Category Archives: Business and Finance

A Chinese perspective on business

I’m currently reading a book called Dedication – The Huawei Philosophy of Human Resource Management, by Huang Weiwei. I’m only in the first chapter, but I’m already in love with it.

It’s so, so different from the most western-centric business books that I’m used to.

I’m just going to leave you with a couple of the passages in the book that made me go did he really write that?! because it was just so damn Chinese and absolutely refreshing (reminds me of the books by Lin Yutang, that I unsurprisingly also adore):

For the past ten years, I’ve worried about failure every single day and paid no attention to success. I have no sense of pride or superiority, just a sense of urgency. This might be the reason for Huawei’s survival. If all of us try to figure out how we can survive, we may survive for a much longer time. No matter, what, we will fail one day. Please be prepared for that. This is my unwavering point of view because it is a law of history.

[…]

I love my nation, and I also love my company and my family. Of course, I love my family more than my employees. That is the truth. We can unite our employees only by telling the truth. We need to give meaning to our employees’ work, and make them realize how their work contributes to their country. We also need to avoid empty talk and encourage our employees to start small, such as helping people around them and improving themselves. Working for one’s country and for one’s family are two engines that we need to start at the same time.

[…]

Huawei’s Board of Directors has made it clear that its goal is not to maximize the interests of shareholders or stakeholders (including employees, governments, and suppliers). Rather, it embraces the core values of staying customer-centric and inspiring dedication.

Don’t believe I’ve ever read anything close to that in another business book. Brilliant.

Great, but incompatible

It’s painful how sometimes you can put in lots of effort and sacrifice  into a project (or a career) in the hope that it will pay off, only for it to fall through in the last moment.

It’s worse when the motivation that was used sustain that effort was based on the fact that “there’s only X months to go; we’ll be done soon,” but X months has passed and we’re no closer to our goals than we were X months ago.

And sometimes it’s not even the first time this has happened. It could be the second or third (or forth) year you’re telling yourself, “not this year, but maybe next.”

But there will come a time when we have to tell ourselves that it’s time to cut our losses. There will come a time when we have to realise that the seed and soil may both be great, but simply incompatible.

The question is when, and will we know it then?

If it’s not a ‘Hell, yes!’, it’s a ‘No.’

The title of this post, “if it’s not a ‘Hell, yes!’, it’s a ‘No.'” comes from a Tim Ferriss book I’m currently reading called Tools of Titans, and is one of Ferriss’ favourite rules of thumb. Here’s a little more context (Ferriss is quoting Derek Sivers here):

Because most of us say yes to too much stuff, and then, we let these little, mediocre things fill our lives… The problem is, when that occasional ‘Oh my God, hell yeah!’ thing comes along, you don’t have enough time to give it the attention that you should, because you’ve said yes to too much other little, half-ass stuff[.]

It reminded me of how uneasy I was when being tasked with a slew of little projects that I knew were nice to have and that closed a few “open loops” (if only for the sake of closing them). I wasn’t too keen because I knew these were not the game-changing things I wanted to work on, things which I anticipated were on the horizon for myself and the team.

I concurred that, in principle, these were things needed to be done eventually, but that they would have be pushed to the back of the queue the moment something more momentous opened up.

We agreed to putting these tasks on the back-burner, with one or two trickling through during periods of slack and/or while we gained more clarity on any “Hell, yes!” projects that might be coming up (the act of scoping and gathering requirements may turn what seems like a “Hell, yes!” project into a solid “No.”).

I’d never actually though too much about it, but this has been one of key plays of my career thus far. Admittedly, it’s difficult to say “no” to customers (internal and external) early on, when you’re still finding a career niche, building up work experience and interpersonal clout (in fact, saying “yes” to just about everything is likely the better strategy when starting your career).

But once past that, saying “yes” to each and every opportunity and task is a recipe for mediocrity. If I’d continued doing that since starting work a decade ago, I’d probably still be copying and pasting data from spreadsheets, generating business reports by hand because somebody else told me so (albeit in an excellent manner, no doubt).

Instead, I’m working on developing my data science career, leading a great sales operations team, and thinking in my spare time about how I could bring my company’s analytical capabilities to the next level. Things I’d very much rather be doing, because I’ve said “no.”

How I Said No

  • Sure, I understand the report is essential, but does it have to be done that way? (Can we change the process or data sources a little so we can automate this?)
  • Can a self-service option be considered?
  • Can it be done by somebody else in the team?
  • What if we could generate a report that had 80% of the information but that could be churned out at 20% of the usual time?

The questions above are actual examples of those I’ve asked over the years. They were my way of saying “no” to projects that would have sucked up my or my team’s time, without which the many “Hell, yes!” projects (highly impactful, hundreds-of-people-thanking-us projects) would never have come into existence.

 

Business Experimentation

Imagine for a moment that you want to implement a new sales initiative that you think will transform your business. The problem is, you’re not too sure if it’d work.

You decide, prudently, that maybe a pilot test would be good: let’s roll out the initiative to just a small subset of the company, the pilot group, and see how it performs.

If it performs well, great, we roll it out to the rest of the company. If it performs badly, no drama – we simply stop the initiative at the pilot stage and don’t roll it out to the rest of the company. The cost of the pilot would be negligible compared to the full implementation.

