For data with a normal distribution, 95% of results will be within +-2 standard deviations of the mean.
(Taken from the book Super Crunchers)
Archive for January, 2012
I’ve just started reading an article from the Harvard Business Review.
The idea in brief
“Budgeting – as most companies practice it – should be abolished. Radical? No, simply the next logical step following everything else you’ve already done to eradicate command-and-control hierarchies in your company – and enable it to nimbly adapt to changing market conditions. Abolishing budgets will free up even more or your employees’ creativity, self-motivation and willingess to share information – essential ingredients for any firm’s agility…
Raising the bar
Abandoning budgets doesn’t mean abandoning high expectations. On the contrary, you raise the bar even higher. Instead of demanding that managers and business units meet fixed targets, you ask them to do something much tougher: measure themselves against how well their competitors will have done during the same period.
… rather than taking short-term actions designed solely to save the credibility of forecasts, they focus on improving their long-term competitive position…”
Buy the full article (“Who Needs Budgets?”) from Harvard Business Review
The chances are that your company has a graph of projected profits over the coming years.
It is dangerous. It is dangerous because profit cannot be predicted. Profit can be wiped out by an nimble competitor or shift in consumer trends. Profit can skyrocket due to unforeseen success.
Past performance is not a good indicator of the future.
The world is becoming more interconnected and more complex. “Winner takes all” and power laws are more common than linear growth.
Be wary of anyone with a crystal ball.
The best defence is innovation. The bible is The Black Swan.
A startup isn’t about size, it about extreme uncertainty. Startup = experiment.
The measure of innovation is the rate of validated learning. In fact, the best way to achieve sustainable profit is validated learning.
Validated learning is THE NUMBER ONE OBJECTIVE.
Only borrow big money if it’s the best way to pursue validated learning, otherwise it’s just a distraction.
Most startups fail. General management (the sort of management taught on MBAs) fails.
Traditional management is not the way things have to be done. It was “invented” by Frederick Winslow Taylor in 1911 (to address the problems of a bygone era). His ideas are so pervasive it’s hard for people to conceive that there are alternatives. It’s summed up brilliantly by this excellent 3 minute video (from another author).
In the Q&A session, one person said that The Lean Startup sounded a lot like “trial and error”. The author agreed but pointed out that what it’s called isn’t important. The important thing is if people do it or not, and largely “trial and error” is undervalued. They don’t teach it in (business) school.
This 15 minute video is the bible for trial and error: Trial, error and the God complex (by Tim Harford, a journalist for the FT).
Lean Startup links:
Where you at Lean Startup? What did you think? Leave a comment!
Average time on site is flawed. TOTAL time on site (TTS) is more robust. It’s the total time spent on the site by all (target) users.
With this metric: some users spending more time on the site is always good; more users is always good.
Other issues are detailed here. For example, “bounces” count as zero seconds on site. (Some people may argue that penalising bounces is a good thing).
If your web analytics don’t support TTS then you can calculate an approximation: (Average Time on Site) x (Unique Users)
As for all metrics, it’s good to focus on your target audience. If you use Ucom or comScore then you could calculate a multiplier. For example, if you reach 25% more of your target audience then multiply TTS by 1.25
