The quote is management dogma. It makes sense. How do you measure success? How do you quantify what needs to be improved? What is a metric everyone can work towards?
In many ways, measurement is a proxy for intuition, trust, and complexity. Most of us have crappy intuition (checking my dating history). As for trusting data, “There are three kinds of lies: lies, damned lies, and statistics.” Complexity is increasing at an exponential rate. A hundred years ago, two brothers built an airplane. Nowadays we don’t fully understand how AI makes decisions. So we boil everything down to a few numbers.
That’s why Goodhart’s Law is important. It states “When a measure becomes a metric, it ceases to be a good measure.” More specifically, “Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.”
Measurements lose or hide fidelity. There are components we don’t understand or are black boxes (see any ad tech platform) or have secondary or tertiary level interconnectedness we cannot see. Plus we don’t fully understand causal relationships between people (their intentions and behaviors) and the interactions with systems. Yet, we are required to make decisions based on the ambiguity. We align incentives with the direction we want the metric to go.
As a slight tangent, we have the McNamara Fallacy, where one makes decisions based on easily identifiable numbers, and disregarding what cannot be easily measured. That is all of digital marketing. Digital-only marketing proponents keep pushing the idea that it is better because it is measurable. Not true. Easy measurement of digital does not mean it is more efficient. Not being easily measurable does not mean it is not relevant. In online advertising, all we hear about is CTR, CRO, CPM, CPC, CPA, confidence levels, etc., creating an industry of spreadsheet junkies that eventually lead to:
The danger is in choosing the wrong metric.
Let’s take Facebook as an example. Their measurement of success is making sure Facebook stock price goes up constantly. This is driven by increasing the number of clicks (oh oops, “engagement”) with ads or publisher content. The platform needs to predict what content a user will click on. Humans are tribal creatures. We look for ways to re-affirm our beliefs and social structures. The success of Facebook inherently generates and amplifies our reptilian instincts. Is it possible for any social platform to not become a channel for culture wars when the ultimate metric is clicks?
Similarly, if you are YouTube, and creators have to play the SEO game for revenue, you end up with garbage. (We will ignore the fact if PBS had done this, they would have been de-funded already. The consequences for Google? Nada. But, you know, Facebook and Google aren’t media companies, they are technology companies.)
Another tangent, the Streetlight Effect where people look where it is the easiest to look. The joke:
A police officer sees a drunken man intently searching the ground near a lamppost and asks him the goal of his quest. The inebriate replies that he is looking for his car keys, and the officer helps for a few minutes without success then he asks whether the man is certain that he dropped the keys near the lamppost.
“No,” is the reply, “I lost the keys somewhere across the street.” “Why look here?” asks the surprised and irritated officer. “The light is much better here,” the intoxicated man responds with aplomb.
From François Chollet’s The impossibility of intelligence explosion:
“And what is the end result of this recursively self-improving process? Can you do 2x more with your the software on your computer than you could last year? Will you be able to do 2x more next year? Arguably, the usefulness of software has been improving at a measurably linear pace, while we have invested exponential efforts into producing it. The number of software developers has been booming exponentially for decades, and the number of transistors on which we are running our software has been exploding as well, following Moore’s law. Yet, our computers are only incrementally more useful to us than they were in 2012, or 2002, or 1992.”
Who is this François guy? An AI researcher at Google who created one of the most popular Deep Learning frameworks.
In the context of digital, it is fascinating to realize that digital hasn’t changed how we live our lives. We buy/rent a house or apartment. We drive our cars or ride the train to work. We push digital paper around at work. Netflix made TV a better experience, but it is still watching TV. Airbnb made it easier to book an exciting home somewhere, but it hasn’t changed travel. The channels and tools have changed, lessened the friction we have to deal with, maybe made us more productive, but at a fundamental level, our activities have not changed.
And that’s ok. The problem is that our expectations are out of whack: we think every new piece of technology is life-changing. All information gets broadcasted at hyper-speed and hyper-volume now. We have no practical way to filter and process. We end up thinking and treating everything equally important all time.
Of course, we can see this in its full glory with bitcoin and blockchain technology today. I ran into this visual earlier in the week:
From an AngelList newsletter:
“Key takeaway: Blockchains are the biggest technological breakthrough since the Internet.”
Now, I have nothing against blockchain and bitcoin. There are extremely promising uses for it, but every time I see a ‘once in a generation’ type statement, I’m reminded of Roy Amara’s quote:
“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
Very few companies have gotten big data right. Most current applications of AI, more specifically supervised learning, requires large amounts of clean data. So that is going to be a challenge. And instead of figuring out all that, we will be moving on to the blockchain. Funny. Or not.
Read about the type of discussion McKinsey is having with clients about digital and marketing. Is your data in silos? Do you have to re-orient employee mindsets to put customers at the center?
It is almost 2018. Why are we still having these types of discussions?
Back to AI. Like most executions of digital which have focused on process, efficiency, and cost, instead of being transformational, AI might be the same. Check out Andreessen Horowitz’s State of AI video. Lots of examples of reducing friction and doing existing activities better and faster, but nothing new.
