Statistics, Correlation and Kids behavior

I wanted to touch base upon a point from Freakonomics.

Was listening to the radio the other day, driving from work. Heard that a study has discovered that there was a high correlation between waking up early in the morning and getting good grades.
This was concluded by saying, early birds achieve good grades. Sounds logical right..!!

But after reading Freakonomics, there is an other way of looking at it.
When you are speaking of correlation, consider this statistic about the cities with most number of cops had the highest crime rate i.e; Washington DC and Denver. If we conclude it by saying that cops are causing all that crime, we've certainly goofed up.
Consider this tale about a Czar who found out that the most people died in the cities with the most doctors and decided to shoot all the doctors to increase the mortality rate.

By now you must have understood the folly in the correlation between early birds and their grades.
Speaking of correlation:
When we see a correlation between X and Y, it could be one of three possibilities:
X causes Y, Y causes X or X and Y are caused by an external factor Z.

So the reason for the higher grades could be any of three possibilities:

1. The students who get up early in the morning to study, get more time to study (X causes Y).
   
2. Actually, the students who are interested in studies tend to get up early in the morning. Obviously these students who are interested in studies are going to have good grades (Y causes X). It could be foolish to wake your son up early in the morning, just expecting his grades to catapult upwards.
   
3. It could be their genes. Studies have shown that a child inherits 50% of his IQ from his parents. (Didn't say which parent, so I am assuming that both the parents are well educated.) So most of the time, the parents may be early birds themselves, which the child eventually imbibes. (External factor Z causes both X and Y)

Digressing here a bit.
It is interesting to read more about how much do parents really affect their kids. Studies show that 50% of the behavior is in the genes itself. Interesting to note a study of the children who were adopted into well educated families. The study found out that the IQ level of the adopted kids was most similar to the IQ level of their biological parents than their adopted parents.

I always wanted to find out a solution to what makes some kids enamor books while others don't. Heard from my sister that a lot of parents read books to their kids at a young age, which helps the kids form a fascination. Believed I had an answer.

Was speaking to my CEO the other day. He has read books for all his kids, while they were growing up. But only 2 of the 5 kids have enamored books. He thinks that it's more in the kid's personality. Its not easy to change that.
Hmmm.... wanna do more research on this, will update you

You gain strength, courage and confidence by every experience in which you really stop to look fear in the face. You must do the thing you think you cannot do. ~ Eleanor Roosevelt

Bring the Class to the Masses

Was researching on new product ideas, and in the meantime was reading "Freakonomics" by Steven Levitt. Stopped reading just after seeing this line, "DuPont had pulled off the feat that every marketer dreams of: It brought class to the masses.

The background: "In 1939, when DuPont introduced nylons, countless American women felt as if a miracle had been performed in their honor. Until then, stockings were made of silk, and silk was delicate, expensive and in ever shorter supply. By 1941, some sixty-four million pairs of nylon stockings had been sold - more stockings than there were adult women in the United States. They were easily affordable, immensely appealing, practically addictive. "


Further research on DuPont's miracle revealed that, "After the II World War ended the, the demand for nylon stockings grew so exponentially that the demand greatly exceeded supply for the next two years. The shortage led to several riots by impatient women who had stood in line for hours for stockings. Newspapers ran stories with headlines such as "Women Risk Life and Limb in Bitter Battle over Nylons." Nylon became far and away the biggest money-maker in the history of the DuPont company.

The basic business lesson to be learnt is that when you can create a product which brings class to the masses, you are going to revolutionize the market dynamics in your favor.

