Author Archive for peter

Page 84 of 85

Sexapedalianism

Published by peter on 2008-04-13 in Culture, Decision theory, Economics and Forecasting. 0 Comments

Statistician Dennis Lindley wrote a book called “Making Decisions” which included the stunningly-arrogant sentence: “The main conclusion [of this book] is that there is essentially only one way to reach a decision sensibly.” He justifies this outrageous claim, contrary to all human experience and a moment’s reflection, by saying that, “any deviation from the precepts is liable to lead the decision-maker into procedures which are demonstrably absurd — or as we shall say, incoherent.” (page vii, second edition, 1985). There follows an account of maximum-expected utility decision theory, which is justified in the standard way using Dutch Book arguments (considerations of certain infinite gambles).

I have never trusted these Dutch Book arguments, first because we all live in a finite world, and so games in which one party is guaranteed to win after an infinitely-large time strike me as games selling pie-in-the-sky. Everyone is rich eventually when investing in a Ponzi scheme, also. And second, gambling is such a socially- and culturally-embedded practice that I cannot possibly conceive how it could be used to justify decision-making procedures claiming universal validity. (For a start, to gamble you need to believe that events in the universe are not pre-determined, something which perhaps half of humanity does not currently believe.) The statistician Cosma Shalizi over at Three-Toed Sloth has a nice parody of the advice of decision-theory ideologues here.

A: Hey, you over there, the one walking! You’re doing it wrong.
B: Excuse me?
A: You’re only using two feet! You should keep at least three of your six in contact with the ground at all times.
B: …
A: Look, it’s easily proved that’s the optimal way to walk. Otherwise you’d be unstable, and if you were walking past a Dutchman he could kick one of your legs with his clogs and knock you over and then lecture you on how to make pancakes.
B: What? Why a Dutchman?
A: You can’t trust the Dutch, they’re everywhere! Besides, every time you walk it’s really just like running the gauntlet at Schiphol.
B: It is?
A: Don’t change the subject! Walking like that you’re actually sessile!
B: I don’t seem to be rooted in place…
A: It’s a technical term. Look, it’s very simple, these are all implications of the axioms of the theory of optimal walking and you’re breaking them all. I can’t get over how immobile you are, walking like that.
B: “Immobile”?
A: Well, you’re not walking properly, are you?
B: Your theory seems to assume I have six legs.
A: Yes, exactly!
B: I only have two legs. It doesn’t describe what I do at all.
A: It’s a normative theory.
B: For something with six legs.
A: Yes.
B: I have two legs. Does your theory have any advice about how to walk on two legs?
A: Could you try crawling on your hands and knees?

Extreme teams

Published by peter on 2008-04-08 in Corporate culture, Joint-Action Society, Planning, Team working and Telecommunications. 0 Comments