After consulting with your team, you decide that your pilot group would be based on geography. You pick a region you know well with relatively homogeneous customers, and whom are extremely receptive to your idea.

You bring your idea to your boss, who likes it and agrees to be the project sponsor. However, he tells you in no uncertain terms that in order for the initiative to go beyond a pilot, you need to show conclusively that it has a positive sales impact. You have no doubt it has, and you readily agree, “of course!”

Knowing that measurement is a little outside your area of expertise, you consult your resident data scientist on the best way to “show conclusively” the your idea works. He advises you that the best way to do that would be through doing an A/B test.

“Split the customers in your pilot group, the region you’ve picked, randomly into two,” your data scientist says. “Let one group be the ‘control’ group, on which you do nothing, and the other be the ‘test’ group, on which you roll out the initiative on. If your test group performs statistically better than the control group — I’ll advise you later on how to do that — you know you’ve got a winning initiative on your hands.”

You think about it, but have your doubts. “But,” you say, “wouldn’t that mean that I would only impact a portion of the pilot group? I can’t afford to potentially lose out on any sales – can’t I roll it out to the whole region and have some other group, outside the pilot, be the control?”

Your data scientist thinks about it for a moment, but doesn’t look convinced.

“You can, but it wouldn’t be strictly A/B testing if you were to do that. Your pilot group was based on geography. Customers in other geographies won’t have the exact characteristics as customers in your pilot geography. If they were to perform differently, it could be down to a host of other factors, like environmental differences; or cultural differences; or perhaps even sales budget differences.”

You’re caught in two minds. On the one hand, you want this to be scientific and prove beyond a doubt the efficacy of the initiative.

On the other hand, having an initiative that brings in an additional $2 million in revenue looks better than one that brings in an additional $1.5 million, due to having a control group you can’t impact.

Why would you want to lose $500,000 when you know your idea works?

What do you do?

A Culture of Experimentation

Without a culture of experimentation, it’s extremely difficult for me to recommend that you actually stick by the principles of proper experimentation and go for the rigorous A/B route. There’s a real agency problem here.

You, as the originator of the idea, have a stake in trying to make sure the idea works. Even though it’d have just been a pilot, having it fail means you’d have wasted time and resources. Your credibility might take a hit. In a way, you don’t want to rigorously test your idea if you don’t have to. You just want to show it works.

Even if it means an ineffective idea is stopped before more funds are channeled to an ultimately worthless cause, for you it really has no benefit. Good for company; bad for you.

In the end, I think it takes a very confident leader to go through with the proper A/B testing route, especially in a culture not used to proper experimentation. It’s simply not easy to walk away from potential revenue gains through holding out a control group, or scrapping a project because of poor results in the pilot phase.

But it is the leader who rigorously tests his or her ideas, who boldly assumes and cautiously validates, who will earn the respect of those around. In the long run, it is this leader who will not be busy fighting fires, attempting to save doomed-to-fail initiatives.

Without these low-value initiatives on this leader’s plate, there will be more resources that can be channeled to more promising ventures. It is this leader who will catch the Black Swans, projects with massive impacts.

I leave you with a passage from an article I really enjoyed from the Harvard Business Review called The Discipline of Business Experimentation, which is a great example of a business actually following through with scrapping an initiative after the poor results of a business experiment:

When Kohl’s was considering adding a new product category, furniture, many executives were tremendously enthusiastic, anticipating significant additional revenue. A test at 70 stores over six months, however, showed a net decrease in revenue. Products that now had less floor space (to make room for the furniture) experienced a drop in sales, and Kohl’s was actually losing customers overall. Those negative results were a huge disappointment for those who had advocated for the initiative, but the program was nevertheless scrapped. The Kohl’s example highlights the fact that experiments are often needed to perform objective assessments of initiatives backed by people with organizational clout.

Can you imagine if they decided not to do a proper test?

What if they thought, “let’s not waste time; if we don’t get on the furniture bandwagon now our competitors are going to eat us alive!” and jumped in with both feet, skipping the “testing” phase?

Or what if the person who proposed the idea felt threatened that should the initiative failed  it would make him or her look bad, and decided to cherry pick examples of stores for which it worked well? (An only too real and too frequent possibility when companies don’t conduct proper experiments.)

It would, I have little doubt, led to very poor results.

And now imagine if this happened with very single initiative the company came up with, large or small. No tests, just straight from dream to reality.

Disastrous.

But unfortunately in so many companies just the case.

Developing a Culture

Seth Godin wrote a wonderful post on how we sometimes need an external push (through laws, policies, cultural guardrails) to do what’s best for us. It can be basically summed up by the following statements (from the post):

  • We know that wearing a bicycle helmet can save us from years in the hospital, but some people feel awkward being the only one in a group to do so. A helmet law, then, takes away that problem and we come out ahead.
  • Guard rails always seem like an unwanted intrusion on personal freedom. Until we get used to them. Then we wonder how we lived without them.

I was just thinking about true this is for so many other aspects of our lives. The friends we choose, because of the context they set, determine many of the decisions we make, and consequently many of the paths of life we take.

When setting up a company, a department, a team – how important it would be then to make sure that the cultural norms we encourage and enforce are the ones we want.

Whether it’s a culture of success (however you define it); freedom of experimentation; openness of communication; risk taking; or hard work, it is our job as servant leaders to ensure that it’s the least awkward thing to do.