Looking back at some case studies,
The product that overnight revolutionized the Indian consumer market in 2000 was the Softy ice-cream. It based itself on the same idea of bringing the class to the masses. Pre 2000, quality ice-cream was a class product. Priced at Rs.25, it was a luxury for middle class. Students, middle class and lower middle class couldn't afford it as a regular recreation. It was considered a class product.
And then, the Softy happened. It brought the class product of ice-cream to the masses for just Rs.5. The people loved it and embraced it with frenzy. It brought money to everybody involved, from the equipment manufacturers,distributors, raw material suppliers to the mom-n-pop stores. The idea was such an instant hit, that every mom-n-pop store bought an equipment. My dad also wanted to buy one.
An other example, was the shampoo packaging. Pre 1990, shampoo was a class product. It was sold in bottles and they were expensive. Then the sachet packaging revolution happened. It brought the class shampoo to the masses for just Rs.1 It was a huge deal for the aspirer and the deprived class (Household income less than Rs.200000 per annum) who constituted 90% of the population in 1990. (The Bird of Gold: The Rise of India's Consumer Market. May-2007)
The recent case using the same principles are contact lenses. In 1999, contact lenses catered to the elite class. But starting 2000, competition entering the market and technological breakthroughs saw the prices coming down to meet the masses. And the sales just grew exponentially. (Tried getting solid numbers on this, but the report costs $3950.00. You can try one here.)


In the same breath, I would like to point out the other extreme point.
Any product that can bring class to the masses is going to enjoy huge consumer embracing, as long as it provides the core value of the product, which the consumer expects. It could be quality, reliability, service, etc.
Softy ice creams, provided good quality ice-cream, which was its core value devoid of its frills. The shampoo sachets provided the core value of the shampoo.
But a Chinese motorcycle manufacturer did not enjoy the same success. In 2002, they introduced a 100 CC bike for just Rs.20,000. Surely aimed at bringing the class to the masses, but failed miserably as they could not provide the core value which bike owners expect. It did not provide them reliability and after sales service.

Indian infrastructure hurdles

Read an interesting article in Financial Times on the realistic infrastructure situation in India and the issues which could burst the growth bubble, if not addressed. I've just added the highlights of the report. If interested, you can read the article here.

• India’s infrastructure is stretched close to breaking point.

• In the near term, India’s economic growth is going to hit a speed limit.

• India’s Planning Commission, in its approach paper to the 11th five-year plan, acknowledges the gravity of the problem and calls for infrastructure spending to rise to 8 per cent of GDP in the period 2008-2012 from 4.6 per cent. Link for India's 11th five year plan: http://www.planningcommission.nic.in/plans/planrel/11thf.htm
  

• The peak electricity deficit this year rose to an eight-year high of nearly 14 per cent, according to Morgan Stanley, leading to blackouts that forced companies to install costly private back-up systems. This is a huge disadvantage for our manufacturers, trying to compete in price with international producers with good infrastructure.
  

• Mumbai has not added a single new generating plant for more than a decade.

• India has just one per cent of the world’s vehicles but 10 per cent of global road fatalities. This owes to the fact that "The national road-building programme has slowed in the past two years, falling to just over 500km last year from 2,500km in 2005, despite soaring sales of trucks and cars."

• Indian manufacturing, despite pockets of excellence, is on the whole struggling to become competitive: India’s share of global goods exports stood at just 1.2 per cent in 2005, compared with China’s 9.9 per cent.

• Small and medium-sized businesses, which generate the bulk of new jobs in any economy, are suffering most from the lack of high-quality public infrastructure. Unless this is resolved, economists warn that India’s demographics – half the population is under the age of 25 and 40 per cent under the age of 18 – will prove a liability rather than an advantage.

• With India’s working age population set to increase by 71m to reach 762m in the next five years, the Asian Development Bank has warned that the country faces a potential employment crisis.

• As the telecoms and aviation sectors show, where private capital and management disciplines have been introduced, the results have been remarkable. It has become one of the fastest-growing telecommunications markets in the world.

• Poor infrastructure is India’s Achilles heel. But it is also the area that is receiving the most attention from policymakers and one that offers significant opportunities to private investors, both domestic and foreign.

Unless the infrastructure issue is placed high up in the priority list for the government at the expense of short term fall in GDP, many of our advantages like young population and huge size of domestic consumption could turn into a bane rather than a boon.

Leadership

Leadership is solving problems. The day soldiers stop bringing you their problems is the day you have stopped leading them. They have either lost confidence that you can help or concluded you do not care. Either case is a failure of leadership.
~Colin Pow

If you think you can do a thing or think you can't do a thing, you're right.

Henry Ford

Making people feel special

How does a person retire in a company???

How is his last week going to be like?

