With the volatility in world economics over the past few years, it is worth asking whether 'experts' can be trusted to provide any worthwhile guidance to protecting your financial future.
My personal view is that economics as a 'science' has about as much validity as astrology, especially given the demonstrably false assumptions on which most contemporary economic thinking is based. In The Sages, Charles Morris points to a 2008 survey by the Wall Street Journal which ranked 51 economic forecasters and found that of 102 separate forecasts, 101 were wrong and in the same direction. And since then economists have made repeated predictions which have failed to materialise.
So what do we do?
My own approach is to watch the news and to look at world events and draw my own conclusions about what is likely to happen. I watch a variety of different news programs from different countries in order to try and get a balanced view. Based on what I could see happening back in May ( the Eurozone crisis (particularly the uncertainties surrounding the Greek election), the continued debt problems and dysfunctional political conflicts in the USA), I switched all of my investments into Australian Fixed Interest investments, on the assumption that all of these changes would lead to decreased investor confidence and increased volatility in the share market. Sure enough the stock market fell. The Australian economy is still strong without the level of sovereign debt of Europe, the USA and Japan and is riding on the back of a mining boom that is expected to last at least into next year (though the boom could bust if the Chinese economy significantly slows.)
Looking ahead, the issues with the US debt ceiling are likely to rear their ugly heads again in September or October 2012 when US government spending bumps against the debt ceiling agreed last year and the Obama administration will need to seek a further increase. Given the coming US election it seems to me that this will be just as bloody as last years negotiations, if not worse and none of the options available to the US government ( increase debt, default on debt, print more money, adopt a more sensible taxation regime) is likely to bode well for the world economy. In Europe, the last debate in the German Parliament regarding the Spanish bailout made in clear that Germany is losing patience with bailing out the rest of Europe's economic mismanagement, which foreshadows future problems in the Eurozone. Based on all of this, my best judgement for my personal finances has been to keep my money in low risk, capital preserving investments with moderate yields.
I'm not saying that everyone (or even anyone) should follow my example. My background is in mathematics and statistics, not finance. However, I think it is open to anyone to look at the news and judge for themselves what is likely to happen in the world economy and invest accordingly.
I did try read a few different books which purported to provide good advice on defensive investing. However, as is usually the case with economic experts, their advice was contradictory, some predicting inflation in the US economy, while other predicting deflation. I investigated investing in gold bullion, however after looking at annual average gold prices since 1979, I've come to the conclusion that gold is likely to be the next bubble to burst. I base this on the fact that from 1979 to 2004, the average gold price was relatively flat, oscillating around $500 an ounce, but since 2004 it has tripled in price, showing the typical pattern of a bubble with greed and fear driving up the price beyond any reasonable value. Some of the books I have read claim that gold could rise to $10000 an ounce. But my gut feeling is that this is just another example of irrational exuberance. So if I invest in gold at all, I intend waiting till it drops back to less than $600 an ounce.
Investment experts will tell you that the stock market always rises in the long term. However, I believe that we have reached a point in history where the economic balance is shifting towards emerging economies and that the past record of the Western stock markets cannot be a reasonable guide to the future. You can't just look at graphs of stock markets over the past 100 years and extrapolate the upward trend; you need to also consider the changing realities that impact on the values of companies traded in these stock markets, realities which do not necessarily bode well for Europe and the USA.
So in a world of uncertainty and volatility, both economic and political, I think the prudent thing is to protect and preserve what you have, batten down the hatches and whether the storm. Once the fallout of the US election and the Eurozone crisis have settled, then it will be time to reassess the best way to invest.
As I said, I am not an investment expert and what I have discussed is purely my approach to protecting my own finances. Listening to experts who get it badly wrong more often than not is not an option. So it is up to each person to use their own judgement and assess what is best for them.
Tuesday, July 24, 2012
Sunday, April 8, 2012
B.O.W. (Based on what?)
At a meeting of a number of related organisations a question came up about what effect a recent change in legislation would have on the number of people wanting to contest matters in court.
The question you would need to ask is "Based on what?". While any of the other three organisations could be considered to have taken a somewhat reasonable position, conjuring a figure out of thin air doesn't seem very reasonable. What makes it even less reasonable was that the types of cases that were likely to be affected by the change in the law only accounted for about 10% of those going to court and the total going to court numbered less than 20,000 per year in total. So the CEO of the fourth organisation was surmising a ten-fold increase in the number of those kinds of cases going to court, from 2,000 to 20,000.
