Don’t rest on your achievements

KONICA MINOLTA DIGITAL CAMERA
Not so smart phone – but good for making calls

Over the weekend there has been a lot of press about Liam Fox’s comments that British business leaders are more interested in playing golf on a Friday afternoon than seeking international trade deals.

To my mind the comments from the Minister for International Trade demonstrates how out of touch politicians can be with the reality of running businesses both large and small. Long boozy lunches and taking Friday off to play golf with the chaps is a very old-fashioned view of the world of work.

However misguided I think he is, there may however be a small grain of truth in what he said about resting on our achievements of the past.

Last week Apple launched the iPhone 7 and it is hard to remember that prior to 2007 there were no smart phones or at least the smartest phone on the block was Blackberry. Hmm where are they now?

Apple have totally dominated, in financial terms, the smartphone market since its inception. But Apple wasn’t always very successful. In 2001 they lost US$25m and their net profit margin was 1.1% in both 2002 and 2003. Hardly results to boast about.Apple Profit vs iPhone SalesWell everything changes and nothing stays the same. Apple’s iPhone sales have probably peaked and look like falling back by about 15% this financial year. This isn’t a surprise. After all you can’t continue to sell 230m phones a year and expect that market to continue forever. Everyone who wants an iPhone pretty much already owns one. So the desperate search for new revenue sources is on, hence Apple’s move into music, TV, watches and perhaps even cars.

This process equally applies to all businesses both large and small.

Look at Marks & Spencer’s inability to compete in clothing now or Tesco’s problems with their out of town stores (and their alleged £326m accounting fraud to cover it up). I used to buy clothes in River Island many years ago and then their clothes, well became a bit rubbish (for me anyway). Recently I have gone back to buying clothes from them because the quality is right, the price point spot on and the style is perfect for me. Who has changed – River Island or me? It doesn’t really matter. Change is all around us and companies need to change and adapt as their customers change.

The world moves on, clients want different things, products and services become out of date.

If you don’t change then someone else will
seize your opportunity.

 

Small business owners – getting on with the job

BrexitFollowing the vote to leave the EU in June, you might have thought that Armageddon was just around the corner. We are doomed, the economy will crash, it will take years to negotiate an exit, EU countries will punish us with high tariffs….

But Britain’s small business owners, in my experience, have pretty much ignored the background noise. In fact they have been …

  • chasing up leads & identifying new potential customers
  • keeping an eye on costs
  • monitoring profit margins
  • training staff to develop their skills
  • increasing value to clients with new products and services
  • building relationships with other organisations
  • looking for new suppliers
  • providing excellent customer service
  • checking out competitors
  • looking at export markets now that sterling has fallen
  • adjusting prices to reflect input costs from overseas suppliers
  • doing their accounts
  • paying bills and salaries
  • dealing with issues
  • answering the phone

…and working hard to provide an income for them and their families.

In fact small business owners know the only person they can rely on is themselves and their staff. They don’t wait around for governments to make decisions or for EU negotiations to start…

They just get on with the job

P.S. My business is a small business and I have been getting on with the job too. I have done pretty much all of the above AND wrote this blog entry.

Self-driving Terminator cars will kill us all!

Google Self Drive CarHow we make decisions can depend on a wide variety of things – how we feel at the time, what else is going on in our lives and, the granddaddy of them all, looking for information to confirm what we already believe (sometimes called Confirmation Bias, but I prefer to call this the “Ah-hah I told you so” bias).

There is another common error we make when taking mental shortcuts. We don’t like to consider things too rationally (because it hurts too much). Our brains like to seize on “facts” which we can then use to make decisions quickly without having to do a lot of thinking. But often these facts are not actually facts at all. Marketing companies understand this very well.

Look at ads for beauty products, anti-aging creams in particular. Appear younger, reduce this, enhance that and you too can look like this fabulous model who has been in professional make-up for 3 hours. But look at the small print and these ads will say something like “72% of 97 agree” (this is from a current ad by a French cosmetics company). So they did a test of 97 people and 72% agree so 66.24 people think it works. Hardly scientifically robust statistics but it’s the headline “facts” they want us to remember.

So politicians and marketers love to use these factoids, but it can also lead to poor decisions or perceptions in the real world as well. Recently I saw the following headline on the BBC website:-

Google’s self-drive cars had to be stopped from crashing”

Wow those robot cars are going to kill us all, I’d never get in one! This might be a “factual” shortcut to believing that self-drive cars are four-wheeled terminators but is this a short-cut to a bad conclusion? Here are some facts about the number of times a human has had to intervene in California in 2015:-

Google             13
Nissan           106
Mercedes     1051
Delphi           405 (& no I have never heard of them before either)
Volkswagon  260
Bosch            625 (yes I thought these guys made tools and home appliances)

Does that make it any clearer? Well it seems to confirm that our first response was correct. I mean look at how many times they almost had accidents – 2,460 times. Actually it is how may times there was  a human intervention not a potential accident, a subtle but important difference.  Once you add in the number of miles traveled in each test then things become a little clearer :-

Google             13     424,000 miles
Nissan           106          1,485 miles
Mercedes     1051          1,739 miles
Delphi           405        16,662 miles
Volkswagon  260        14,945 miles
Bosch            625             935 miles (perhaps these guys should stick with tools & appliances)

So Googles cars have had to be stopped by human operators 13 times in 424,000 miles of driving. I wonder how often I had to slam on the brakes because I wasn’t paying attention or someone cut me up or pulled out without looking? Probably more that once every 32, 000 miles or so. I live on a small crowded island, so I am guessing I have to do this every 32 miles or even more. In fact, two of the incidents reported by Google were because of traffic cones and the other 11….well would there have been an accident? Who knows?

So perhaps Google’s self-driving cars aren’t so scary. In fact it is estimated that humans have 4.1 crashes per million miles in the US (estimated because minor accidents are not always reported to the authorities). Google are running at a lot more than that (30 per million miles) so they have a ways to go. But I am pretty sure humans are not going to be wiped out by terminator cars.

This decision short-cut is unhelpfully called the Availability Heuristic, not exactly a catchy or intuitive name. So I prefer to call it the Schwartzeneggar Shortcut.

Postscript: One of the case studies I use in training is Tesla Motors, the US all electric premium car company. I test drove their Tesla Model S recently during which I used their autopilot feature where the Terminator…sorry the car, did the driving. It is very unsettling to start with but after a while you get used to it. I suspect that in 20 years time I will enjoy a drive where I can sit back, relax and have a glass of wine while the car does the driving.