She says that she is retiring and will not be in here from next week. Friday would be her last day. Everyone meets her once during the day and say bye. And she vanishes…..

That is what I expected.

But this is how it happened in our company..

Gayle was retiring this week. There was a banner put up, saying there was a retirement party at break today. I was not too willing to go, put just dropped in, coz I shared a good rapport with her and I liked her professionalism at work.

What was inside the room completely astounded me. There was Gayle sitting at the head of the table. There was a huge cake in front of her. The whole table was filled with all sorts of cut fruits. People all over the crowded room. People from every department were there. Then the CEO himself was making preparations from half an hour ago, laying out the cake, checking if everything was right.

When the party started, more surprises begin to flow. I had never imagined, how special you can make a person feel, on her special day.

The CEO himself started off the celebration, by saying how he was trying to put up a speech for Gayle, and he had so many memories of her dedicated work, that the whole experience touched him. Then he brought up a photo album from 1987, the year when Gayle started working here. There was a photo of her, trying to hide her face. She was far away in the photo. The next surprise was the CEO picked up a photo, where he tried to zoom into her and then showed the picture to everyone in the plant. The same thing you do with your dearest friend. The whole experience touched everyone. Then he said a few words of how special she was to the company and how dearly we are going to miss her. All his words were expressed sincerely with a deep feeling.

The entire room was in the same feeling of missing her from next week, of not seeing her smiling face again first thing in the morning. It just touched me. Gayle was happy, people were admiring her for her work in the last 23 years. Tears were rolling, but she could not stop smiling.

Last week was speaking to some people and they were saying how they loved working here. I did not understand that. But today I can see why everyone loves working here. I was trying to see the expressions of the people who've joined this company just 2 weeks ago. They were just spell bound. They must have just walked in to blindly work for some company from 6 to 4, so that they could pay their bills. But what they are experiencing is completely different. I guess, a few must have been dreaming what their retirement party would be like.....

One important thing if you are the CEO, make your people feel special.

For Gayle’s retirement party, it hardly takes 40 mins, but if he supervises all the arrangements and does some homework, all the people in the company feel special, that this is a company, where every employee is treated as a family. And the CEO, taking special interest in making someone feel special, that could be one of their best days of her life.

If you are the CEO, you just being there just makes the person feel special. And all your people understand how special they are.

Dont kill the creativity

“People will work hard when they are given the freedom to do the job the way they think it should be done, when they treat the customers they way they like to be treated. When you take away their incentive and start giving them rules, BOOM, you’ve killed their creativity.”

"I cant understand why people are afraid of new ideas, I am afraid of the old ones." - John Cage

Asking 'why' again and again is harder than you think, but it works

GEORGE STALK

George Stalk Jr. is senior vice-president of Boston Consulting Group of Canada Ltd. and adjunct professor of strategic management for the Rotman School of Management at the University of Toronto.

May 5, 2008

Asking "why" is the basic act of probing. Searching for root causes takes strategy formulation away from the unconscious repetition of past patterns and mimicry of competitors. Asking "why" leads to new insights and innovations that sometimes yield important competitive advantages.

Asking "why" repeatedly is a source of continuous self-renewal, but the act of inquiry itself is an art. It can evoke strong reactions from the questioned. It is rarely welcomed. It is sometimes met with defensiveness and hostility, on the one hand, or, on the other, the patronizing patience reserved by the knowledgeable for the uninformed.

To ask "why" - and "why not" - about basics is to violate the social convention that expertise is to be respected, not challenged. Functional organizations in mature industries have a particular problem in this regard. But growing enterprises in new frontiers must eventually confront the reasons for their success or be displaced by competitors who see things differently.

One risks a lot to challenge the "lord" in his fiefdom.

Questioning the basics - the assumptions that "knowledgeable" people don't question - is disruptive. Probing slows things down, but often to good effect. Probing can yield revolutionary new thoughts in quite unexpected places.

Few new thoughts have been as revolutionary as the Japanese Manufacturing Technique. Toyota was the leader in its development, and over more than 40 years slowly learned to turn upside down the most basic assumptions about how manufacturing must be conceived and organized. Central to this rethinking was tireless probing.