When you see things like that happening, you have to wonder how they came up with the figure and why they felt obliged to come up with any figure at all, especially in an area in which they were clearly unfamiliar.
In some organisation you see this happening all the time. A CEO tells employees that business is going to double in the next 2-3 years, based on a naive confidence that a business that they supply is going to meet its growth targets even though the other business has consistently failed to meet its targets in the past and even though there is likely to be a change in owners within a year.
There are times when you need to articulate your assumptions and then make a realistic estimate as to how likely it is that those assumptions hold true. Once you spell them out in black-and-white then it becomes clearer whether what you suppose to be the case is based on anything at all, whether it is based on shaky assumptions or wishful thinking. And when assumptions are surfaced, you can provide the opportunity for other people to question them and possibly gain new information of which you were previously unaware. This in turn can shape a re-estimate of how things are likely to turn out.
However, if you fail to bring assumptions into the light of day where they can be questioned, if you fail to ask yourself "Based on what?" then you are setting yourself and your organisation up for failure. You may invest resources where they are not needed and raise the costs of your business without any corresponding gain. And you may lose the confidence of employees as to whether you have sound judgement, if you repeatedly make claims which fail to materialise.
A similar question is: What makes you think that? I find this question useful when a colleague makes a judgement about someone else in my organisation, especially when the judgement surprises me. I want to know if there is something useful my colleague knows that I don't. What I tend to find is a mixture of fact and interpretation and when I make a few tentative interpretations of my own I begin to draw out the information on which their judgment is based, whether it comes from a credible source and whether the judgment is reasonable or whether there may be a more charitable interpretation. In some cases, I can add things that I know that shed light on the situation, so that we both emerge with greater clarity.
The lesson here is that judgments don't exist in a vacuum. They are underpinned by:
At least then a momentary failure can sow the seeds of better judgments in the future.
- one group believed that it would make no difference because, based on their experience, most people didn't realise that the law hadn't always been as under the changed legislation.
- one group didn't care since it had no impact on them.
- one group stated that they hadn't collected any figures that would lead them to a reasonable estimate
The question you would need to ask is "Based on what?". While any of the other three organisations could be considered to have taken a somewhat reasonable position, conjuring a figure out of thin air doesn't seem very reasonable. What makes it even less reasonable was that the types of cases that were likely to be affected by the change in the law only accounted for about 10% of those going to court and the total going to court numbered less than 20,000 per year in total. So the CEO of the fourth organisation was surmising a ten-fold increase in the number of those kinds of cases going to court, from 2,000 to 20,000.
When you see things like that happening, you have to wonder how they came up with the figure and why they felt obliged to come up with any figure at all, especially in an area in which they were clearly unfamiliar.
In some organisation you see this happening all the time. A CEO tells employees that business is going to double in the next 2-3 years, based on a naive confidence that a business that they supply is going to meet its growth targets even though the other business has consistently failed to meet its targets in the past and even though there is likely to be a change in owners within a year.
There are times when you need to articulate your assumptions and then make a realistic estimate as to how likely it is that those assumptions hold true. Once you spell them out in black-and-white then it becomes clearer whether what you suppose to be the case is based on anything at all, whether it is based on shaky assumptions or wishful thinking. And when assumptions are surfaced, you can provide the opportunity for other people to question them and possibly gain new information of which you were previously unaware. This in turn can shape a re-estimate of how things are likely to turn out.
However, if you fail to bring assumptions into the light of day where they can be questioned, if you fail to ask yourself "Based on what?" then you are setting yourself and your organisation up for failure. You may invest resources where they are not needed and raise the costs of your business without any corresponding gain. And you may lose the confidence of employees as to whether you have sound judgement, if you repeatedly make claims which fail to materialise.
A similar question is: What makes you think that? I find this question useful when a colleague makes a judgement about someone else in my organisation, especially when the judgement surprises me. I want to know if there is something useful my colleague knows that I don't. What I tend to find is a mixture of fact and interpretation and when I make a few tentative interpretations of my own I begin to draw out the information on which their judgment is based, whether it comes from a credible source and whether the judgment is reasonable or whether there may be a more charitable interpretation. In some cases, I can add things that I know that shed light on the situation, so that we both emerge with greater clarity.