Eric Nehrlich, over at Unrepentant Generalist, has reminded me of the book “The Wisdom of Teams“, by Jon Katzenbach and Douglas Smith, which I first read when it appeared in the early 1990s.   At the time, several of us here were managing applications for major foreign telecommunications licences for our clients – the fifth P (“Permission”) in telecoms marketing.
Before Governments around the world realized what enormous sums of money they could make from auctioning telecoms licences, they typically ran what was called a “beauty contest” to decide the winner.     In these contests, bidders needed to prepare an application document to persuade the Government that they (the bidder) were the best company to be awarded the licence.  What counted as compelling arguments differed from one country to another, and from one licence application to another.   The most common assessment criteria used by Governments were:  corporate reputation and size, technical preparedness and innovation, quality of business plans, market size and market growth, and the prospects for local employment and economic development.
As I’m sure you see immediately, these criteria are multi-disciplinary.  Licence applications were (and still are, even when conducted as auctions) always a multi-disciplinary effort, with folks from marketing, finance, engineering, operations, legal and regulatory, folks from different consortium partners, and people from different nationalities, all assigned to the one project team.  In the largest application we managed, the team comprised an average of about 100 people at any one time (people came and went all the time), and it ran for some 8 months.   In that case, the Government tender documents required us to prepare about 7,000 original pages of text in response (including detailed business plans and blue-prints of each mobile base station), multiplied by some 20 copies.    You don’t win these licences handing in coffee-stained photocopies or roneoed sheets.  Each of the 20 volumes was printed on glossy paper, hard-bound, and the lot assembled in a carved tea chest.
Work on these team projects was extremely challenging, not least because of the stakes involved.  If you miss the application submission deadline even by 5 minutes, you were out of the running.    That would mean throwing away the $10-20 million you spent preparing the application and upsetting your consortium partners more than somewhat.   If you submit on time, and you win the licence, you might see your company’s share-market value rise by several hundred million dollars overnight, simply on the news that you had a won a major overseas mobile licence.  $300 million sharevalue gain less $20 million preparation costs leaves a lot of gain.   In one case, our client’s share-market value even rose dramatically on news that they had LOST the licence!  We never discovered if this was because the shareholders were pleased that the company (not previously in telecoms) had lost and was sticking to its knitting, or were pleased that the company had tried to move into a hi-tech arena.
With high stakes, an unmovable deadline, and with different disciplines and companies involved, tempers were often loose.   One of the major differences between our experiences and those described in the Katzenbach and Smith book is that we never got to choose the team members.  In almost all cases, Governments required consortia to comprise a mix of local and international companies, so each consortium partner would choose its own representatives in the team.  Sometimes, the people assigned knew about the telecoms business and had experience in doing licence applications; more frequently, they knew little and had no relevant experience.  In addition, within each consortium partner company, internally powerful people in the different disciplines would select which folks to send.   One could sometimes gauge the opinion of the senior managers of our chances by the calibre of the people they chose to allocate to the team.
So — our teams comprised people having different languages, national cultures and corporate cultures, from different disciplines and having different skillsets and levels of ability, and sent to us sometimes for very different purposes. (Not everyone, even within the same company, wanted to win each licence application.)  Did I mention we normally had no line authority over anyone since they worked for different divisions of different companies?  Our task was to organize the planning work of these folks in a systematic and coherent way to produce a document that looked like it was written by a single mind, with a single, coherent narrative thread and compelling pitch to the Government evaluators.
Let us see how these characteristics stack up against the guidelines of Katzenbach and Smith, which Eric summarized:

  • Small size  – Not usually the case.  Indeed, many of the major licence applications could not physically or skill-wise have been undertaken by just a small team.  These projects demanded very diverse skills, under impossibly-short deadlines.  The teams, therefore, had to be large.
  • Complementary skills – Lots of different skills were needed, as I mention above.  Not all of these are complementary, though.  I am not sure how much lawyers and engineers complement each other; more often, their different styles of thinking and communicating (words vs. diagrams, respectively) and their different objectives would have them in disagreement.
  • Common purpose – In public, everyone had the same goal — to win the licence.  In private, as in any human organization, team members and their employers may have had other goals.  I have seen cases where people want to lose, to prove a point to other partners, or because they do not feel their company would be able to deal with too many simultaneous wins.   I have seen other cases where people do not want to win (not the same as wanting to lose) — they may be participating in order to demonstrate, for example, that they know how to do these applications.
  • Performance goals – Fine in theory, but very hard in practice when the team leaders do not have line responsibility (even temporarily) over the team members.
  • Common approach – Almost never was this the case.  Each consortium partner, and sometimes each functional discipline within each consortium partner had their own approach.  There was rarely time or resources to develop something mutually acceptable.  In any case, outputs usually mattered more than approach.
  • Mutual accountability – Again, almost never the case, partly due to the diversity of real objectives of team members, divisions and partners.

