Archive for June, 2014

Using “Little Data” to Gain a Competitive Advantage in Cost Controls, Marketing, Sales and Product Development

How Developers, Managers, CFOs, and Sale and Marketing Executives can Affordably Determine Competitive Advantages from the background Noise of Claims, Counter Claims and FUD

Introduction

 

We are all becoming familiar with the concept of “Big Data”. We already have experienced the intrusiveness of “data mining” be it from the grocery store that sends out targeted coupons, or other sources that seem to know more about us than we might want.

 

“Little Data” concerns the plethora of information existing and transmitted throughout the embedded industry. If surveyed properly, we can learn a lot of what developers are doing, using, liking, disliking, where they are located, what tools, chips, OSes, etc. they are using, and what their experiences – good and bad – have been. When combined into a tool we call the EMF Executive Dashboard, this information can be efficiently mined to determine many interesting aspects of the embedded marketplace, including comparative costs of development between operating systems (including a comparative analysis of the costs of using open source software and free Linux compared with commercial OSes) and determining whether modeling offers a cost savings as compared with similar developments that don’t use modeling..

 

Pick up any journal or read any “market research” paper and one can be left wondering. Is Open Source software really “free”? Is it better than commercial RTOSes? Does free Linux offer a cost savings over commercial Linux software or commercial RTOSes?

 

How does a senior financial manager or development manager gain insights into cost savings or better design outcomes? How is development cost measured?

By upfront cost of tools and software? Or can it be measured by total cost of development, cost of late delivery, time-to-market – or by other measures?

 

Who can managers and executives trust? Can a market research director who has never managed a real P&L or met a payroll really offer value and insights based on internal surveys and personal interpretations? What is the real cost of knowledge and is it of value?

 

Is there a tool that would enables managers or financial executives to look at the marketplace from their personal perspectives – or must they dependent on the graphs and tables published (or purchased) by journals or market research organizations? Moreover, the real issue is whether these managers or executives can test their vision of corporate reality against the underlying reality of the embedded marketplace.

 

The answer is YES and we will illustrate how it works.

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The Concorde Fallacy

And other reasons why Embedded Managers, executives and CFOs Make Avoidable and Counterproductive Marketing Decisions

Asking the Important Questions

 

A Related Perspective:

 

I asked my colleague Steve Roemerman, CEO of Lone Star (a highly respected consulting company to business and to the military) and former senior VP at Texas Instruments (TI) and president of Raytheon Dallas, to review this paper from his perspective to see if he was experiencing similar encounters. He replied as follows (with his permission):

 

“It is ironic that you sent me this while I’m looking at some research on psychological effects related to “Prospect Theory” for some work we are doing on modeling how companies bid in auction situations. There is something over 150 named biases, fallacies and other effects related to cognitive errors in decision making. The nature of humans is to make flawed judgments choosing what to consider, in the way we gather what we’ve chosen, and how to use the data we get. It is nearly impossible to do your own research and build your own models. So, insourcing this kind of work has its limits.

 

“To me, the Dashboard is a unique value proposition, which makes the inside/outside distinction less stark. It makes the internal team more reliable, and provides them unbiased data to use, or to contrast with their own findings.

 

“I had lunch with the head of strategy for Wal-Mart. I asked him about their modeling for holiday sales. This is THE most important analysis for any retailer. He told me they run 5 – 7 different models each year. Two of them are Wal-Mart internal tools. He said they think they are the best in the world. I asked why buy the others if you have the best. He told me they valued the contrast, and they knew that even the best in the world is not the same as “always right.”

 

 

And Now the Rest of the Story

 

As a matter of background, Dolores is a retired teacher who specialized in data-based development of educational literacy programs. Having more than enough credits to gain a Ph.D. she chose not to waste a year writing a thesis as she chose to be in the classroom anyway. She has spent the past eight years learning about embedded technology. In short, she’s no dummy.

 

Being a curious person she would often ask vendors such questions as:

 

  • How much do you spend on your marketing efforts?
  • Where do you get your data?
  • How many people do you pay to get the data for you?
  • Why do you think that speaking to a few customers actually gets you the market insights on which your company depends?

 

She would then ask them why they are willing to spend so much money on internal marketing assistants when they can get comprehensive data and a tool by which they can examine the marketplace from their own perspective. They can get it all for around $1000/month.

 

They usually say that they don’t have a budget for this. Dolores was having none of this. She would constantly badger me with the obvious question: Why would such highly intelligent and experienced folks waste money and potential markets and ignore data shared with them that has immediate implications to their business? The 2nd most offered excuse we heard from marketing directors and VPs was “I really don’t have the time to look at the data”. “How then”, she would ask, “Can you do your job effectively?”

 

I confessed that I couldn’t explain it – and many such professionals are friends and colleagues who love the data but “don’t have time to address it”. Dolores questions why this wasn’t included in my MBA program and I have no good response to the questions from a results oriented educational professional.

 

Recently, I was reading the new book (Think Like a Freak, William Morrow/Harper Collins) from my favorite economists Steven Levitt and Steven Dubner (of Freakonomics fame) that gave me some ideas that I immediately discussed with Dolores. After thinking about it she said that it made sense to her and might explain why things are as they are.

 

She encouraged us to write about these thoughts to share with our friends and colleagues (we are too old to care if some don’t agree). So we broke it out as follows – we encourage feedback of all types.

 

  • Concorde Fallacy – or why is failure preferable to admitting a mistake and changing direction
  • Going Against the Facts: If one is presented compelling information-based data that shows the best options for success, why are they frequently ignored?
  • The plural of Anecdote is NOT Data – or why case studies are an easy way to explain away poor sales. There is safety is being able to point to meaningless information and justify going the same direction as everyone else
  • Secrets of Data Acquisition: No data is better than bad data – how surveys and case studies can mislead and how to get the best information out of them

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