Protecting what isn't damaged

It's World War II and your job is to help the military devise a strategy for reducing the shockingly high loss rate of planes in battle. Dozens and dozens of planes are being lost due to ground-based enemy anti-aircraft weapons, as well as in air combat.

And of the planes that do make it back to their air bases safely, most have received at least some damage, with many of the damaged planes requiring substantial repairs to make them air-worthy again.

You show up to the air base, and as you begin examining the damaged planes you make an interesting observation - most of the planes that made it back have sustained damage to the wings, fuselage, and fuel systems, but most do not exhibit signs of damage in the engines or front of the cockpits.

A bunch of shot-up planes but a fairly consistent of measurable and repeatable characteristic - damaged fuselages but not engines. Wings that have sustained hits but with clean and intact cockpits.

Your recommendation to the military brass to reduce the rate and number of lost planes?

Well it seems intuitive that better armor and protection on the parts that have sustained the most damage would be the best strategy. I mean, you have evidence all around you - blown apart wings, fuel systems, etc. These parts are obviously sustaining heavy damage in battle, and need shoring up.

Makes sense, right?

Except that it is almost completely wrong, and due to the research and conclusions made in WWII by Abraham Wald, the opposite of the best strategy.

Wald concluded that the Air Force shouldn't arm or add protection to the areas of the planes that sustained the most damage on the ones that came back. By virtue of the fact that they planes came back at all, those parts of the planes could sustain damage.

Wald's insight, that the holes from flak and bullets on the bombers that did return represented the areas where they were able to take damage led him to conclude that these patches were the weak spots that led to the loss of a plane if hit, and that they must be the parts to be reinforced. 

Wald's suggestion an recommendation seemed unconventional, but only if you could get past what you could 'see', a bunch of blown apart wings and fuselages; and think about what you couldn't see, the planes that crashed as a result of the damage they sustained.

The big lesson or takeaway from this tale?  As usual, probably not much of one, with the possible exception is that it serves as a compelling reminder not to always focus on the obvious, the apparent, and what seems like the easy explanation.

Note - some of Wald's notes on this research can be found here.

Forecast, Upside, Pipeline and Staying on Offense

I ended last week with a piece titled Playing Offense on Social Media, a story about how sometimes being aggressive, even snarky, but essentially leaning forward and playing offense in social media can be a good strategy for organizations, (and even individuals), that are active in social media and social networks.

To continue the 'offense' theme, I want to share another similar take, this one from the world of sales, (and even if you are not 'in' sales, let's face it, we are all selling something), titled 'Play Offense When Predicting Revenue', from the Feld Thoughts sales blog.  

In the piece, Brad Feld shares a simple way to change the way sales managers think about their sales pipeline, essentially instead of assigning a generic 'probable close rate' to every deal in the pipeline, e.g., 'We have 10 active deals, we think 75% will close this quarter', Feld recommends sales teams divide the pipeline into three buckets as follows:

Forecast - These are the deals we BELIEVE (in CAPS), will close this quarter. We are committed to them, and any deal in this group that does not close, will be subject to a detailed review and post-mortem

Upside - These are deals that MIGHT close this quarter. We are working them, but can't commit to a close this quarter.

Pipeline - These are deals that WILL NOT close this quarter, but are being worked. These should move into the Upside or Forecast buckets soon, or will fall out as lost opportunities.

According to Feld, the positioning of deals into these discrete categories, most particularly the 'committed' portion of the forecast bucket, creates more accountability in the organization, and provides a better mechanism for inderstanding the sales process, the customer decision cycle, and the skill and capability of the sales team.

Then the sales team and managers revisit this list each week. Sometimes deals  fall out of Forecast into Upside based on new information. Last week you thought there was a 100% it was going to close (forecast), now you no longer have certainty but there's still a chance. And, if there's no way it'll close this quarter, it should go in Pipeline.

This discrete planning helps allocation your efforts - most of your short term energy should be on Forecast deals, some of your short and some of your long term energy on Upside deals, and the balance of your long term energy on the Pipeline.

I kind of dig it, simple, keeps the team focused, and as we like to say around here, keeps you playing offense, not just sitting back and wiating for (hopefully) good things to happen.

Forecast, Upside, Pipeline - what other parts of your business could benefit from this simple breakdown?