    • Despite not matching these guidelines, some of the licence application teams were very successful, both in undertaking effective high-quality collaborative work and in winning licences.  I therefore came away from reading “The Wisdom of Teams” 15 years ago with the feeling that the authors had missed something essential about team projects because they had not described my experiences in licence applications.  (I even wrote to the authors at the time a long letter about my experiences, but they did not deign to reply.) I still feel that the book misses much.

    Three men in a bar

    Published by peter on 2008-04-04 in Advertising and Culture. 0 Comments

    A year ago, the UK Guardian newspapers ran a short article deconstructing a British TV advertisement for Strongbow beer. Watch the advert below, and then read the article. The BNP is the British National Party, a neo-fascist political party.
     

    But what is interesting is the complex set of both politically correct and prejudiced rulings from which this ad, as well as the current Guinness one, evolved. Four blokes in a pub? No. Looks like a hooligan gang. Two blokes? No, no, no! Not that there’s anything wrong with it, but Strongbow’s not that sort of pint. One bloke? No. A loser. Probably got a book. Gotta be three blokes. Two blokes and a girl? Bloke and two girls? Too much implication of ménage à trois. Three girls? No. Too much implication of knickers round ankles at two in the morning in the town square, doubled over and urinating into a gutter. When it comes to women and pints, Al Murray’s glass of white wine for the ladies holds unironically true in adland. No, it has to be three blokes, blokes who like doing it with women so long as the “it” isn’t social drinking. Three white blokes? No. A bit BNP nowadays. Two white blokes and a bear in a pork pie hat? Too retro. Three black blokes? Now steady on. Two black blokes and a white bloke? Not being funny or nothing, but what would the white bloke be doing there?
    So, it’s settled then – two white blokes and a black bloke, going down the pub to get completely and utterly, well and truly “refreshed”.

    The future is bright, the future is sepia!

    Published by peter on 2008-04-03 in Advertising and Telecommunications. 0 Comments

    The results of a competition to produce vintage advertisement for modern products can be found here.   The best entry is an advertisement for Mr Nokia’s Patent Mobile Telephonic Communicator and Typographic Messenger with Box-Brownie J-PEG Maker and MP3 Gramophone, circa 1900, which plays on the slogan of British mobile operator, Orange, now part of France Telecom.

    Run-time marketing

    Published by peter on 2008-03-28 in Corporate culture, Market planning and Telecommunications. 0 Comments

    Although mobile communications (mocoms) began primarily as a service for business users and rich individuals, for over a decade mocoms have attracted a mass consumer audience.   Perhaps for this reason, it is often the case that mocoms marketing folk have cut their baby teeth in the fmcg sector — those consumer goods that move off the shelves so fast that only a short, unpronounceable acronym with all the vowels deleted to save time would keep up with them.    But there are many differences between telecommunications and other consumer products and services, and, despite having pre-cut teeth, these imports don’t always cut the mustard.
    We have long tried to identify these differences, and the key difference seems to be the time at which the product is created.     If you sell chocolate bars, you make them in a factory, deliver them to a store, and sell them to consumer.  The product is created before it leaves the factory door.   If you sell draught beer, the product is partly created before it leaves the factory (that would be the “beer” part of “draught beer”), but also partly created at the time the service is purchased (the “draught” part).   So a publican who waters down the beer he or she sells will alter the quality experienced by the end-user.
    But telecoms services are not created beforehand, and they are not even created at the time of purchase; instead, they are created at the time of use.  Provision of a network and its level of quality are created and re-created each and every customer call, and not even just once per call, but repeatedly throughout a call.  As a cellular phone user moves around during a call, for instance, his or her call will be routed through different cells, and these may vary widely in quality of service — for example, due to the presence or absence of other, simultaneous users in each cell.   This is quality of service generated on-the-fly, at runtime, to use some computer-speak.  And, as with all marketing, perceptions matter far more than reality:   if customers expect a network to be congested they may be more accepting of quality of service problems than if they’ve been led to think they will be the only users of it.
    Lots of fmcg folks don’t see the difference with their prior world.  Marketing can’t simply order the folks in the factory to ensure good quality product, and then sit back, gin and tonics in hand, to commission a few TV spots.  Instead, Marketing has to ensure that customer expectations are set and re-set realistically to match the quality of service being generated by Engineering as the network operates.  For new networks, add, “and as the network rolls out”.    Marketing have to monitor customer expectations and perception of network quality and compare with actual network quality in real-time, and adjust campaign tactics as they do so.  Marketing, too, has to be generated, on-the-fly.  It’s a lot harder than selling candy.