It is not to say that old economy jobs won’t be destroyed and supplanted with new ones. Or existing companies will not get wiped out and new ones created. As an example, listen to episode 27 of Rad Awakenings podcast where they discuss a new company that arbitrages interest rates, other macroeconomic information, and payment terms to elicit discounts from vendors. This is possible now that we have the computational power and ability to massively aggregate amounts of data.
AI is not earth shattering as harnessing electricity or practicing agriculture for the first time. We expected flying cars by now. Instead, we got electric cars.
Social networks facilitate and magnify identity politics.
Once a user follows more than Dunbar’s number, algorithms have to kick in for platforms to be usable and not overwhelm. Generating engagement and stickiness requires displaying content platforms think you will like. So algorithms look at what the users first, second, etc level connections like, what similar profiles like.
Objective, rational content is boring and gets little engagement. Publishers push content that is emotionally driven. Content that requires us to pick a side.
Combine both and you have a filter bubble that amplifies tribal tendencies. A filter bubble based on identity politics.
This isn’t to say social media creates identity politics. We all want to be part of our own tribes. The point is that the natural output of social media will always be based on identity politics.
It is not unlike other social interactions. We hang out with family, neighbors, coworkers, church members, alums, etc. The problem is our expectations. For some reason we thought global social platforms would connect us all, expose us to new and different ideas, and then we would all become enlightened.
That’s not how our biology works.
What happens to society or businesses if young men never have any reason to leave home?
Historically, young men of a certain age, let’s say 18, want to leave home. The reasons are well known and revolve around the idea that independence will allow for making money (or going to college to gain a skill), entertainment, socializing and dating. Everyone wants to ascend in Maslow’s Hierarchy.
But rules of the game have changed.
Young men may not be enthusiastic to join a work environment where they realize they are not as unique as mommy/daddy/school said they were and now have to put in the time and effort and play the office politics to climb through corporate ranks. And even if they do, there is the constant threat of layoffs/outsourcing/automation and stagnating wages. On the flipside, if the only available jobs are in a low-paying service industry, it is challenging to support oneself, let alone raising a family or saving for retirement. To make it all worse, possibly crippling student debt.
Add in that marriage and settling down is not an exciting milestone. Hanging overhead is the experience of complex relationships and pain resulting from divorced parents. Add in the high bars set by heavily-curated lifestyles seen on social media creating unrealistic expectations for the perfect mate.
So, if you can live at home, why leave?
Nowadays platforms allow for more, quickly, now. But it’s not the technology that is exciting in itself; it’s the change in human behavior. So, what if men could fulfill all their needs, on demand, while living at home?
Entertainment: 5000 cable channels, Netflix, Hulu, Xbox, YouTube
Food: Grubhub, Ubereats, Postmates
Socializing: Facebook, Instagram, Snapchat, texting, Reddit, Discourse
Adult: infinite tube streaming sites
The shift in leaving home may not be permanent, but what is the impact of postponing the transition to adulthood for five years or even ten years?
The potential economic impact is significant. Take the home construction industry as an example. If historically the average person buys three homes over a lifetime, and Netflixication reduces this is to 2.5, the ripple effects are massive. Construction labor, building materials, landscaping, appliance manufacturing, furniture, retail, architecture, engineering, insurance, mortgages, transportation, wholesale, and warehousing.
We have built religious, legal, and economic rules around the expected social norms and life trajectory. Are we capable of dealing with them becoming frayed or delayed?
All the talk of Amazon buying Whole Foods revolves around Amazon getting its tentacles even more into the grocery business.
Amazon is a different breed of company. Why? Its service-oriented architecture (SOA) structure. The Wikipedia definition of SOA: “services are provided to the other components by application components, through a communication protocol over a network.” In short, autonomous components that know how to talk to each other. At first glance, this would not seem revolutionary. Plenty of big businesses already have silos that never talk to each other and compete against each other for budget and credit. Sure I am sarcastic, but how does Amazon do SOA?
Amazon’s silos service customers internally and externally. They start out with an existing large internal customer, but they are designed to be used externally as well. Their warehouses are not only for Amazon merchants but any third party who needs order fulfillment. Selling through amazon.com is not a requirement. AWS is similar. It was created to power parts of the website but became a product to rent out.
Most companies build a product or provide a service. Imagine what happens when all the core activities are profit centers by using them internally and externally. How you create a product, service, or function changes. It is building a business that can thrive in a world of constant change. Instead, we have companies creating innovation labs whose outputs will have to be bolted onto existing processes and systems…unsuccessfully.
As Ben Thompson points out, Whole Foods is not about getting into the grocery business. It is taking the Whole Foods logistics, re-architecting it so it can be used internally for Whole Foods, but any other industry/vertical that buys food whether its hotels, restaurants, assisted-living homes, schools, and so forth. They will be competing against Sysco and U.S. Foods.
We thought Uber’s was in the logistics business because of UberEats and flower deliveries. However, that is small potatoes compared to Amazon when it wants to do everything from payment (money logistics) to drone deliveries and everything in between.
Whenever brands talk about change transformation, usually there are three pillars: process, technology, and communication.