In his book on the Toyota Production System, Taiichi Ohno, formally the vice-president of manufacturing of Toyota, cites the practice of "the five why's." He gives an example of how asking "why" five times (or more) led him through all the explanations to find the most important root cause.

It's easy to say, but difficult to practice.

Suppose a machine stops functioning.

1. "Why did the machine stop functioning?"

"There was an overload, and the fuse blew."

2. "Why was there an overload?"

"It was because lubrication of the bearing was not sufficient."

3. "Why was the lubrication not sufficient?"

"Because the lubrication pump was not pumping sufficiently."

4. "Why was it not pumping sufficiently?"

"The shaft of the pump was worn, and it was rattling."

5. "Why was the shaft worn out?"

"There was no strainer attached, and this caused metal scrap to get in."

To have stopped anywhere along the way would have ended the search before the root cause was found. And there is still value in this example of asking even more "whys." To probe to the limits is to simplify the problem to its essentials and solve one problem rather than five.

To pursue such probing takes a special, strongly motivated person, unless one makes such questioning the norm for the organization. Asking "why" five times is easy to say, but hard to do. It challenges people's knowledge and even self-respect. It can call into question their diligence and the basis of their expertise. It requires fresh thinking on all sides. Yet it's so basic to learning, to seeing new things from the familiar.

The superior must be handled with great interpersonal skill. If you face a superior try using the "five whys" by yourself, first. Then invite the superior to share his wisdom and experience to help you refine and extend your initial effort. If possible, re-visit a decision whose outcome the superior is unhappy with and work with him using five "whys" to see if the decision is indeed the correct one.

Good strategy depends critically on knowing the root causes. Finding them is often a task beyond quantitative analysis. One must look to broader frames of reference and bring basic judgment and common sense to bear. Probing - asking why - is the often intuitive search for the logic that heavy data analysis can miss or bury.

Asking "why" is a qualitative act. It is different from quantitative analysis, but the one gains power from the other. It propels analysis forward by raising new questions to be subjected to rigorous analysis. It takes us beyond the numbers to new answers, new solutions, and new opportunities.

Asking "why" five times is easy in concept, but harder in practice. It can be very rewarding. Why not do it?

THE POWER OF WHY

Asking "why" can raise the questions that are fundamental, but not necessarily answerable through rigorous analysis. These are the basic questions of leadership and common sense. They are the search for "the point."

For example:

Why do we continue in this business?

Why should anyone buy this product?

What will prevent competitors from matching us?

What will we do then?

Why are we making so much money?

Why won't it eventually come to an end?

What must we do now to prepare for or moderate that change?

These sorts of probes search for the bedrock reasons for value and advantages to test how enduring they may be. They ask whether the shape and character of the business and its strategy make sense.

My personal experience says that people react very aggressively when you question their basic assumptions. In fact they assume their basic assumptions as their beliefs.
This technique would work a bit better, when you step down a bit in the beginning and explain that you have some questions to ask, that do not mean you don't believe the system, but these questions just help you to understand the topic better. You will not ask them, if they don't want you to.
When you make a candid confession like this, people embrace you a bit more and are not so averse to your questions.

Give the praise in writing

Leonard Lauder

• What's the best advice you ever got?

Chairman, The Estée Lauder Companies

The best advice I ever got came from my mother, Estée Lauder: She believed that if you had something good to say, you should put it in writing. But if you had something bad to say, you should tell the person to his or her face.

I learned this lesson the hard way. I'm chairman of the Whitney Museum of American Art in New York, and several years ago, I was angry with one of my trustees. I wrote a letter and signed it. But then I decided not to send the letter, and left it on my desk over the weekend. The following Monday I was out of the office, when a temp saw the letter and mailed it. The trustee got very angry and resigned from the board. To this day, writing that letter is something that I regret.