Have a Great Weekend!

Flipping Supply and Demand - Lemonade Version

Interesting story out of Spain, where a marketing company came up with the idea to install lemonade vending machines that actually decrease the price of the lemonade as the outside temperature rises, (and theoretically people will be thirstier and demand more lemonade), and increase the price as temperatures decline.

More details about the 'Let's go crazy and turn the immutable laws of supply and demand on their head' scheme can be found here.  The basic pricing plan goes like this:

Each machine displays both the temperature and the price, with three different price levels depending on just how hot it is. Up to 77 degrees Fahrenheit and the price is 2 euros or about $2.45. From 78 degrees F to slightly above 84, the price lowers to about 1.4 euros or $1.70. Anything over 86 degrees F and the drinks are 1 euro or $1.22. Special software allows the machine to automatically adjust.

Traditional economics and business logic of course suggest the exact opposite pricing strategy - as the temperature rises the merchant should increase prices to meet the anticipated elevated demand and maximize profits. Likewise, on cooler days, a lower price for the cold drinks seems to make more sense, as it should, according to everything we've ever learned in Econ 101 class, stimulate demand. 

So why would the lemonade vendor enact a pricing strategy so seemingly illogical?

Well it's only illogical if you don't consider the point of view of the customers, to them, their value is maximized, or at least greatly enhanced, by paying less for the cold drink on the hottest days when they are at their thirstiest, when they are in need of the product the most. 

Long term, this kind of strategy should engender greater customer loyalty and affinity - the customers should begin to see the lemonade vendor as more of a trusted ally in the fight against thirst, as someone who is there for them when they need it the most, and not as someone trying to take advantage of a situation to extract a few more cents of profit per can.

And forgetting the specifics of the lemonade vending machine, the broader lesson, making it easier and more convenient for your customers to buy, whomever they are, when they need you the most, (and not the other way around), is likely to separate you from just about every other supplier who has ever existed and that is holding fast to the Supply v. Demand chart they studied Freshman year.

Stay thirsty my friends.

A Reader asks: How to get more 'Strategic'?

I have a few more posts to write from things I saw and heard at the HR Technology Conference, but this question came in from a reader in reaction to my 'Be Curious' post:

I am only provided information on a "need to know" basis. Never included in planning meetings, etc. What can I do to prove my value and become more strategic?

I did reply to the question, but I figured I would throw this one out to the community. What do you think, how does the average HR Generalist in a company that does not seem to place much value in the HR function break out of the administrative, paper-pushing role and become more 'strategic?

What specific steps should he/she take?

Thoughts?

HR Technology, Amtrak, and Priorities

Amtrak American Orient Express
Originally uploaded by Roadsidepictures

Last week Amtrak announced it would spend $9.4 Million on HR Technology, specifically for what it is calling 'Employee Information Management'. Notably, the $9.4 Million is significantly more that will be spent on 'Customer facing' type initiatives like CRM and an improvements to the passenger information systems.

Full details on the Amtrak projects can be found here.

Of note in the article is how Amtrak feels its HR Technology is 7 to 10 years behind other similarly sized organizations, and that significant cost savings can be realized by the introduction of automated processes and the use of Employee and Manager Self-Service. A key component of the project is the E-learning portal to help define and deliver needed development content to the employee.

It does beg the question of how did Amtrak allow the critical HR Information Systems to get so out of date and how can such a large organization still be so reliant on manual and paper-based HR processes to such an extent.

I don't claim to know the inner workings of the Amtrak IT strategy, but since they are earmarking $9.4 Million for HR Technology, and only about $6 Million on the CRM and passenger systems combined, it does seem apparent that the HR systems have been neglected and underfunded.

So it is good and refreshing to see such a significant investment on HR Tech, the key systems to help employees manage their infromation, learning and development, view competency information, and hopefully become more engaged and productive in their careers.

Maybe Amtrak is finally seeing that a great CRM and a fantastic passenger information portal are not the only critical systems in an organization.  Because truly, it is the employees that have to serve the passengers, deliver excellent service, and make the crucial decisions to execute the strategy.

And employees can't do any of those things at their best if they are busy filling out HR forms, waiting days for HR information, and chasing down data that should be readily available.

So Cheers to Amtrak for making a commitment and investment in HR Technology and in their employees.