July 18, 2019

You’re the Boss Blog: Training Employees to Analyze the Business

Building the Team

Hiring, firing, and training in a new era.

“Be direct.”

This is one of our core values at H.Bloom. It stems from another one of our values, which is to care deeply about our colleagues, and from the shared ambition to become as good as we can possibly be in this business. The only way to achieve this is to be direct with each other about areas of improvement. Otherwise, how will any of us know what to improve?

In my last two posts, I have written about the importance of practice, the formal training that we have set up, and shared the details of a specific management class that I led recently on data-driven decision-making. In this post, I want to walk through some of the projects our managers presented as part of the assignment from that class, and the direct feedback that I gave them so that they could work on the continued development of their skills.

After the training class, I gave the following assignment to our market managers and sales managers:

  1. Identify a problem or opportunity in your market.
  2. Analyze any available data about that problem or opportunity.
  3. Use the evaluation of data to draw a conclusion.
  4. Present your findings to the group.

The class participants could work on this assignment individually, or in teams, and they were given two weeks to complete the project. Here are four examples of what the participants presented, and how we used the presentations as an opportunity to give direct feedback on the skills they had learned.

Automate a Process

One of our market managers presented the need for a new piece of software that would automate the process of fulfilling same-day orders. Today, these orders are guided to completion in a relatively manual way. There is no question this process needs to be automated. However, as a three-year-old start-up, almost everything we do still needs to be automated. The presentation skipped over the data analysis and jumped right to the conclusion. While the conclusion was sound, the presentation missed the mark because of the lack of supporting data.

In our company, there is tremendous opportunity to derive competitive advantage by automating manual processes, but the trick is in deciding which processes to automate first. I gave this market manager direct feedback: First, when the assignment is data-driven decision-making, don’t forget the data! Second, and the important lesson in this interaction, was that because everything needs to be automated, the only way to determine what to do next is to compare the potential return of one project to that of another. With this filter, we work on the highest-value projects first, and eventually, we will get to everything. I asked this market manager to redo the presentation.

Buy Some Equipment

Another presentation, this time from a current SEED participant, suggested that we purchase a piece of equipment to deliver a particular corporate service in a more efficient manner. The numbers were sound: the presentation showed cost, a detailed potential return, and months to break-even. The return on investment was compelling, except for one other piece of data – this new business, one we had just introduced, was not yet profitable. I suggested to the presenter that we should drive the business to profitability first – which was only a couple of months away – before investing further in the line. While the presentation analyzed data, I thought it missed the analysis of contextual data (in this case, the profit and loss of the business line itself). The presentation provided a good opportunity to share with this future market manager my philosophies on investing limited capital, introducing new lines of business, and investing in those businesses for scale and efficiency.

Eliminate Wasted Effort

Two sales managers presented a detailed analysis of our sales pipeline. They enumerated activities by account executive, conversion rate and closed deals. They conducted an in-depth survey with current account executives, and identified a situation in which our sales people were duplicating efforts by entering the same data into two different systems. They calculated the potential uplift in sales if this wasted effort were removed and concluded that our engineering team should build the required functionality. My reaction was not what they expected. In the process of presenting their findings, they highlighted the number of activities that our account executives complete on average per day. When I asked the sales managers if they thought it was conceivable that our account managers could do more activities per day, the answer was a resounding, “Yes.”

In fact, these sales managers believed that our sales people could execute twice the number of activities per day even without implementing their suggestion. When I then asked them to compare the potential value of a) increasing the number of activities per account executive per day to b) removing the duplicative process, they saw that the former would provide a much larger return. My feedback to them was simple – if the data is there, make sure to draw the most rewarding conclusion. As a result of the presentation, the sales managers met as a group and instituted a new minimum number of activities a day, supported by our incentive program, and that has now been introduced to our entire sales force.

Try a Loyalty Program

One of our most seasoned sales managers analyzed our corporate subscription business. She proposed the introduction of a customer loyalty program, whereby we would systematically deliver something extraordinary to our customers as a thank-you for their loyalty during the previous year. This program could do two things: 1) surprise and delight our customers and 2) help ensure that they continue their subscription. The team compared the cost of this program to the potential benefit and proposed a pilot program that would contain our costs while enabling us to see any positive results in just two months. I gave the sales manager my feedback: it was a great presentation; a thorough analysis of the data; and a thoughtful decision to propose a pilot program. As a result of the presentation, I approved the program, which is in process right now. We will be able to assess the results in a couple of months.

Bryan Burkhart is a founder of H.Bloom. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/05/23/how-we-train-employees-to-analyze-the-business/?partner=rss&emc=rss

Economix: Book Chat | ‘The Economics of Enough’

Book Chat

Diane Coyle is a British economist who blogs at The Enlightened Economist and is an active Twitter user. Her previous book, “The Soulful Science,” examined the revival of economics as a field relevant to the rest of us, and her latest book is called “The Economics of Enough.”

Diane Coyle, author of Courtesy of Alex SedgwickDiane Coyle, author of “The Economics of Enough.”

The Financial Times, The Independent (of London) and The New York Times, among others, recently reviewed “The Economics of Enough.” In an interview with the British site The Browser, Ms. Coyle listed her own favorite economics books. My exchange with Ms. Coyle follows.

