “opinion”.

There is a better way…

Nate Silver, statistics guru extraordinaire, put a face on the value of data and — when astutely analyzed — its ability to guide decision-makers toward the most desirable outcome. His CNN blog was widely followed during the 2012 American presidential election, because his statistical models proved more accurate than anyone else’s.

A year earlier, the Hollywood hit, Moneyball (originally published as a book), introduced the world to a unique idea: A data-driven, decision-making model can successfully overcome a lack of financial resources… allowing a stats-geek baseball recruiter to beat out deep-pocketed rivals who continued to rely on subjective intuition and gut feel.

When you look back, the writing’s been on the wall for years.
But very few want to read it.

The availability of troves of data — and the computer power needed to process it — has increased substantially over the last decade.

Yet, to some, the Big Data trend is scary.

The National Security Administration (NSA) spooked the world when Edward Snowden revealed the agency’s collection of massive quantities of our personal data. (Scary!)

Target stores reportedly have the ability to predict when a woman is pregnant — based on her spending patterns — even before she knew she was! (Scarier!)

And Twitter has analyzed billions of data points to determine which days of the week, and months of the year, we’re more likely to be happy. (Odd!) Here’s a graphic showing the analysis:

Twitter - Happy Day Of Week

Twitter, Target, and the NSA aside, financial markets are chock-full of data and, therefore, the ultimate playground for investors with a bent toward quantitative analysis. They even have their own nickname – quants!

If you’ve read my blogs for any length of time, you know I ONLY make decisions when my metrics show I have an edge…

I call it Management By Metrics.

Even though I am a fan of the power of the human spirit and readily admit that running a business is a balance of art and science, I NEVER make any major business (or investment) decision based on a gut feel. I am risk averse – why take a risk when you can reduce or eliminate it with some very simple, basic math?

I realise my pure and applied science and engineering background has influenced me. I spent several years immersed in the scientific method, which involves making observations about the real world, forming hypotheses (educated guesses) as to why the observations are what they are, and designing experiments to determine whether or not the hypothesis holds true.

Surprisingly, very few people in business use this method. Anecdotally I think it’s the popular aversion to mathematics as much as it is mental laziness. I am not suggesting you need to learn multivariate statistics, but just the use of Excel and a few simple formulas can take the guesswork out of most business decisions.

As The Exponential Growth Strategist, I facilitate our Platinum Program where you can learn the skills to acquire what I call 20/20 Foresight – being able to predict the future or manifest the future you seek for yourself or your business. Founded on scientific principles, it is with reach of anyone with a basic understanding of math and a hand-held calculator.

The science is straight forward and simple – the repercussions for you and your business can be, well…. astounding.

Contact us if you want to get past your hunches and gut feeling decisions that are letting you down or keeping you up at night with worry.

One thing that is crystal clear and most “experts” agree – the volatility and uncertainty we are currently facing is NOT going away anytime soon and in fact many agree it will get a lot worse before it gets better. It is the ‘new’ way of the world, well documented and well understood. We are in a cycle that will continue to play itself out in very predictable ways – well predictable for those who know what I am talking about!

Give us a call and we’ll introduce you to very exciting and valuable concepts like this one, that will put you back in the driver’s seat of your business (and your life) so you can steer in the direction of your goals and dreams and get to your ultimate destination (achieve your ultimate outcome).

Why business is getting harder

First, I want to apologise because this blog post is quite long – but necessarily so. It’s an excerpt of an email I received from a US-based financial “advisory” firm. The story is so well told – I have chosen to make only minor edits, so bear with me and the story for the priceless lesson it provides you as a business owner-manager.

I finished high school in a small town back in the swamp in southern Louisiana. We had 89 people in our graduating class, and the entire school had less than 400 students.

While we missed a lot of things because of the size of the school, there were some positives.

For one, athletes got to play several sports. In fact, my best friend was a four-sport letterman. He was fast, strong, and smart, so he was a free safety in football, point guard in basketball, 2nd baseman in baseball, and a sprinter on the track team.

Now, he is simply a relic…

The government has made his achievements almost obsolete. It’s nearly impossible for kids to pursue more than one sport today and still make a high-school team… because it’s all about the money.

Scholarship money, that is… and Division 1 in particular.

My friend’s achievements come back to me as I sit in the stands and watch my daughter play volleyball. She’s not playing on a school team this time of year, because volleyball season is over. Instead, we’re at a private facility where we pay too much for her to pursue this sport outside of her school. This is the world of “travel ball.”

Like most players, our daughter tried out for more than one organization, which then ranks the players. Then some of the players are offered a spot on a team at different levels (open, regional, state, local), representing where the team will compete.

Once on a team, players practice three times a week and play in six to 10 tournaments over the course of four months. There are also optional mini-camps… but keep in mind, in sports, practice is never optional, no matter what the coach says.

When the travel season ends, it will be summer, when the girls are expected to attend at least one three-day and one week-long ball camp, and there are other “optional” opportunities to play and practice as well.

Once school starts, the girls will try out for their respective school teams during the regular fall season. In October and November, travel-ball tryouts occur and the cycle starts all over again.

This process exists for baseball, volleyball, lacrosse, and probably every other sport.

Families spend thousands of dollars every year to pay for their spot on a team, for travel to tournaments (which can be across the country), for gear, and for camps. The costs easily can reach $6,000 per year.

While some players truly do it for the love of the game, there’s a different motivation for most. It’s all about Division 1.

Parents and players have a laser-like focus on making it to the big-time: scoring a Division-1 college scholarship to top level schools, like Duke University and University of Southern Carolina.  

Everything about their pursuit of a single sport centers on the possibility of being selected to play at a great college, thereby obtaining a “free” degree.

With the cost of college outrageously high, sports scholarships are one way for kids to be able to attend pricey schools. So families do what they can to bolster their kids’ chances. The kids play all year (school and travel ball)… they go to camps… they go to all of the practices. And they focus on only one sport in order to master the skills necessary to get selected.

The years of multiple-sport lettermen are over… thanks to a larger force that’s driving everything.

It’s the force that has driven college costs outrageously high, bringing us to the point where it’s impossible for a median-income family of four to afford it.

I hope we’ll find a way to reduce the price of college, and thereby relieve some of the pressure on high-school athletes who are trying so hard to get scholarships at the expense of pursuing, or even trying, other interests.

Here is the lesson for business owners:

Every single industry has gone through a transformation like the one that has afflicted (hopeful) US college students… It is getting harder and harder to compete because successful companies have specialised with laser-like focus out of necessity, to stay in the game so-to-speak.

So what can you do to counter-act this?

You need a DIFFERENT approach, to get DIFFERENT results.

Ignoring what has changed will not make it go away any more than a US student who doesn’t pick his or her sport in middle school or at the very least at the beginning of high school. Otherwise, it’s “game over”.

That’s today’s lesson – if you THOUGHT the game of business had changed – it has and continues to change at an alarming rate.

We offer business coaching and mentoring services to help you stay “ahead of the curve” and leverage these changes to your advantage rather than becoming victim to them.

Contact us when you’re ready.