September 11, 2022

How Business Works

A Twitter user forwarded me an interesting article from more than a decade ago (click here).

There's a quote in the article, in the footnotes, that resonates:

  • "That gravels me. I cannot think of another industry in which the uttermost basics of how the product works are a mystery to the people in that industry. There is nothing, to any with IQs much over their hat size, mysterious or controversial about analysis: it's just the way things work, and that's that. Yet a coach on the major-league level (coaching on a team last in all the majors in OPS) can to this hour be found publicly remarking, "You want to see a walk? Go watch a mailman." How is that possible? How can businesses with annual payrolls approaching a tenth of a billion dollars not have any least idea how their business works?"

The quote doesn't just apply to baseball.

One of the most frustrating experiences of my consulting work was a pairing of analyst and executive. These two understood every aspect of Google Analytics. They could tell you how much traffic they had, they could tell you where it came from, they could tell you how it converted. They knew nothing about their business. When conversion rates dropped by 10%, they panicked. They didn't even bother to look at new merchandise (which was a problem). They just started blaming vendors and co-workers for random issues.

This week, we'll talk about How Business Works. There is a natural cycle in your business. If you understand the cycle, you can do something that gives you a competitive advantage over the pair of guys I described above.

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