The lesson here is that judgments don't exist in a vacuum. They are underpinned by:
- biases,
- blindspots
- assumptions,
- interpretations
- limited knowledge
- ignorance
- failure to effectively use the knowledge you do have
- believing something which is in fact not true
- not adequately weighting the reliability of different information sources
- believing a situation is stable but which is actually in a state of flux (or vice versa)
- overconfidence in your own infallibility.
At least then a momentary failure can sow the seeds of better judgments in the future.
Tuesday, April 3, 2012
How favoritism undermines businesses
If you run your own business then it is in your interests to get the best person for the job and to promote people based on the value they add to your business. However, if you choose to do otherwise, such as hiring and promoting your friends or relatives or people you like, then ultimately that is your choice: it's your money and if you lose out as a result of your decision then that is your prerogative.
However, if you are a manager in a government organisation or a publicly traded company, then basing decisions on factors other than what the person adds to the business effectively means that you are stealing from the "owners" (i.e. taxpayers or shareholders). In effect, you would be deliberately creating a sub-optimal outcome for reasons that have nothing to do with the success of the business, aiming instead to benefit your "favourites".
And this effect doesn't just stop at sub-par work being performed by your favorites. Let's look at some of these consequences.
Firstly, you undermine confidence in the competence of those so favoured. Generally, the feeling among employees who see what is happening is that if the favourites were all that good then they would be able to compete on their own merits. So the fact that they had to be given the opportunity rather than earn it suggests that they are less competent than others who might have competed for the opportunity. It also suggests that the person playing favourites is aware of this and has deliberately short-circuited any competitive process for that very reason. In some ways being the favorite is a double-edged sword: on the one hand you are being given the benefit of an opportunity, but on the other hand, even if you would have won the opportunity on merit in a competitive process, your reputation as competent in your own right is being undermined. And that can have consequences later on if your "protector" leaves the business or is moved elsewhere within the business.
Secondly, the person loses the confidence of the workers. If they are prepared to act with so little integrity in this matter then what else may they be doing? Can they be trusted? Who may they be undermining behind the scenes without that persons knowledge? Where there is a lack of transparency, workers may fill in the blanks themselves and draw their own conclusions, tinged with a justifiable paranoia.
Thirdly, such favoritism demotivates other workers: if promotion is based on being the boss's favourite then what is the point in doing a good job? Or, they may continue to do a good job just so that they get a good recommendation when they apply for jobs in other, fairer organisations.
Fourthly, it undermines co-operation within the workplace. You can end up with an environment were people do the least they can do without getting fired and where change is a struggle because disaffected workers withdraw their participation in change measures. Where rewards are not based on merit, passive resistance becomes the strategy of choice.
Finally, you fail to recognise and fully deploy the skills and knowledge of other employees who may have a greater claim to the opportunities on offer.
In summary, if you are a manager working in a business you don't own, then by playing favourites you are not only failing to act with fairness or integrity but aren't even earning your own salary since you are sowing the seeds of problems and dissension within the business instead of moving it optimally in the direction of its objectives.
I've painted a pretty grim picture. But unfortunately it is a reality in many organisations today when managers get it into their heads that they are in charge of their own little fiefdoms and lose sight of why they were hired in the first place.
However, if you are a manager in a government organisation or a publicly traded company, then basing decisions on factors other than what the person adds to the business effectively means that you are stealing from the "owners" (i.e. taxpayers or shareholders). In effect, you would be deliberately creating a sub-optimal outcome for reasons that have nothing to do with the success of the business, aiming instead to benefit your "favourites".
And this effect doesn't just stop at sub-par work being performed by your favorites. Let's look at some of these consequences.
Firstly, you undermine confidence in the competence of those so favoured. Generally, the feeling among employees who see what is happening is that if the favourites were all that good then they would be able to compete on their own merits. So the fact that they had to be given the opportunity rather than earn it suggests that they are less competent than others who might have competed for the opportunity. It also suggests that the person playing favourites is aware of this and has deliberately short-circuited any competitive process for that very reason. In some ways being the favorite is a double-edged sword: on the one hand you are being given the benefit of an opportunity, but on the other hand, even if you would have won the opportunity on merit in a competitive process, your reputation as competent in your own right is being undermined. And that can have consequences later on if your "protector" leaves the business or is moved elsewhere within the business.
