Posts Tagged ‘science’

I wish to take this opportunity to wish you a Merry Christmas and Happy New Year. May we all live in interesting times, and find opportunities to grow and thrive.
It’s always good to take stock when readying for the future. In the interests of sharing some of my recent observations, I provide this list of my “lessons learned” from 2016. Not all directly related to business, but still enlightening I should think.
  1. We need demanding goals. In late 2015 the Trudeau government committed to admitting 25,000 Syrian refugees quickly. Initially, it was by the 31st of December 2015, then by the middle of February 2016 (or something to that effect). The initial timeline was missed, but it appears the second one was mostly met. There were plenty of nay-sayers, but ultimately, the goal was achieved. Had Trudeau set the goal at 5,000 refugees, we probably would have struggled to meet that. He had the guts to set a high goal, which put everyone into overdrive. Kudos!
  2. It ain’t over… till it’s over. Yogi Berra’s favourite saying about baseball games was very true this year, especially in the political arena. Donald Trump’s presidential campaign was declared dead and buried several times since mid-2015, but he always seemed to rebound. Whether you like him or not, he stayed until the end and proved a lot of people wrong.
  3. Homo homini lupus. That’s a Roman saying: “Man is a wolf to man.” As we saw in Syria, Turkey (Kurdish terrorism), Northern Iraq, France (Islamic terror), Europe (with the migrant crisis), and other hotspots around the world, there is no lack of barbarity these days. I like to think of myself as a political and strategic realist. People are capable of great feats of generosity and hope (see point 1), but atavistic tendencies can also surge in a heartbeat.
  4. Geography still exists. Geopolitics and geostrategic interests are the main drivers of international conflicts and tensions. European countries are dependent on Russia’s oil and gas. Consequently, they don’t want to upset Russia too much. Russia wants to control the Crimea because that’s its only guaranteed access to the Black Sea. By extension, Russia and Turkey are in a rapprochement because the only access to the Mediterranean is through the Bosporus and the Dardanelles. I could go on; these are only two examples in one region of how geography continues to dominate international politics, economics and strategy.
  5. Leadership matters. Who’s in charge and how they’re leading and managing the situation make a major difference in performance and events. It’s evident in politics, but we can also see it play out in business. For instance, Microsoft is becoming a leader again after floundering for over a decade. That is largely attributable to the outstanding leadership of the new CEO Satya Nadella.
  6. Elegant scientific theories still need evidence. Without much notice, two of the most cherished theories in physics appear to be on their respective deathbeds. Many physicists have staked their careers on finding dark matter and proving supersymmetry. The first supposedly makes up about five sixths of all the matter in the universe, but efforts to observe it are leading nowhere. The second is needed to make the sub-atomic world comprehensible and is one of the key explanations of dark matter, but the Large Hadron Collider in Europe has eliminated all but the most unlikely candidate models. Things are going to change in a major way in the coming years and decades in physics, possibly as fundamentally as the relativity and quantum revolutions (which gave us microelectronics, nanotech, and nuclear energy, among many other things).
  7. The universe is mind-bendingly big …and inhospitable to life as we know it. We learned a few months ago that there is an earth-like planet in orbit around the nearest star to our solar system. But unlike in science fiction, it would take well over 100,000 years using current understanding (and likely future technology) to reach it. Heck, it took 9.5 years for the New Horizons spacecraft to reach Pluto, and it is the fastest spaceship ever launched. Suspended animation anyone? There is still no sign of life on Mars. Getting there would probably kill any life form, just because of solar radiation. Maybe we should cherish our presence here on earth a bit more…
Remember Richard’s Business Readiness Process in 2017!
  1. Ensure vigilance through situational awareness.
  2. Do preliminary assessment of tasks and time.
  3. Activate organization or team.
  4. Conduct reconnaissance.
  5. Do detailed situational estimate.
  6. Conduct wargame and decide on optimal course(s) of action.
  7. Perform risk management and contingency planning.
  8. Communicate plan and issue direction.
  9. Build organizational robustness.
  10. Ensure operational continuity.
  11. Lead and control execution.
  12. Assess performance.

Call me if you would like a 90-minute Business Readiness Briefing in early 2017!