Truly golden words to be remembered.
I've read a beautiful article earlier.
A company owner, while visiting his steel plant, walks around observing things. He notices how a worker has a deep cut on his leg and is still lifting his heavy loads without complaining. He gets touched by the scene. At the end of the month, with his paycheck, he attaches a piece of paper with a simple line of praise for the worker.
He forgets it and things move on. He rises to higher levels and completely forgets about the incident.
Several years later, while inquiring for an address he gets lost and has to stop and ask for directions. He stops at a small old home. After few knocks, an old lady opens the door. Seeing his impeccable attire, she respectfully invites him in and goes inside to fetch some water. The owner wanders around the small room, and sees something on the wall that makes him stop. On the wall he sees his letter in his own handwriting, framed beautifully.
The old woman comes out and explains that it is the single most treasured thing for them in the entire house and very proudly explains how her husband got it.
The owner comes out of the house and almost has tears in his eyes trying to comprehend how a small hand written note of appreciation is the most treasured item for a person and his family. He vows to always write his praises down, so that people remember their moments of appreciation.

Human nature has a craving for appreciation. No one would argue that. An employee works best when he feels important in the organization. When my work is appreciated, I almost feel like I have springs in my shoes. I just have more energy to work than any source could ever give me.

Everytime my boss says, "Raghu I like the way you have done this project, good job" I feel good for the second. But I always wished for having something in writing. My previous boss, with whom I worked as an intern, gave me two performance reviews in writing. Those two sheets have been treasured ever since and I feel so proud looking back at them.

My personal experience also emphasizes the same. My most treasured items are hand written letters from my sisters. We may have shared innumerable gifts over the years, but everything loses its charm, compared to a handwritten letter from her.

In business again, the most valuable thing you could give to someone working under you would be a hand written letter of appreciation. Another rule for me would be: Always have written performance reviews.

I like other important point mentioned by Leonard: If you have a negative thing to say, say it on the face. So that he would forget it soon.

Search for people...who can teach you

Andrea Guerra

• What's the best advice you ever got?

CEO, Luxottica

The piece of good advice came from my first boss, when I was a young man starting out on my career. I was working at Marriott. He told me that in your first years of business life, you shouldn't go chasing after fancy titles, but try to find people who can teach you something.

Business deal

Joanna Shields

• What's the best advice you ever got?

President, Bebo.com

I go back to things my dad said: "Your career is long and the business world is small. Always act with integrity. Never take the last dollar off the table." In my dealings to sell Bebo [to AOL], this advice was critical. You can always do a slightly better deal, but that incremental dollar or windfall is not worth creating an imbalance that affects the relationship. You have to have the intuition to know when to say, "I'm going to make sure that we walk away feeling like we've both done well."



Always try to end up with a win win situation, if you want to be in the business for long.

Golden words in the beginnning of your business

Charlene Begley

• What's the best advice you ever got?

President and CEO, GE Enterprise Solutions

I was about to transition to a new role, heading GE Fanuc Intelligent Platforms, and Jeff Immelt, before he became CEO, gave me this advice: Spend a ton of time with your customers. Especially when you're new, the first thing you should do is go out to customers and ask them how you compare with competitors, how your service is, what they think of your products. At General Electric, people tend to get enamored with your title, and people want to look good in front of you. Customers will give you the reality. They don't care about your title, they just want value. You'll never get anything straighter than from a customer.


Just looking back, that was a key to Dad's supermarket success also. He was very close with the customers and most treated him as a family member rather than a businessman selling his goods. So he unknowingly always had a pulse for their preferences and priorities.

Be the most humble, and you will be on top

Sam Palmisano

• What's the best advice you ever got?

Chairman and CEO, IBM

Some of the best advice I ever received was unspoken. Over the course of my IBM career I've observed many CEOs, heads of state, and others in positions of great authority. I've noticed that some of the most effective leaders don't make themselves the center of attention. They are respectful. They listen. This is an appealing personal quality, but it's also an effective leadership attribute. Their selflessness makes the people around them comfortable. People open up, speak up, contribute. They give those leaders their very best.


Even when you are speaking to the operator on the floor, give a lot of respect and give them the credit. Be as selfless as possible.

People follow only those leaders willfully, who are most concerned about the growth and well being of their people and his main aim is be the servant of his people.
If there are five friends living together, and its lunch time without any lunch cooked, the person who takes the pain to cook himself, is the one who is most respected.