Secondly, the person loses the confidence of the workers. If they are prepared to act with so little integrity in this matter then what else may they be doing? Can they be trusted? Who may they be undermining behind the scenes without that persons knowledge? Where there is a lack of transparency, workers may fill in the blanks themselves and draw their own conclusions, tinged with a justifiable paranoia.
Thirdly, such favoritism demotivates other workers: if promotion is based on being the boss's favourite then what is the point in doing a good job? Or, they may continue to do a good job just so that they get a good recommendation when they apply for jobs in other, fairer organisations.
Fourthly, it undermines co-operation within the workplace. You can end up with an environment were people do the least they can do without getting fired and where change is a struggle because disaffected workers withdraw their participation in change measures. Where rewards are not based on merit, passive resistance becomes the strategy of choice.
Finally, you fail to recognise and fully deploy the skills and knowledge of other employees who may have a greater claim to the opportunities on offer.
In summary, if you are a manager working in a business you don't own, then by playing favourites you are not only failing to act with fairness or integrity but aren't even earning your own salary since you are sowing the seeds of problems and dissension within the business instead of moving it optimally in the direction of its objectives.
I've painted a pretty grim picture. But unfortunately it is a reality in many organisations today when managers get it into their heads that they are in charge of their own little fiefdoms and lose sight of why they were hired in the first place.
Monday, March 26, 2012
Three lessons from spaghetti
Sometimes an everyday word becomes a rich metaphor that can teach us a lesson by the visual analogy that it embodies.
Take, for example, the following three lessons we can learn from spaghetti.
Firstly, consider spaghetti communication, that is communication where the source (sauce?) of the communication may be unclear, where different strands may overlap, wrap around each other and double back and become entangled in such confusion that it may be impossible to straighten out the message (somehwat like that sentence!). There may be plenty of color and flavor but not a lot of meat, so you end up being dissatisfied and needing further communication to clear up the confusion, which may then just result in more confusion. In this case, the lesson is to avoid spaghetti to begin with and instead think through the communication clearly and then communicate through a single channel.
Then there is spaghetti code, computer code that has a complex and tangled control structure. This makes it difficult to follow, increases the risk of unforeseen and undesireable side effects and makes it hard to update. However this isn't limited to computer code. We see it in legislation where the use of complex definitions and cross-referencing to other parts of the same legislation may make it difficult to understand and even at times self-contradictory. And it may also occur in the standard procedures used in our businesses where they may have multiple levels of approvals or complex loops through different work units before being resolved. By eliminating this spaghetti we may be able to bring clarity and efficiency to our processes and eliminate waste.
On a more positive note is the lesson we learn from spaghetti sauce is this video presentation by Malcolm Gladwell:
In an earlier post, I mentioned communication differences between different generations (Boomer vs Gen X vs Gen Y) and to a degree this parallels the spaghetti sauce analogy: some people may like their communication to be "extra chunky" (watch the video) whereas others may want it to be smooth, some want it to be thorough and detailed while others may want us to cut to the chase. The lesson here is that instead of pursuing a 'one size fits all' approach, we instead tailor our approach to what best suits our customers.
One food, three lessons. But common to all three is the need for clarity: clarity of intent, clarity of process, clarity in satisfying customer needs.
Take, for example, the following three lessons we can learn from spaghetti.
Firstly, consider spaghetti communication, that is communication where the source (sauce?) of the communication may be unclear, where different strands may overlap, wrap around each other and double back and become entangled in such confusion that it may be impossible to straighten out the message (somehwat like that sentence!). There may be plenty of color and flavor but not a lot of meat, so you end up being dissatisfied and needing further communication to clear up the confusion, which may then just result in more confusion. In this case, the lesson is to avoid spaghetti to begin with and instead think through the communication clearly and then communicate through a single channel.