    The network is the consumer

    Published by peter on 2008-03-24 in Advertising, Consumer Behaviour, Culture, Decision theory, Economics, Game theory, Joint-Action Society, Market planning and Marketing strategy. 0 Comments

    Economists use the term network good to refer to a product or service where one user’s utility depends, at least partly, on the utility received by other users. A fax machine is an example, since being the sole owner of fax is of little value to anyone; only when others in your business network also own fax machines does owning one provide value to you. Thus, a rational consumer would determine his or her preferences for such a good only AFTER learning the preferences of others.   This runs counter to the standard model of decisions in economic decision theory, where consumers come to a purchase decision with their preferences pre-installed; for network goods, the preferences of rational consumers are formed instead in the course of the decision process itself, not determined beforehand.   Preferences are emergent phenomena, in the jargon of complex systems.

    What I find interesting as a marketer is that ALL products and services have a network-good component. Even so-called commodities, such as natural resources or telecommunications bandwidth, can be subject to fashion and peer-group pressure in their demand.  You can’t get fired for buying IBM, was the old saying.   Sellers of so-called commodities such as coal or bauxite know that the buyers make their decisions, at least in part, on the basis of what other large buyers are deciding.  Lest any mainstream economist reading this disparage such consumer behaviour, note that in an environment of great uncertainty or instability, it can be perfectly rational to follow the crowd when making purchase decisions, since a group may have access to information that any one buyer does not know.  If you are buying coal from Australia for your steel plant in Japan, and you learn that your competitors are switching to buying coal from Brazil, then there could be good reasons for this; as they are your competitors, it may be difficult for you to discover what these good reasons are, and so imitation may be your most rational strategic response.

    For any product and service with a network component, even the humblest, there are deep implications for marketing strategies and tactics.  For example, advertising may not merely provide information to potential consumers about the product and its features.  It can also assist potential consumers to infer the likely preferences of other consumers, and so to determine their own preferences. If an advertisement appeals to people like me, or people to whom I aspire to be like, then I can infer from this that those other people are likely to prefer the product being advertized, and thus I can determine my own preferences for it. Similarly, if the advertisement appeals to people I don’t aspire to be like, then I can infer from this that I won’t be subject to peer pressure or fashion trends, and can determine my preferences accordingly.

    For several decades, the prevailing social paradigm to describe modern, western society has been that of The Information Society, and so, for example, advertising has been seen by many people primarily as a form of information transmission.  But, in my opinion, we in the west are entering an era where a different prevailing paradigm is appropriate, perhaps best called The Joint-Action Society;  advertising then is also assisting consumers to co-ordinate their preferences and their decisions.    I’ll talk more about the Joint-Action Society in a future post.

    Method marketing

    Published by peter on 2008-03-23 in Corporate culture and Market planning. 0 Comments

    Method acting (aka “The Method”) is an approach to acting in which the actor tries to recreate and inhabit the emotional and psychological world of the person he or she is portraying.   The approach was originally created by the Russian theatre director Constantin Stanislavksi,  and is premised on the actor not merely “acting”, but “being” the character.   If done successfully, the method can lead to great authenticity in performance.

    But not everyone accepts this approach.  There is a wonderful story of method actor Montgomery Clift, pictured here, on the set of Alfred Hitchcock’s 1953 film, I Confess, being asked by the director to stand by a window so that the cameraman could take a quick external shot of him looking through the window.  Clift asked what his character would be thinking as he looked out the window.  Hitchcock replied, Who the hell cares!, or words to that effect.  The two argued, with Clift thinking that motivation and character was all, while Hitchcock just wanted his picture finished. (Hitchcock also greatly preferred actors who left all the thinking to him, and so it is not surprising that he and Clift never worked together again.)

