Monday, February 12, 2007

What's A Few Seconds Among Friends

Once there were three physicists. They were standing next to a tall skyscraper. Suddenly, a loud voice came from above, shouting, “Watch out! I’m going to jump!” The physicists looked up and saw a man standing on a ledge of the skyscraper looking like he is about to jump.

One physicist turned to the others and remarked, “I wonder how long it would take for the man on the ledge to hit the ground after he jumps.” This started a heated debate. The following comments were made by the physicists:

“Well, speed equals mass times acceleration, so if we can determine the exact mass of the man on the ledge and the exact height of the building, we could get an answer. Maybe if I go to the city records, I can find a blueprint showing the exact building height. While I’m doing that, perhaps one of you could kindly ask the man what his mass is.”

“That’s all well and good, but I think the weather will affect your calculation. It is very humid and windy today. This will alter the speed. I need to check with the weather bureau for precise conditions.”

“And don’t forget about that coat he’s wearing. It is a big trench coat. I suspect that when he jumps, the coat will fill up with air and act like a parachute, slowing him down. Perhaps I should run a few models on my computer with various coat-billowing scenarios.”

So all three physicists went off and did serious and extensive research on the problem. When they finally got back together again at the base of the skyscraper, they all had come to different conclusions. One predicted 5.34 seconds, one predicted 6.02 seconds and the third predicted 6.53 seconds. This started another series of arguments as to who was right and why the others’ analyses were flawed.

Finally, one of them said, “The only way that we’ll ever know is through experimentation. Let’s time how long it takes the man on the roof to hit the ground after he jumps.” They all agreed, but when they looked up, the man was no longer on the ledge.

As it turns out, while they were out doing research, the man on the ledge jumped and hit the ground in 5.7 seconds. Police and the ambulance service had already taken care of the problem before the physicists got back. Unaware of what happened, the physicists turned their attention to ponder another problem—why the sidewalk by the skyscraper was so dirty.

Sometimes, in our attempt to precisely understand a problem, we get caught up in the research and the minutia, missing the big picture. The big picture in the story was that a man was contemplating a jump to his death. The physicists had the opportunity to try to stop the tragedy. They could have tried to talk him out of it. Or they could have called some experts to come in to help. Or they could have tried to find a net to cushion his fall. Instead, they wasted time trying to get more precision on the phenomenon.

In the end, it doesn’t really matter if the man hits the ground in 4 seconds, 5 seconds or 6 seconds. In the end, what matters is that a tragedy was about to occur and they did nothing to stop it.

This same thing happens in strategic planning. People can spend months (or maybe years) trying to make the forecasts of the future as accurate as possible. While all of the time is spent on gaining this extra precision, the world keeps moving forward. By the time one reaches the conclusion, it may already be too late to take any action. The phenomenon one is trying to predict may already occur, and you are unprepared with a strategy for dealing with it.

You can see this in rapidly changing environments, like digital entertainment and mobile phones. By the time the market settles down and you can accurately predict the outcome, it will be too late to develop and implement any sort of strategy to become a major player in that area. The rules will already be in place and the consumers will have already made their choices of who is going to win. You may have accuracy on your side, but the competition will have the profits.

Precision can make us feel more comfortable. After all, isn’t it risky to act with less than perfect information? Even if you cannot achieve perfect information, isn’t it true that the more precise and accurate your findings, the better off you are? Not exactly. There are many reasons why the pursuit of added accuracy can be detrimental to your strategic health:

1) Nobody knows exactly how the future will unfold. There are too many variables. At some point, further research will not help get you any closer to understanding the future. You just have to make some educated guesses.

2) Speed can often be very critical. Windows of opportunity can shut quickly. Others can get the advantage quickly if your retaliation is slow. Time spent in search of excessive precision can be time not spent in timely action.

3) In your search for details, you can lose sight of the big picture. You might even end up looking for precision in the wrong direction. It’s like the old saying of understanding a tree but losing sight of the whole forest.

4) Precision can give the illusion of knowing more about an uncertain future than you really know. It can give you the false confidence to move forward boldly, without giving any further scrutiny to your situation.

So, if too much precision is potentially dangerous and no knowledge is dangerous, what is a person to do? The answer is to substitute precision with assessment. Assessment involves knowing three things:

1) DIRECTION: Which direction are the trends heading? Higher or lower; bigger or smaller; better or worse; stronger or weaker? This can apply to consumer beliefs/behavior trends, competitive trends, technology trends, economic trends, etc.

2) MAGNITUDE: How far is it going in that direction? Big or Really Big; a Little Better or Much Better; a Little Stronger or Quite a Bit Stronger?

3) SPEED: Is the trend moving in the direction to this magnitude quickly or slowly? How soon will the trend manifest itself?

The key in the whole analysis game is to research until you are reasonably sure that further research would not make a major difference in what you choose to do. Then stop the research and do what you choose to do. In most cases, if you know the direction, magnitude and speed of the trends around you, then you know enough to do the right thing.

In the story, it was irrelevant whether the jump from the skyscraper would take 5, 6, or 7 seconds. No matter how many seconds it took, the key facts were already known:

  • Direction: A movement towards injury—a bad direction.
  • Magnitude: Very High, Very Severe—nearly certain death.
  • Speed: The likelihood is that it will happen very soon, and when it happens, the event will occur very quickly.

That was enough knowledge to take action to prevent the man from jumping. One didn’t need to research the building height, weather conditions, or the air resistance of a coat. One needed to act immediately.

This is also true in business. If you can quickly assess the direction, magnitude and speed of what is going on around you, then you can move forward. In fact, if you continued on and built a big fat binder full of numbers to three decimal points, it is unlikely that your conclusion would meaningfully be any different than if you had stopped when you knew the direction, magnitude and speed.

When in need of a strategic decision, before diving into a lengthy research project with lots of precision, ask yourself three questions:

1) Direction: Is the trend going Up or Down?
2) Magnitude: Is it happening a little or a lot?
3) Speed: Is it happening quickly or slowly?

In most cases, this will let you know enough to get your company moving in the right strategic direction (and save a lot of precious time).

The physicists were so busy gathering data that they didn’t even know that the terrible event actually occurred. The clean up was so quick that all they saw was a dirty sidewalk. If you miss out on acting timely due to busyness, your business will quickly disappear as well, leaving little more than a little smudge in the memory of time.

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