Is $1 worth $1 dollar in all situations... is money linear?
I believe that money is highly non-linear and our 1000's of years old concept of money needs an overhaul.
Some questions ....
If I am a millionaire how do I value an incremental dollar offered to me versus a homeless person?
If I am a millionaire and I need to get out of a parking garage and my bill is $10 but I only have $9 in cash, what is $1 worth?
If I want to spend $100 million on televisions will the cost per TV be the same as if I spent $3,000 on TV's?
If I love books and hate music would spending $1000 on books be the same as spending $1000 on CDs to paying a $1000 tax bill?
Is earning $1000 at work equivalent to winning a $1000 lottery?
Are 100,000 loyalty program points which I can buy a $1000 TV with worth $1000 in cash? Are 100,000 loyalty program points which I can buy a $1000 plane ticket with worth a different amount of cash than the 100,000 points I can buy the TV with?
Is a $10 million offer to buy TVs from a $10 billion dollar retailer worth the same as a $10 million offer to buy the same TVs from the $100 million dollar manufacturer of the TVs?
Why do rich celebrities get a $40,000 gift bag at the academy awards for free? Are those gifts actually worth $40,000 to the giver(s) or the receiver?
Why is there an adage which says "It is much hard to make your first million than your second"?
Why is it that the more money you have the more you get for free?
Is paying $100,000 for products/services to a large corporation with cultural beliefs about salary, compensation, worth the same as paying a different consulting firm with different beliefs $100,000 for the same products/services?
The value of money is a function many things... incremental utility of the buyer, incremental utility of the seller, the marketplace, time, the situational utility, quality, belief systems, what the economic value of your currency is plus many other variables...
I don't believe that supply, demand, price or traditional macro/micro economic concepts can accurately account for the situations described above.
Big questions ... how much inefficiency exists in our economic, political and social systems because we have such a simple concept of money? Can we create new value out of this inefficiency that would increase GDP, reduce unemployment etc.? Can we change macroeconomic properties by optimizing the micro-utility of trillions of transactions.
Can we create a new concept of money that allows us to maximize our utility better than we currently do? or can we broaden the definition of a transaction that recognizes more than just our current system of money that will impact our utility and on aggregate will impact macroeconomic properties like GDP.
Yes, Yes, Yes ... we can use information technology and analytics and the willingness to change to do so.
Better use of information can create value out of seemingly nothing. It is there for the taking by any individual, corporation or organization.
Tuesday, March 9, 2010
Thursday, February 18, 2010
Change is Everything
Technology implementations, statistical analysis, discovering actionable insights, changing business processes, developing information use cases, measuring financial results, modeling business performance... All easy things to accomplish. I have been involved in dozens of projects where we have delivered some or all of these things. Clients have been on the precipice of dramatic business gains... yet many analytic projects do not deliver as promised.
Getting organizations and people to change is very difficult and is the real challenge when delivering strategic analytic solutions. By strategic analytic solutions, I mean solutions which could double a company's bottom-line performance.
Overlooking change management issues will doom projects to the dustbin.
The types of analytic solutions in the marketplace, fraud detection for insurance and banking, pricing optimization and assortment planning for retail, forecasting for retail and manufacturing, retail customer loyalty require organizations to be able to create, assess and act upon the output of sophisticated analytics and reporting and to be able to measure the impact of your actions, learn from those actions and adjust your operating plan.
There are two types of change required: surgical change to business processes that are impacted by information and strategic change which requires an organization to be change its management style and mindset to become analytically driven and willing to experiment.
Surgical change while narrow in scope can be painful. Employees who execute business processes may not have the skills to assess, review and take action based on analytic insight and business intelligence reporting. Employees who were otherwise well regarded and successful in their positions may find themselves floundering to adapt to the changes. With information based business execution comes transparency and accountability, further compounding employees willingness to accept change.
Changing the management mindset in an organization is even more difficult. When decision making has been largely based on intuition, or "how we've always done it" and the impact of decisions has not been measured, it becomes a monumental task to get employees, middle managers and executives to change the way they make decisions and learn how to make better decisions. I don't know many companies who track their decision performance!
Recognizing these issues before embarking on strategic analytic initiatives will improve the likelihood for success. Setting appropriate expectations for time to results should be set. Implementing a change management program and plan is mandatory. Crawl, walk and run is highly recommended. Expect the change management issues to long outlive the technology implementations.
Seek outside help as change from within is very difficult. Select a change management method that accomodates both surgical change and organization paradigm shift.
Analytic technology implementations take 2 to 4 months. If you can overcome the change issues, I think every organization is 12 to 18 months away from doubling and more their bottom-line profits. Start now...
Comments welcome
Getting organizations and people to change is very difficult and is the real challenge when delivering strategic analytic solutions. By strategic analytic solutions, I mean solutions which could double a company's bottom-line performance.
Overlooking change management issues will doom projects to the dustbin.
The types of analytic solutions in the marketplace, fraud detection for insurance and banking, pricing optimization and assortment planning for retail, forecasting for retail and manufacturing, retail customer loyalty require organizations to be able to create, assess and act upon the output of sophisticated analytics and reporting and to be able to measure the impact of your actions, learn from those actions and adjust your operating plan.
There are two types of change required: surgical change to business processes that are impacted by information and strategic change which requires an organization to be change its management style and mindset to become analytically driven and willing to experiment.
Surgical change while narrow in scope can be painful. Employees who execute business processes may not have the skills to assess, review and take action based on analytic insight and business intelligence reporting. Employees who were otherwise well regarded and successful in their positions may find themselves floundering to adapt to the changes. With information based business execution comes transparency and accountability, further compounding employees willingness to accept change.
Changing the management mindset in an organization is even more difficult. When decision making has been largely based on intuition, or "how we've always done it" and the impact of decisions has not been measured, it becomes a monumental task to get employees, middle managers and executives to change the way they make decisions and learn how to make better decisions. I don't know many companies who track their decision performance!
Recognizing these issues before embarking on strategic analytic initiatives will improve the likelihood for success. Setting appropriate expectations for time to results should be set. Implementing a change management program and plan is mandatory. Crawl, walk and run is highly recommended. Expect the change management issues to long outlive the technology implementations.
Seek outside help as change from within is very difficult. Select a change management method that accomodates both surgical change and organization paradigm shift.
Analytic technology implementations take 2 to 4 months. If you can overcome the change issues, I think every organization is 12 to 18 months away from doubling and more their bottom-line profits. Start now...
Comments welcome
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