Q. Your book, as you write, is about “how to make sure what we achieve in the present doesn’t come at the expense of the future … how to run the economy as if the future matters.” One big challenge seems to be getting people to sacrifice for the future at a time when the present isn’t very good. How do you think about the politics of “the economics of enough”?

Ms. Coyle: Looking to the long term is difficult enough in business and finance, and it’s all the more so in the realm of politics. Voters are disillusioned, and part of the explanation is that public policy is so clearly failing to tackle the complexities and uncertainties of the modern economy. There is too much cynicism about politicians, I think. Most people go into public life because they start out with the noble ambition making things a bit better for their fellow citizens. So why do they all seem to end up doing short-term pork-barrel politics?

One answer is that politicians and voters alike are unaware of the extent of the economic problems. Believe it or not, the government debt is much worse than it looks because it currently excludes the implied promises of future Medicaid and Social Security payments as the population gets older. To take another example, there are no official statistics on the depletion of the country’s natural resources. One of the main measures we look at, gross domestic product, indicates how much income the national economy produces in a year, but we don’t know how much of the nation’s capital — in the widest sense, including natural resources — has been eaten to generate it. Statistics need to be tailored to their era, and developing official measures of the nation’s wealth, as well as its income year to year, would give politicians both the information and the ammunition they need in order to build a solid economic legacy.

Princeton University Press

A second reason we lack the “politics of enough” is that people are unlikely to make sacrifices for the future if the future looks likely to be as unfair as the present. The decline in the real incomes of millions of families, especially in the U.S., while the very rich have grown much richer make it unlikely that a majority of voters would have any confidence about benefiting from future growth. This is a question of politics, and the extent of the power certain groups such as bankers have been allowed to develop; and it’s also for me a question of morality, the strong ethical commitment to one’s fellows needed for the market economy to work well.

Q. In the context of the huge long-term deficits facing rich countries, you say that recent generations have been living beyond their means. What do you think is the one kind of tax increase that would best help us live within our means? And, similarly, the one kind of spending cut?

Ms. Coyle: The current system of taxes and government spending encourages consumption and the over-use of resources today and creates too little incentive to save and invest. The one tax to increase now is a carbon tax. You don’t even have to worry about climate change to accept it has many benefits. In particular, it will encourage innovation in noncarbon-based energy supplies from renewables to nuclear. This is a field in which the U.S. and other Western economies could build on their strong science base to build an area of technological strength for the future, and at the same time reduce dependence on oil and gas imports from overseas. There are multiple good reasons for introducing a carbon tax.

Government spending needs to be redirected away from massive corporate subsidies — including to the financial sector but also big companies in health care and agribusiness — and instead towards infrastructure investment and education (which is infrastructure of a different kind for the digital economy). But the really painful cut in expenditure needs to be in government support for older people. Across the Western economies, retirement ages and the age threshold for benefits from the government will have to increase. If not, healthy and active over-60s benefiting from the taxes of a declining proportion of working people in the population are going to bankrupt the government and undermine the arrangement of mutual benefit that keeps any society stable. And, yes, I’m fully planning on working until I’m 70.

Q. And how should we be spending money in ways that we are not now — or not doing enough of now?

Ms. Coyle: Governments are what we have to take decisions for all of us, and that means there are three ways governments should spend our tax dollars. One is in making judgments about which groups need support from the rest of the society. This is why democracy is so important, to legitimize choices between spending on one group rather than another. A second is when there are what an economist calls public goods, which mean that private spending overlooks the wider benefits of some activity and therefore expenditure would be too low. Examples range from defense spending to public parks. The third is when it’s important that the government can take decisions over a longer time horizon than any private business or individual can.

In my book I focus on the first and the third. The first because in a society whose average age is rising, which is the case in all Western democracies, voters will have a growing tendency to favor programs for older people at the expense of the young. Yet the younger people do most of the work, drive the growth of the economy, and pay the taxes that fund government expenditure. This could become extremely divisive politically, especially given the scale of the cuts in deficit spending currently needed to restore the government’s finances to a sustainable state. In the U.K., the coalition government has gone ahead with brave — and controversial — public spending cuts, but these are likely to fall more heavily on younger age groups, while some subsidies for the elderly are politically untouchable because older people are more likely to vote. So I argue we need to make a generational assessment of government expenditure.

On the question of the time horizon for investments to pay back, any business raising money through the financial markets or the banks will need to be earning a return on investment within two or three years, but the advanced economies need investments that might not pay back for 20 or 50 years. Investment in basic research is another example, where spending might not earn its return for decades, if at all. But who could argue that past investment has not served America well, putting the country at the global frontier for science and technology? In the U.S. and U.K., investments made in the 1950s and 1960s (or even the 1890s), such as the highways and ports, are still serving us well. Government spending needs switching from current needs to investment anyway, and the question needs to be: which projects are so long-term that future generations will be the ones to benefit from the investment? What is the current legacy for the nation going to be?

Q. I may be grasping for optimism here, but is there any good reason to think we’ll be able to make this transition?

Ms. Coyle: The triumph of democracy, in the end, is that it offers a path for difficult transitions. People know things have to change, and I think are both ready and eager for the political debate that requires, a different kind of debate from politics as usual. So I’m definitely an optimist about it — as long as we do everything we can to put the tools in place for that process to start.

Article source: http://feeds.nytimes.com/click.phdo?i=4233b98e02a9ac616e49390200f46944