Then there is spaghetti code, computer code that has a complex and tangled control structure. This makes it difficult to follow, increases the risk of unforeseen and undesireable side effects and makes it hard to update. However this isn't limited to computer code. We see it in legislation where the use of complex definitions and cross-referencing to other parts of the same legislation may make it difficult to understand and even at times self-contradictory. And it may also occur in the standard procedures used in our businesses where they may have multiple levels of approvals or complex loops through different work units before being resolved. By eliminating this spaghetti we may be able to bring clarity and efficiency to our processes and eliminate waste.
On a more positive note is the lesson we learn from spaghetti sauce is this video presentation by Malcolm Gladwell:
In an earlier post, I mentioned communication differences between different generations (Boomer vs Gen X vs Gen Y) and to a degree this parallels the spaghetti sauce analogy: some people may like their communication to be "extra chunky" (watch the video) whereas others may want it to be smooth, some want it to be thorough and detailed while others may want us to cut to the chase. The lesson here is that instead of pursuing a 'one size fits all' approach, we instead tailor our approach to what best suits our customers.
One food, three lessons. But common to all three is the need for clarity: clarity of intent, clarity of process, clarity in satisfying customer needs.
Sunday, March 4, 2012
7 or 6?
Consider the Englsih sentence:
"This sentence contains at least seven words"
If we wanted to translate this into German then we could say:
"Dieser Satz enthält mindestens sieben Wörter"
but now a statement that was true in English has become false in German.
Or we could translate it as:
"Dieser Satz enthält mindestens sechs Wörter" (i.e. "This sentence contains at least six words")
which preserves the truth of the statement but only by translating 7 as 6.
So which is correct? The first translation is literally accurate but at the expense of truth. The second is true but at the expense of accuracy. Which you would use would depend on your purpose.
Sometimes something similar happens with best practice. An attempt may be made to transfer the practice of another organisation point by point to your organisation, based on the idea that we only know it will work in its original form - we don't know what will happen if we modify it. However, the same process that works well in one organisation may fail in another because in the act of "translating" it to a different set of circumstances we have failed to preserve its "truth". So we need to modify it to preserve its truth within the context of our organisation.
Something similar can happen when we attempt to communicate. We can attempt to communicate a consistent message to all of our customers (i.e. use the same form of words) or we can attempt to communicate in a way that ensures each customer receives the same message (i.e. where different words are used to cater for different customer characteristics.)
For instance, in my home state of New South Wales, for people over the age of 18 we have the following breakup by generation:
So we have a choice: we can send a message that is literally consistent or we can send tailored messages that obtain a consistent outcome.
In all of the examples, the difference is between an absolutist perspective in which literal accuracy is a key value and a relativist perspective where context needs to be taken into account. In general, the more nuanced contextual approach will be more effective.
So when you are faced with "translation"-type issues, it may pay to consider wat you want to happen and whether contextual modification is important - sometimes translating "7" as "6" is necessary to preserve the effective essence of a process or communication.
"This sentence contains at least seven words"
If we wanted to translate this into German then we could say:
"Dieser Satz enthält mindestens sieben Wörter"
but now a statement that was true in English has become false in German.
Or we could translate it as:
"Dieser Satz enthält mindestens sechs Wörter" (i.e. "This sentence contains at least six words")
which preserves the truth of the statement but only by translating 7 as 6.
So which is correct? The first translation is literally accurate but at the expense of truth. The second is true but at the expense of accuracy. Which you would use would depend on your purpose.
Sometimes something similar happens with best practice. An attempt may be made to transfer the practice of another organisation point by point to your organisation, based on the idea that we only know it will work in its original form - we don't know what will happen if we modify it. However, the same process that works well in one organisation may fail in another because in the act of "translating" it to a different set of circumstances we have failed to preserve its "truth". So we need to modify it to preserve its truth within the context of our organisation.
Something similar can happen when we attempt to communicate. We can attempt to communicate a consistent message to all of our customers (i.e. use the same form of words) or we can attempt to communicate in a way that ensures each customer receives the same message (i.e. where different words are used to cater for different customer characteristics.)
For instance, in my home state of New South Wales, for people over the age of 18 we have the following breakup by generation:
- 12% Depression/WW2 Generation
- 27% Baby Boomers
- 38% Gen X
- 23% Gen Y
So we have a choice: we can send a message that is literally consistent or we can send tailored messages that obtain a consistent outcome.
