sometimes things go up, sometimes things go down

April 28, 2011 1:06 PM

Go figure: How to succeed in business by doing nothing Article about variability in business and why it is sometimes better to do nothing. "You're a dynamic business leader. Let's say you make widgets - though you might equally make big-budget Hollywood movies. Your widgets, or your movies, vary. Some widgets are perfect, some a tad too long. Some movies make mega-bucks at the box office, some bomb. So what do you do? Well, you're dynamic, so you react, of course. Something must be done. " [SLBBC]
posted by marienbad (16 comments total)

when i read the line "sometimes things go up, sometimes things go down" i was hearing it in an aged Judd Hirsch voice. oy vey.
posted by marienbad at 1:07 PM on April 28, 2011 [2 favorites]

good article. One thing I've found interesting that is that if you keep your eye on 'good people' in terms of their worldview and personal capacity it's a better predictor of whether they'll succeed at stuff than keeping track of the minutiae of what they're up to. Easier said as an outside observer than someone who's actually actively risking their money though
posted by the mad poster! at 1:10 PM on April 28, 2011 [4 favorites]

A link to this article belongs in the teaching metrics thread.
posted by yeolcoatl at 1:27 PM on April 28, 2011

Succeed in business by doing nothing? I'm already the next Henry Ford!
posted by Sangermaine at 1:35 PM on April 28, 2011 [1 favorite]

The manufacturing industry has figured this out years ago. They even created a management philosophy around controlling variability: Six Sigma. Unfortunately it's hard to implement statistical controls when your sample size is small (such as the number of movies put out in a year by a Hollywood studio).

But I agree with the gist of the (brief) article: managers don't credit luck enough when evaluating an organization's performance.
posted by Popular Ethics at 1:35 PM on April 28, 2011

There are so many game-industry management jobs that require a Six Sigma Black Belt.

Gamification of management. Yey.
posted by andreaazure at 1:40 PM on April 28, 2011

Well, sorry, but I thought the article wasn't very good.
The one thing I do agree with wholeheartedly is that sometimes change is due to factors outside of one's control, but that's about all I agree with. I'm sympathetic to the articles underlying point, but the message got botched. Yes, I agree that an organization that's constantly changing direction will tend to go nowhere. But that's not because they're tracking metrics in detail and monitoring in real time, it's because they don't understand what metrics are important and how to evaluate those metrics to make strategic decisions. To me the article seemed to be a combination of "go with your gut" and "it's ok to not make decisions", where it should have focused on how minor things should not affect a businesses course. An analogy, I'm driving down the road, it's appropriate to take evasive action if a deer jumps out (though not if doing so puts you into oncoming traffic or into a more hazardous situation). In the summer though, I'll hit thousands of animals and I'll not do anything to avoid them, and to try and avoid them would be folly (these animals I'm talking about are insects).
Or a corporate analogy that I've seen too often: My breathless VP of Motor Vehicle Operation shows me a report of the number of animals I've hit plotted over time, decrying the disastrous numbers for May (and crap! June's are looking even worse) has advised me to implement his brand new evasive maneuver procedures project in order to pull ourselves out our nose dive. If I'm fool enough to go with that, then yes, things will get worse, not better. But this has nothing to do with ignoring the data, and everything to do with not understanding the data.

TLDR: Know the difference between a gnat and a deer.
posted by forforf at 1:46 PM on April 28, 2011 [6 favorites]

Tsk. Not one mention of "common cause" vs. "special cause" variation. Didn't even use the term "process tampering."

Ah well, nobody wants to hear about statistical process control where I work either, and I'm an engineer.
posted by cross_impact at 2:01 PM on April 28, 2011 [1 favorite]

This phenomenon is also why parents/teachers/coaches/supervisors sometimes mistakenly come to believe that criticism works better than praise, when really all they're witnessing in both cases is a return to the mean.
posted by Jacqueline at 2:01 PM on April 28, 2011

I like to point out that our ideas about what makes success happen is are subject to massive bias. You don't see Fortune magazine interviewing guys who believe in their product, work seventy hour weeks, do all the right things, and have little or nothing to show for it. Hell, they even call the magazine Fortune, and not Dumb Luck.
posted by Xoebe at 2:14 PM on April 28, 2011 [1 favorite]

cross_impact: Tsk. Not one mention of "common cause" vs. "special cause" variation.

I count one mention of "common cause" vs. "special cause" variation.

"The simplest example is in process control. You have a set point for the output and then you adjust the control for every deviation without distinguishing between common cause [intrinsic] variation and special cause variation. The consequence is that the total variation becomes greater than it would if the process were allowed to run uncontrolled."

posted by mhum at 2:22 PM on April 28, 2011 [1 favorite]

Xoebe: "Hell, they even call the magazine Fortune, and not Dumb Luck."

You know, there's an archaic definition of fortune that basically means good luck...
posted by pwnguin at 2:31 PM on April 28, 2011

There's a special place in hell reserved for people who massacre the data from web-based A/B tests. People simply don't understand what constitutes "statistically significant".
posted by GuyZero at 3:00 PM on April 28, 2011

Unfortunately ceteris never stays paribus long enough to get statistically robust results. So in most real life decisions you have to guess a lot about what is a real pattern and what is random variability.
posted by philipy at 4:38 PM on April 28, 2011

In any place with lots of politics (I imagine Hollywood and television are worse than many industries in this regard), there are wolves ready to take unfair advantage of the 'common cause versus special cause' variation.

"Yes she had some hits, but her last project hasn't done well. Clearly she's lost her touch. Time to let go of the losses and bring in my [ass-kissing, untested, untalented] replacement."
posted by eye of newt at 9:45 PM on April 28, 2011 [1 favorite]

"When it is not necessary to make a decision, it is necessary not to make a decision." Lucius Cary, 2nd Viscount Falkland (c. 1610 – 20 September 1643).

There's nothing new under the sun.
posted by Jakey at 1:40 PM on April 30, 2011 [1 favorite]