Monday 23 June 2008

Business schools' annual reports

Business schools professors shout themselves hoarse about the importance of standardised scores (the only score that matters in marketing is Net Recommenders) and scoring methods (to compare Company A's profits with Company B's, one must first be sure that both were calculated in, more or less, the same way). 

Very right.

But shouldn't they begin at home, by agreeing on standard methods of measuring success, and even go a step further to issue fairly detailed guidelines of how these figures should be used? For instance, students interested in a career in marketing should look at scores X, Y and Z, whose weights are a%, b% and c%, respectively. 

Considering that most school sites are very similar, education agents have self-interest in recommending one course over the other (How do we know they don't get commissions and only fees?), and magazine ratings are unreliable (No 1 in list A doesn't exist in list B), and all sorts of rumours make their rounds, candidates cannot be blamed if they are totally confused about where to go. 

On the face of it, it is not in the school's self-interest to help, obviously, given the immense asymmetry in information. But do we have conclusive proof that this is indeed so?  

It goes without saying that true excellence cannot be compared, even less quantified. However, that is as true for the marketplace as the academic ivory towers. Why shouldn't the ivory tower dwellers practise what they preach?

On second thoughts, two scores are readily available: first, the application fee, and second, the tuition fee. The number of publications by students and faculty may be useful too, particularly for the more academically inclined. But are these readily available and easy to collate? Can't college associations make it mandatary to publish certain data, and make the data accessible to everyone with, say, a GMAT score? 

By way of the movies

Freakonomics has an interesting piece on research into baby names in California. In a nutshell, the research finds poor, under-educated, black single mothers 'act black' while naming their new children, which may be indicative of the way they'll bring up their babies.

It also says names travel down classes, that is, a name becomes popular among the rich before it becomes popular among the poor, by which time the rich decide that it's become 'down-market' and abandon it, unless they want to project a 'regular guy' image.

It'd be interesting to find out the role of popular culture, especially movies and tv shows, in the names' transition. Do names that become popular among the rich also become popular among screen characters, via whom they reach the poor? Or does the janitor pick up names from the bosses' doors?  

(Do screenwriters name characters after their friends or their friends' children? If it is the former, one should expect a reallife-to-screen shift to take a few decades; if it is the latter, the gap should be far shorter.)

A big question is why can't we get such interesting research and books in India? Is it because we are too busy making a living? But interesting research provides a good living? Or are we plain stupid? Or made stupid by our rote-and-rot education system?

Tuesday 17 June 2008

Que sara sara

Reading up about applying for MBA programmes, I notice that two of the most criteria are (a) does the candidate demonstrate leadership and (b) does he know exactly what he wants out of his career.

Both look peculiar, particularly the second. Business writers never tire of saying that change is the only constant, and that old-fashioned concepts about career are outdated.

If this is indeed the case, why is an applicant supposed to know where he'll be two to three years from now? Shouldn't the course help him discover his strengths and weaknesses and decide? Presumably the candidates, with perhaps the lone exception of entrepreneurs, are familiar with only one or two aspects of business, and most of the mandatary material is likely to be completely new to them. (For example, an engineer may know nothing about HR, and an anaesthetist, nothing about managerial accounting.) How would they know if they won't find any of these subjects interesting?

My problem with the first is that it biases the selection process towards proven leaders. On first sight, this sounds ridiculous because management schools are supposed to produce leaders. But what does 'leader' mean, a leading practitioner or a leader of men? The two can be quite different persons, especially in professions where motivating team-members is not the principal qualification.

For example, a fantastic market analyst may be a third-rate team leader. In spite of his limited man-management abilities, his team may deliver quite smoothly, even spectacularly, simply because they don't need too much leading.

Or is the insistence on proven leadership ensure that the largest number of graduating students end up in leadership positions, perhaps the best advertisement that a course can hope for.

Why, then, bother? (The grapes aren't sour yet, because I haven't started applying.) I suppose because what's good for MBAs and their schools may not necessarily be the best for business as a whole, especially is change is really omnipresent, and leading the forces (“Go marine go!”) may be a trifle old-fashioned in the Knowledge Economy.

Monday 9 June 2008

Tipping point

An investment advisor argues that our giving tips at the end of the meal is evidence of our being wrongly wired: We should give tips before ordering, to insure promptness (during the forthcoming meal).

While we're surely wrongly wired, we're probably right in tipping after eating.

The waiter knows that almost everyone tips; we know that the waiter knows.