In all of the examples, the difference is between an absolutist perspective in which literal accuracy is a key value and a relativist perspective where context needs to be taken into account. In general, the more nuanced contextual approach will be more effective.
So when you are faced with "translation"-type issues, it may pay to consider wat you want to happen and whether contextual modification is important - sometimes translating "7" as "6" is necessary to preserve the effective essence of a process or communication.
Thursday, March 1, 2012
What an average doesn't tell you
Recently, I had a hunch that the average age of males was lower than the average age of females. My logic was that women tend to live longer than men and that slightly more male babies are born than female babies. I wondered if my reasoning was correct so I downloaded the demographic statistics for NSW from the Australian Bureau of Statistics and I found the following:
The answer is: nothing!
Averages are about populations not about individuals. So if you were to see a statistic such as "Males are on average 1 year 8 months younger than females", you aren't being given an answer so much as a provocation to ask "Why would this be the case? What does it mean?"
When you are surprised at an average then it may help you to surface your assumptions about whatever it was that was being measured.
For instance, if I were to ask you what the average height for a human being was, the chances are that you would say something like 5'2" or thereabouts. So it would surprise you if I were to tell you that the true figure is under 5'. I will explain this claim in a moment, but first would it surprise you to learn that short people often have lower literacy levels than taller people? Yes?
Well interestingly the reason for both of these statistics is the same: children are human beings too!
Most children are under 5' tall and most childen have lower literacy levels than adults and these two facts result in the given statistics. So if you were surprised at the claims I made, it would be because you assumed that we weren't counting children in the averages. Even if we weren't aware of it, we implicitly assumed that we were talking about adult humans.
This can be true of almost any average. The question we always need to ask is: what is the true population that is being averaged? What assumptions are we making about this population? Are there groups we are excluding which we should be including? Does it make sense to use a single average when you are dealing with a 'mixed' population (e.g. adults vs children, males vs females). Does comparing separately calculated averages lead us to ask new questions about the reasons for any differences? Are the reasons obvious or do we need to dig deeper?
The other question is whether we are comparing the right averages.
In Australia, a serious issue is that average Aboriginal life expectancy is significantly lower than that of other Australians. However is this the right comparison? If we were to segment the two populations by socio-economic level would we find that the issue isn't race but poverty i.e. that people in lower socio-economic groups have much lower life expectancies than those in higher socio-economic groups? In other words, the underlying reason may not be racial but economic. Whatever the answer may be, it determines what sort of strategy you use to approach the issue: do we directly target health services to Aboriginal people or do we adopt a broader strategy of reducing poverty across the board?
I don't know what the answer is, but I raise this issue as just one example where the populations you choose for comparing averages can make a significant difference to what strategy you use to investigate the causes of any differences and the consequential strategies you adopt to deal with such causes.
Averages are one of the simplest statistics to calculate and this is one of the reasons that they are so frequently used. However they may conceal differences and assumptions that need to be surfaced if you truly want to understand what is actually going on.
- There were 4.3% more males than females under 31 years of age
- There were equal numbers of males and females aged 31 years of age
- There were 6.3% more females than males over 31 years of age
- 41.2% of the population were less than 31 years old while 57.4% were more than 31 years old
The answer is: nothing!
Averages are about populations not about individuals. So if you were to see a statistic such as "Males are on average 1 year 8 months younger than females", you aren't being given an answer so much as a provocation to ask "Why would this be the case? What does it mean?"
When you are surprised at an average then it may help you to surface your assumptions about whatever it was that was being measured.
For instance, if I were to ask you what the average height for a human being was, the chances are that you would say something like 5'2" or thereabouts. So it would surprise you if I were to tell you that the true figure is under 5'. I will explain this claim in a moment, but first would it surprise you to learn that short people often have lower literacy levels than taller people? Yes?
Well interestingly the reason for both of these statistics is the same: children are human beings too!
Most children are under 5' tall and most childen have lower literacy levels than adults and these two facts result in the given statistics. So if you were surprised at the claims I made, it would be because you assumed that we weren't counting children in the averages. Even if we weren't aware of it, we implicitly assumed that we were talking about adult humans.