    I believe the same authentic empathy is required for good marketing, and marketers have to fully inhabit the world of their target customers.   If the target customers are the same social class or ethnic group as the marketers themselves, then such Method Marketing probably comes without awareness — marketers are selling to people like themselves.  But often marketers are not themselves part of the target audience, and have to struggle to understand their customers and their environments profoundly. Global companies that do this well, such as Unilever, are often thought by others to have “gone native”, allowing local managers great autonomy.    Local autonomy, of course, does not guarantee empathy with local customers, but it certainly is necessary.

    A situation I have experienced several times is a company from a developed country launching a subsidiary in a developing market.   The latest marketing technology is deployed, including customer database systems and marketing data warehouses, to support customer profiling, friends and family programs, affinity marketing, the whole shebang.  All this advanced technology requires air-conditioned offices and needs people with advanced skills to deploy and operate.   Even if these people are local (and many are), they too sit in the air-con offices in the downtown skyscrapers in the capital city.     An environment less like that of the target customers is hard to imagine.   Although local marketers, usually with relatives in the villages, the kampongs and the favelas, will quickly realize the authenticity challenges here, they often have a hard time persuading their western-world masters that a problem exists.

    The strangest example I ever witnessed was a long-winded discussion in a start-up mobile phone company in a developing country in Asia about whether to bill calls by the second or by the minute. The intended target market were people living in rural towns and villages. No one in the room seemed to appreciate that most of the target customers did not wear watches.

    Speak now!

    Published by peter on 2008-03-20 in Corporate culture, Culture, Obama speeches, Oratory and Politics. 0 Comments

    Following the US presidential election primary campaigns from afar, I have been struck, as have many people, by the great oratory of Senator Barack Obama.   For those of us with experience in non-governmental sectors or in foreign-aid circles, his style of speaking is very familiar — it is the voice of a community organizer, creating self-awareness and encouraging group action, and doing so superbly! (As an aside, since the nuclear briefcase and the bully pulpit are pretty much the only real powers of a US President, character, judgment and oratory would seem to me far more important as criteria for assessment of presidential candidates than the details of their proposed legislative programs.)

    In reading some of the commentary on Senator Obama’s important speech this week in Philadelphia on race, I came across this post by psychologist Drew Westen.  In speaking about race relations and a US national conversation on race, Westen says:

    “We can’t solve problems we can’t talk about . . .”

    It is hard to over-emphasize just how deeply and profoundly American this view is. There are many cultures in which the majority of the population would take the precisely-opposite view — that we cannot solve problems we DO talk about, that solutions to difficult social or even personal problems can only be found by working in the background, behind the scenes, in the corridors of power rather than in public forums, where it is possible for solutions to be found and agreements reached without any loss of face.   England, despite sharing a common language and a common political history with the USA, is one such culture, as are those of North and East Asia.  Even when people suspect that open discussion may be needed to solve a difficult problem, they may still prefer to keep shtum, since the pain of enduring the problem may be far less than the pain of admitting its existence or of discussing it openly.

    What is the relevance of this to business, I hear you cry out (or not, depending on your culture)?    I have worked on multi-national business ventures where this particular cultural difference threatened to overwhelm any other profession-disciplinary, corporate or personal differences.  In one case, a consortium of companies from the USA, Britain and Korea worked together on a joint venture where the Americans always tried to surface any problem and discuss it openly in the weekly project meetings.  Both the Brits and the Koreans recoiled from this approach, and the two would often caucus together before project meetings to try to pre-empt any difficult discussions.   I don’t know if the Americans on the project ever knew of the corridor-caucusing of their two partners, or why so many difficult matters were sent for “off-line” resolution, only to disappear or else be magically resolved, apparently without any discussion.

