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|In: Career Management|Last Updated:

Do trends matter?

You know the answer: It depends. It depends on the reason for the trend. It depends on the hat you’re wearing. And, it depends on what you’re trying to accomplish while wearing that hat.

This being Super Bowl weekend (as I type these words) and as I live a mile from the Super Bowl’s epicenter, a football metaphor is mandatory.

And so, imagine you’re the offensive coordinator for one of the two teams and you notice a trend: Your opponent’s defensive secondary is sluggish on the right side of the field. Should you adjust your offense accordingly?

Well, duh. And you should be alert for signs the trend is ending.

This illustrates the first it-depends: The reasons for the trend matter a lot. If the secondary is sluggish because several players are badly hung over you can ride the trend longer than if there’s no obvious reason for it.

Okay, that’s all the sports metaphor I can stand. Time for the second it-depends — the hat you happen to be wearing.

Imagine your hat says “Investor.” You spot a trend, to all appearances driven by the Greater Fool theory — tulip bulbs, Beanie Babies, Bitcoin if you found last week’s KJR convincing — something is increasing in value for no apparent reason. Being unsure as to whether a greater fool will turn up or not, as a prudent investor you give the trend the same wide berth you’d give a radioactive skunk.

Replace your investor headgear with a cap labeled “CIO” and go back in time a few years to when Bitcoin was newer. Whether or not you personally thought it was going to be around for the long haul, you might have reasonably decided it was important for your company’s financial systems to process it like any other currency.

You also might have decided Bitcoin itself was a losing proposition, but the blockchain technology it relies on might still have offered your business important advantages in securing customer transactions.

Some trends are ephemeral. Others have staying power. Some businesses trade in ephemera. Others don’t.

Which brings up it-depends #3 — what you’re trying to accomplish.

Imagine a CIO who thinks in terms of trends rather than goals.

Our CIO supports a retailer that sells expensive fashions. The entire business is built on spotting and responding to ephemeral trends — preferences for hemlines, necklines, fabrics, and so on that have no real internal logic driving them. Customers just want to look trendier than the people they hang out with. The only thing driving the trend is the trend.

For this sort of retailer, web traffic probably spikes and evaporates as fashion shows and various awards ceremonies come and go. Handling extreme variability in processing demands is something The Cloud is quite good at. The retailer’s CIO, being a trendy sort, long ago put the company’s website on The Cloud. Chalk up a win for trend-following.

Now imagine a CIO who supports a life insurance company. Life insurance companies sell risk products (if you die you win, if you live you lose), investment products (if you live you win, if you die you lose), and hybrid products (if you live or die you win less but something). Purchase transactions and product lifespans last for decades, and part of the appeal of their investment products is that there’s no reason to pay day-to-day attention to them.

The demand for processing power is steady — a situation where Cloud economics just aren’t as interesting.

For the most part, new information technologies are interesting to the extent they provide important business capabilities.

But sadly, most of the analyses aren’t about business capabilities. They’re about surveys of who’s planning to invest in them, and how much.

To illustrate the point, imagine the Froschboscher Group’s annual Shiny Ball Survey reports that 90% of your peers plan to spend heavily on IDA — Intuitive Data Analysis, a technology that mimics the human capability of “trusting my gut.” Does this mean you should too?

That depends on your business, and whether the ability to apply Artificial Stupidity to a problem might prove useful to it.

And it might. If your target market consists of people who trust their guts when making decisions, being able to duplicate their decision-making could prove very useful.

The moral of this week’s story: When planning your company’s technology strategy, trends are effects, not causes. Your job isn’t to follow the trend. It’s to figure out what’s causing it.

If you can identify a potentially valuable business capability, by all means investigate the trend more deeply.

If you can’t, the trend is probably about as important to you as a Beanie Baby.

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|In: Industry Commentary|Last Updated:

When Bad Things Happen to Good People was a popular book once upon a time (1983, to be precise). But it was based on a false premise — that bad things happening to good people is somehow puzzling or unusual.

It is, of course, neither. As I pointed out a few years later, it’s When Good Things Happen to Bad People“ we find seriously annoying, and stupidly common.

Last week’s missive asked about the commercial version of this — how so many businesses that are, according to the dictates of evidence, logic, and standard formulations of what constitutes a well-run business, poorly run, do so well. And continue to do so well, not only for short bubble-like periods but for decades at a time.

I’ve run across a few theories regarding this distressing phenomenon over the years. Isaac Asimov proposed, for example, that “The lesson of history is that it isn’t who outsmarts whom that matters. It’s who out-stupids whom.”

Another, which I don’t like at all but that seems to fit the evidence well enough that we can’t just discard it out of hand, is that businesses only need to do one or two things really well. The rest they just need to be good enough at to muddle through.

This isn’t as preposterous as it might seem. To understand why, consider the Case of the Perturbed Perfectionist.

As pointed out in this space once upon a time, to the perfectionist the world is an infinite pile of flaws, each and every one of which must be ferreted out and fixed.

It isn’t that flaws are good things. It’s that, to put it in automotive terms, no matter how repairs you make, you won’t turn a Gremlin into a Bentley. Which is why, I think, Six Sigma is so often disappointing: Minimizing variation results in better Gremlins, not better cars.

Which in business leads to the only question that matters: What customers care about when deciding between your product, a competing product, and not buying anything at all.

The list of what customers care about isn’t all that long. Customers, defined as people who make or strongly influence the buying decision, care about:

  • Product assortment
  • Price
  • Convenience, which includes support and service
  • Features
  • Aesthetics
  • Quality (that is, absence of defects)
  • Image (visibility, perceived coolness, brand, liking the sales rep …)

This list isn’t comprehensive, but it’s close enough, because what matters is that different customers in different markets will rank these differently. In most markets only a few matter very much, but it’s a different few for different markets.

Take, for example, the benefits manager responsible for choosing her company’s group health insurance provider. Price and convenience will matter a lot. The rest will range from mattering a little to who cares?

For an insurer, great pricing comes from the actuarial and underwriting functions, accurate provider scoring and negotiated discounts, and ferociously efficient claims processing. Convenience mostly translates to customer service … at the benefits manager level, that is. Business functions that don’t contribute to these are business functions where being good enough is probably good enough.

Which is different from say, a company that retails consumer electronics on line.

For e-tailers, like health insurers success depends on price and convenience, and price does depends in part on how effectively merchants negotiate with vendors, and how well procurement negotiates shipping rates. In place of claims processing, e-tailers need ferociously efficient warehouse fulfillment operations (pick, pack, and ship).

Convenience comes mostly from merchandising, only it’s web merchandising. Image depends on advertising.

For e-tailers, unlike health insurers, their product assortment matters a lot. For some but not all, so does image. The former? Merchandizing again — how accurately merchants predict which products will be most interesting to customers. The latter usually belongs to an ad agency.

So for e-tailers, anything that doesn’t improve merchandising and warehouse operations falls into the just-good-enough pile.

Here’s what this means to you.

Unlike flaws, the pile of money and executive attention available for investing in business success is far from infinite. Where you can convincingly connect the dots between what your organization does within the business to one of the short-listed success factors, you can argue for more of this pile.

That’s quite different from anything else you do. If you want some of the pile for those responsibilities, you have a harder case to make:

That without more budget you can’t achieve the exalted state of good enough.

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