My name is Richard Martin and I’m an expert on applying readiness principles to position companies and leaders to grow and thrive by shaping and exploiting change and opportunity, instead of just passively succumbing to uncertainty and risk.

© 2016 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

The “Power Law” is one of the most useful concepts for making predictions and decisions in business and management.

The power law shows how two variables–one dependent, the other independent–covary. Mathematically, one varies as a function of the other by being raised to a certain power (exponent).

The following diagram shows this type of relationship. Often these are depicted on log or log-log graphs, but I show the “power curve” as an asymptote on both axes of the graph to highlight the non-linearity of the relationship between the two variables.


A concrete example will help. The great majority of earthquakes are of very low magnitude. High magnitude earthquakes are much rarer than low magnitude earthquakes. In fact, their magnitude varies in inverse exponential proportion to the total number of earthquakes. In practice, this means that there are literally thousands of earthquakes every day around the world, but magnitude 6, 7, and 8 ones are much rarer. The most powerful earthquakes of all, over 9 on the Richter, scale are very rare. They can happen only a few times a century, or even less. This doesn’t mean that the magnitude of any particular earthquake can be predicted. It does however imply that given a sufficiently large sample, we will eventually see a frequency-magnitude distribution that resembles the graph above.

This type of relationship is ubiquitous in nature, and that includes our human and social natures. There was a whole book written on this topic–The Long Tail, by Chris Anderson–with emphasis on the right side of the graph. In his book, Anderson described how the internet has made many businesses or ideas viable which would not previously even have been known. He called this the long tail because there are musicians, artists, artisans, crafts workers, professionals, etc. who can provide their productions and services to people around the world, even though they can’t compete with the more traditional providers who dominate markets by occupying the left side of the power curve. This makes for much more diversity and many more opportunities to get known and appreciated, and to develop a following because it lowers traditional barriers to entry and long-term viability.

This type of relationship is also depicted in the following diagram. I show the relationship between number of clients and the number purchases, interactions, or value of each category of client that characterizes the market and product distributions of most, if not all, companies (including my own clients).


For instance, I’ve been working with a banking client. This graph shows the relationship between number of clients and the number of products/services that each client has with the bank. The total market size for this bank is about 80,000 potential users of its services. Of these potential users of its services, the great majority, about 85 %, have no business relationship with the bank. Of the 13,000 or so that do use the bank’s services, the majority only use less than 3 of over 20 products and services. As we move to the right, there are less clients, but their interactions with the bank are more intensive. In other words, there are are many fewer clients in categories to the right, but they use many more of the bank’s services, which in turn generate much greater value. On the other hand, there are no actual clients who do all of their banking and meet all of their financial needs and objectives, much less use all of the bank’s services. This is why we can depict the lower right part of the curve as an asymptote. You never actually reach complete saturation or use.

We’ve all noticed these types of power-law relationships in our professional and personal lives, our management and business experiences, and even in some natural phenomena. This relationship is often referred to as the 80/20 law, Pareto’s Law, or Zipf’s Law. It shows up in such truisms as: 80 % of my problems are caused by 20 % (rates can vary) of my people; most of my sales and profits come from a small number of sales reps; only a few of my clients provide most of my revenue and profits; this product category accounts for 45 % of my sales, but 70 % of my profits; etc., etc.

The following diagram is a further illustration of the principle. It comes from an online article by Mark McLean of the Toronto Real Estate Board (TREB) and shows an almost perfect example of a power-law distribution in the number of deals done by different categories of real estate agents who are members of TREB.  We can see that only a very small number of agents in TREB can be considered highly successful, prolific even.


Of those agents having completed 6 or less deals in a year, a similar relationship holds, although it’s less stark:


Whatever we wish to call them, power-law distributions and relationships underlie much of the correlations and dynamics that surround us. We can use them in making general predictions and, along with the S-curve phenomenon I described in a previous post, we have two very powerful tools and concepts for understanding the world around us. Moreover, power laws and S-curves are not only ubiquitous, they tend to show what’s called “self-similarity,” or a fractal pattern. I’ll discuss that third powerful concept next week.

© 2016 Alcera Consulting Inc.

This article may be forwarded, reproduced, or otherwise referenced for non-commercial use with proper attribution. All other rights are reserved and explicit permission is required for commercial use.