Further, both parties know how much is expected. If the service is satisfactory, the bill isn't mid-size (for the restaurant in question), and the patron is normal, the tip is in the close neighbourhood of 10%.

If the waiter slips, the patron can punish him by giving substantially below 10%, giving a token tip, or not tipping at all. If the service is extraordinary, it may go up a little, but not much.

If the patron is a regular, the waiters even know the ups (rewards) and downs (punishments), in percentage and absolute terms, they can expect.

In such a situation, where both parties know exactly what to expect of each other, withholding the tip till after the meal is the only threat that the patron can exercise (to insure promptness).

Thursday 5 June 2008

Awards and the graveyard

It is common knowledge that ad agencies live on awards, and only the very untalented and shameless say anything against them, more so since 'research proves that award-winning ads work actually work'.

As a certified loser, I can dare.

Let's start by looking at this research, by Donald Gunn (gunnreport.com) actually says. I'll paraphrase his article, Do Award-Winning Commercials Sell?, which you'll find in How Advertising Works (edited by John Philip Jones).

Dunn investigated 200 of the most awarded commercials of 1994-5, which between them had won 1,483 awards around the world. He found that:
  1. 174 (87%) 'were associated with marketplace success'.
  2. 119 'achieved or surpassed' objectives in terms of 'specified increases in sales value or sales volume or share'
  3. 55 were successful against 'attitudinal or awareness or image-related goals'
  4. For more than 50, over 25%, the level of business success was 'astonishing'
  5. On comparing the data with that from his 1994 study, he found the results 'remarkably similar'.
By the 1996 data, 72.50%, or 3 out of 4, of the commercials were successful. Overall, the success rate is 86.5%.

Which is great because, according to Gunn, “In any given market category over a given period of time, what tends to be happening on average is that about one-third of the brands are going up, one-third are going down, and one-third are holding. The 86.5% success record found in this study is more than 2.5 times better than 33%.” (My emphasis.)

In short, we have clinching proof that awards are not only good for egos, increments and promotions; they also do good for clients' businesses. It's win-win!

So what's wrong? Plenty.

First, the survey suffers from the same defect as the The Millionaire Mind, a book that Nassim Taleb (of Black Swan and Fooled by Randomness fame) calls the stupidest book around.

This book, after examining the traits of some extraordinarily rich guys, declares that one thing they have in common is a big appetite for risk. In doing so, Taleb points out, it most conveniently ignores the 'graveyard statistic' of multitudinous risk-takers who did not get rich but ended in financial ruin. Had the author of Millionaire Mind taken this static into account, he'd have probably concluded that taking risks, in spite of the stupendous returns it sometimes fetches, is unjustifiably risky.

(I haven't read The Millionaire Mind but Dr Taleb's analysis is good enough for me. That places me on the same footing as Gunn's disciples, though with one redeeming difference. I'm painfully aware that I'm taking something on face value.)

Gunn ignores the graveyard statistic of award-aiming ads which didn't make it to the podium. At the very least, he should have looked at ads entered for awards instead of just the super-winners.

The real peeve of the sour losers is not against the award-winners, whom they are wildly jealous of, but the triers. In other words, we feel that awards pickle impressionable minds and pulls the entire industry off-target.

Also, the very fact that these ads surpassed marketing goals hints at the possibility of there being more aims than creative excellence in their commissioning. While we may conclude that creative excellence didn't harm, can we be as sure that it helped? Did it make the critical difference?

As an advertising practitioner with a dozen years' experience (admittedly, in the Dark East), I can vouch that ad campaigns are rarely backed by well-thought through marketing plans and quantified goals. So Gunn was, in any case, comparing positive anomalies.

Last, but not least, he picked commercials, which form, to this day, a small fraction of the ads that are entered for awards or win them. There are far more award categories for print. The reason is very simple. While TV commercials probably account for the lion's share of overall ATL marketing communication spends, print makes up the numbers.

I'm sure advertisers and agencies think far harder and longer before deciding to make and run a commercial than they do when they have to decide on a press ad.

Plus, scam press ads are fairly common. Even the most renowned agencies indulge in this sin. Ads are run in publications that exist in name alone, to fulfill an award entry criterion. (Think state-funded 'art movies' made solely for the awards circuit, and not for commercial release.) The equivalent for TV commercials is unheard of, perhaps because it is well-nigh economically impossible. Again, the choosen medium points to the possibility of there being more than creativity at work.