This can be true of almost any average. The question we always need to ask is: what is the true population that is being averaged? What assumptions are we making about this population? Are there groups we are excluding which we should be including? Does it make sense to use a single average when you are dealing with a 'mixed' population (e.g. adults vs children, males vs females). Does comparing separately calculated averages lead us to ask new questions about the reasons for any differences? Are the reasons obvious or do we need to dig deeper?
The other question is whether we are comparing the right averages.
In Australia, a serious issue is that average Aboriginal life expectancy is significantly lower than that of other Australians. However is this the right comparison? If we were to segment the two populations by socio-economic level would we find that the issue isn't race but poverty i.e. that people in lower socio-economic groups have much lower life expectancies than those in higher socio-economic groups? In other words, the underlying reason may not be racial but economic. Whatever the answer may be, it determines what sort of strategy you use to approach the issue: do we directly target health services to Aboriginal people or do we adopt a broader strategy of reducing poverty across the board?
I don't know what the answer is, but I raise this issue as just one example where the populations you choose for comparing averages can make a significant difference to what strategy you use to investigate the causes of any differences and the consequential strategies you adopt to deal with such causes.
Averages are one of the simplest statistics to calculate and this is one of the reasons that they are so frequently used. However they may conceal differences and assumptions that need to be surfaced if you truly want to understand what is actually going on.
Sunday, February 5, 2012
Do they really care?
A key question that you really need to answer is:
If you continually try to refine aspects of your business that are of no interest to your customer then you may be throwing money away unnecessarily.
For example, in your written communications with your customers you may spend a lot of time and effort in choosing just the right word, in ensuring that the writing is polished and professional. Yet your customer may barely notice it. If the customers you deal with have issues with literacy or with the language (such as English) of your communications then you may need to simplify things to the most basic level, possibly using colloquialisms instead of jargon, instead of trying to make it sound like something they might read in a magazine. Even if it contains some spelling errors this could work in your favor since at least it wouldn't appear to be some standard response that is sent to all your customers.
This isn't to say that you shouldn't have a professional image. But you should focus your efforts in ways that give greater weight to substance than image.
I remember dealing with an employment service once who were very professional in their appearance and in their customer liaison, but were completely useless in almost all other respects. They were continually late with their billing, it was wrong more often than not and they stuffed around the people that they had contracted with us. A year after we ceased dealing with them we were still getting correspondence from them about their billing which they had still not straightened out. They had a veneer of professionalism but nothing beneath to back it up and needless to say they were incredibly frustrating to deal with.
Customers will forgive a bit of roughness around the edges if you deliver on the things they really value. What they won't forgive is failure to deliver, regardless of how polished and professional your image.
The message here is to put your resources where they matter and that means actually taking the time to understand things from your customers perspective. Otherwise, while you are patting yourself on the back about the quality of your communication, your customers may be seething about the poor quality of your service.
What do our customers value?On the answer to that question hangs where you need to focus your improvement efforts.
If you continually try to refine aspects of your business that are of no interest to your customer then you may be throwing money away unnecessarily.
For example, in your written communications with your customers you may spend a lot of time and effort in choosing just the right word, in ensuring that the writing is polished and professional. Yet your customer may barely notice it. If the customers you deal with have issues with literacy or with the language (such as English) of your communications then you may need to simplify things to the most basic level, possibly using colloquialisms instead of jargon, instead of trying to make it sound like something they might read in a magazine. Even if it contains some spelling errors this could work in your favor since at least it wouldn't appear to be some standard response that is sent to all your customers.
This isn't to say that you shouldn't have a professional image. But you should focus your efforts in ways that give greater weight to substance than image.
I remember dealing with an employment service once who were very professional in their appearance and in their customer liaison, but were completely useless in almost all other respects. They were continually late with their billing, it was wrong more often than not and they stuffed around the people that they had contracted with us. A year after we ceased dealing with them we were still getting correspondence from them about their billing which they had still not straightened out. They had a veneer of professionalism but nothing beneath to back it up and needless to say they were incredibly frustrating to deal with.
Customers will forgive a bit of roughness around the edges if you deliver on the things they really value. What they won't forgive is failure to deliver, regardless of how polished and professional your image.
The message here is to put your resources where they matter and that means actually taking the time to understand things from your customers perspective. Otherwise, while you are patting yourself on the back about the quality of your communication, your customers may be seething about the poor quality of your service.
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