    There are many wonderful qualities of American culture, and, in my opinion, openness and transparency are among these.  But not everyone thinks so, and it would behoove us all in an age of global interactions and inter-dependence to recognize this.

    POSTSCRIPT (Added 2008-03-21):  It is also worth noting that some cultures may discuss problems publicly but only in elliptical or indirect terms.   Shona culture (found in Zimbabwe and Mozambique), for example, has a highly-sophisticated use of metaphors, parables, multiple-meaning-layers, and even songs, as a means of somewhat open discussion of sensitive topics.   The use of such sophisticated linguistic devices means that a speaker can intend that an utterance be understood differently by different audiences.  Not an insignificant reason for his political success is that Robert Mugabe is a grand master of these multiple simultaneous registers, of being heard to say different things to different audiences at the very same time, and of clearly being heard to say without actually having said.

    Porous boundaries

    Published by peter on 2008-03-19 in Corporate culture and Telecommunications. 0 Comments

    Over at This Blog Sits At, Grant McCracken has an interesting discussion about the new corporation.    One of the features he identified is porousness, the idea that boundaries between an organization and its environment are fuzzy and in flux.  This has long been the case in telecommunications services, whose very business is connecting people.  So it is perhaps not surprising that telcos have been porous places for some time.

    For British Telecom (BT), Britain’s largest fixed network operator, Vodafone, Britain’s largest mobile operator, was both a major competitor (when BT owned mobile network Cellnet/ O2) and a major customer (because calls from Vodafone’s customers connected across BT’s network, and for this access Vodafone paid BT).  At the same time, BT’s customers, both fixed and mobile, called Vodafone’s mobile customers, so BT was also a major customer of Vodafone.  At one time, each company was the largest customer of the other.  

    This makes something of a mockery of traditional linear supply-chain analysis.  How do you manage a relationship with a company that is simultaneously a major competitor, a major supplier, and a major customer?  With kid gloves and internal Chinese Walls, presumably.    You may even decide to leave one market, as BT did by demerging O2, in order to simplify the relationship.

    Because most telecommunications markets were once regulated monopolies, most still have a major incumbent (as BT is in Britain).   This fact often makes governments and telecoms regulators tip the scales in favour of new entrants, in order to redress the inherited monopoly.   A common procedure is to allow new entrants to co-locate their switching equipment right alongside that of the incumbent — even, in some cases, inside the same buildings.   How many companies, other than telcos, could tolerate competitors having dedicated space and equipment inside their own buildings?

    And it gets even more complex.  As I commented on Grant’s post,  major users of telecoms services, such as American Express, often want direct access to the switches of their telecommunications services supplier so as to facilitate rapid reconfiguration of their service profiles.  Large telcos, such as Verizon, will often allow such access to their major customers.  But then companies such as AmEx, not being phone companies, often do not have the skilled staff to execute such reconfigs. So, Verizon lends AmEx some personnel, and a Verizon employee is sent on longterm secondment to work for AmEx; he or she may be paid by AmEx and report to a boss at AmEx, while retaining a career and benefits at Verizon, and physically sitting still in a Verizon building. Where do his or her loyalties lie?

    Porousness indeed.

    Globalization lives!

    Published by peter on 2008-03-13 in Culture. 0 Comments

    Annette Funicello I was witness to a conversation this week between Japanese and Mexican colleagues who reminisced about their common experiences as teenagers in the 1990s, on opposite sides of the world, playing the same Nintendo games.   I was reminded of a conversation I had once in a shebeen (a bar) in rural Zimbabwe in about 1985 with a black Zimbabwean mathematician about the many American TV series we had both seen growing up in the 1960s and 1970s, again in different hemispheres and neither of us in North America  – Superman, Batman, Bonanza, The Mickey Mouse Club, etc.  But it was not only American culture on our TV screens across the former British empire – we had both also seen the Japanese historical action series, The Samurai, a hit phenom in both countries.