But sour grapes apart, why do I rant? Partially, because it's my favourite passtime. But I rant because I genuinely believe that the ad industry, by making awards the sole yardstick of creative excellence, does itself a disservice. By 'overvaluing' genius, it shuts out craftsmen to the extent that it now faces a crisis for the latter.

Tuesday 3 June 2008

For heaven's sake, can't you dig?

In this week's (June 9) India Today, Ambreesh Mishra (Birth of hope) writes, “According to official figures in 2004, almost three-fourths (74 per cent) of the total deliveries in the state took place outside medical institutions, in dangerous circumstances under the guidance of ill-trained midwives.

As a result, maternal mortality rate was 498 per lakh and infant mortality rate was 76 per thousand.

The figures were the highest for any state in the country and according to an official survey, below average ratings on nearly all human development indices confirmed the status of Madhya Pradesh as a sick state.

However, the launch of two major initiatives—Janani Suraksha and Janani Express—has helped bring about a change.

While maternal mortality rate is down to 354, infant mortality rate has declined to 66, as per 2008 figures.” (Emphasis mine.)

This should be good news, yet why do I keep seeing a NGO aunty making a pious speech in a 5-star hotel's conference hall, the corrupt babu and evil doctor licking their fat lips in the back rows, while mothers and children continue dying?

Because I cannot trust the numbers. As fractions, they are very small. In percentage terms, the maternal mortality rates are 0.498% and 0.354%, and the infant mortality rates are 7.6% and 6.6%, for last year and this year, respectively. Can we, just by looking at the figures, say that things have started changing for the better?

And the journalist gives no clue about the nature of the research that produced them. Surely, a sample of a lakh (100,000) was not surveyed, nor a sample of exactly a thousand. What are the ranges between which reality lies?

What is also interesting, and probably worrying, is that the infant mortality rate was 15 times the maternal mortality rate last year, and is 19 times this year. Why is this so? The article doesn't tell us.

Size of direct marketing industry in India

I did some Femi calculations, which are at http://spreadsheets.google.com/pub?key=pM63eRG2NCQi6YsR03FUpIA. The estimate is $ 151 billion! I'm going horribly wrong somewhere.

Why is Jobs the Messiah?

What's common between William Blackstone, Henry W. Seely, Steve Jobs and the nameless soul who invented cake mix?

They all came up with things that made machines easier to handle, and tedious tasks easier. Blackstone invented the domestic washing machine as a birthday gift for his wife; Sheely came up with the electric iron; the inventor of the cake mix did away with the code (“Look darling, no recipes!”) and Steve Jobs... we all know what he did (Incidentally, what did he do?)

But why is Steve Jobs the second coming of the Saviour, while other inventors rot in relative obscurity?

Take your pick:
1.Steve Jobs is Christ with a haircut.

2.When he was in India as a hippie, he saw Mughal-e-Azam. Dilip Kumar showed him how you could turn a complete loser into an idol by just saying the right things, that too in a melodrama that owes Parsi Theatre than Moghul history. Salim (Jahangir) gets thrashed by his daddy, rescued by his mamu, and can't even bed with the girl, though he's legally entitled to. (In real life, he was henpecked husband and a worse father than Jon Vogit.) Yet he's the hero. Presentation matters. That's the key to the stockmarket stardom. Lesson learnt, Steve heads home and mesmerises Yankees thereafter.

(I hasten to add that Mughal-e-Azam is one of my favourite films. I find absolutely nothing wrong in enjoying melodrama. We are a melodramatic people. So what?)

3.The 9-to-5 man is eternally grateful to Steve for simplifying the most complicated thing he ever had to learn for doing his job. Till the computer came along, all he used in office was pen and paper. The typist typed; the secretary filed; the telephone operator handled called; while he dictated, signed and pontificated. There other threats of complexity in his life, the camera and the car, had long been simplified (made 'user-friendly') to the degree his wife could use both! The computer made him look bad; GUI made him look good again.

4.Apple hit the ad world, and by extension the brand-building universe. He became a case study. Just as the loyalty programme industry, which has only three case studies – (a) a Tesco case study (b) another Tesco case study and (c) yet another Tesco case study – brand gurus believe in recycling. Most studied in Calcutta University, which is why their class notes haven't been updated in the last three decades (1984 was in 1984.). If it ain't broke, why fix it?
Also, while unearthing deep philosophical links between the Apple, the iPod and the iPhone, they completely overlook the fact that almost all successful home appliance, electronic and electrical appliances companies have multiple products, without the advantage of philosophy.

Blasphemous? Guilty as charged. Absurd? I'm not so sure.