The people component is assumed to be elements of all three.
Unfortunately, the hard part is people.
Externally you have investors, analysts, regulators to satisfy.
Internally you have competing power structures and budgets, misaligned incentives, matrix reporting structures.
In reality, the roadblocks are much more significant:
Add in the fact humans don’t like change. Plus everyone’s favorite topic, corporate risk management.
We can try offshoring, nearshoring. We can try to add another piece of technology. We can try newsletters and coffee mugs.
None of it addresses the real problem.
How do people change or become comfortable with change in a faster-moving world?
Ben Sasse wrote a piece in the WSJ about how the political sphere is not dealing with economic changes head on. It’s written as if a government can do something about it.
When he talks about education and retraining, the problem is worse than he describes. Companies don’t train anymore. That’s because the fundamental purpose of business has changed. Ruthlessly (potentially) optimized to provide a product or service for maximum profit at all costs. People are a liability. Not only that, the skills most people can learn here, anyone anywhere in the world can learn and do it cheaper. If the radiologist can be sitting in Malaysia reading the chart of a patient in Midtown, an accountant in India is working on taxes for Deloitte, what job exactly does Sasse think will stay in the US? He says there are many potential policy responses available. Doubtful. None of them will be sustainable. Especially none that he can get through a Republican Congress. We won’t even get into automation.
Sasse alludes to it, most of the rules/religions we have and what we expect out of our lives were designed for living on farms when the family was the economic unit. It was for a time when having a bigger family meant more money. A boy knew as much as he was going to know about farming by the age of 15. He needed to start on the baby makin’. Concepts like waiting for marriage before being intimate meant something different 2000 years ago. Protestant work ethic was great when people were traveling on a wagon trying to stake out 100 acres in California in the 1850s. Will Durrant wrote about this. In an agricultural world, you could see religion in action, the cycle of birth, death, rebirth. It does not have the same impact when most of the population lives in dense areas, commuting, and pushing around pointless (digital) paper feverishly all day indoors or staring at tiny screens in our hands.
Whatever tribe (family, church, country, etc.) protected us and gave us comfort previously doesn’t know how to deal with the current avalanche of changes. We are in the ugly middle where the old ways don’t work anymore, but we haven’t found anything new to replace them with yet.
And anyone who says they have the answers is full of shit.
Many consumer brands are trying to incorporate voice interactions or voice commerce into their products. Apple has Siri locked in its ecosystem. So does Google for the most part. But Amazon is pushing Alexa to be the first mainstream voice touch point.
I wonder if that is the end goal. Sure Amazon would like a frictionless interface for consumers to buy more. My hypothesis is Alexa is meant to convince developers and startups that Amazon has all the products and tools that any “technology” company would ever need. The product line has everything from $5/month VPS instances that compete with Godaddy to running oil and energy market-related applications for GE. All infrastructure and data processing needs can be fulfilled within the Amazon ecosystem.
You would think that Google and Microsoft would leverage their expertise into selling more cloud infrastructure. Google’s revenue is overwhelming based on advertising. Microsoft’s comes from Office and licensing enterprise software. Both are in the process of shifting their mindset, but it is not a natural process. This direction might be in Amazon’s DNA or at least related to their previous experience with AWS. They built their website and realized they could leverage that knowledge and rent it out to others. They were the first big cloud provider that enabled developers and shadow IT groups to test, build, prototype and run their products in the cloud. Once hooked those customers were not going anywhere else as they developed more sophisticated products and moved on to other jobs. The use of AWS was organic. It had to be. They didn’t control any of the touch points like the operating system or devices (even though they tried).
How will we know if this hypothesis is correct? The easy answer is we see an uptick in new voice products developed on AWS. It will take time. Voice interactions or commerce have challenges. For example, the discovery of skills or apps. Can you search for Alexa skills without a phone or going through a website? We can’t turn the knob and find more content like on radio. Any form of monetization will be intrusive. How about interjecting ads? We all know how much consumers love pop-ups and interstitial ads. These points of friction require resolution. Otherwise, voice technology will have a short hype cycle.
Scott Brinker interviewing chief marketing technologist of Xerox:
8. Any advice you’d offer to someone starting out their career in marketing today?
Compare to the email sent out in preparation for the first course in Udacity’s Deep Learning Nanodegree Foundation:
Our team has compiled an excellent selection of resources for you, so please review these as you use this week of preparation to your full advantage:
Are you completely new to the world of Deep Learning? Read this fantastic introduction to Machine Learning.
Need a refresher on the basics of Linear Algebra? Have a look at this Udacity course.
Do you want to brush up Python skills? This Intro to Data Analysis Udacity course covers the Python libraries NumPy, Pandas, and Matplotlib.
Want to play around with a real neural network right in your browser? Check out this cool Neural Network Playground.
Never worked with TenserFlow before? Follow these instructions to download and install it.
We are severely underestimating the knowledge employees and agencies will need to have to optimize for the customer journey in the future.
If most brands can’t get digital right, or more thoroughly digital transformation (which includes big data), how will they take advantage of AI? Which to be successful, requires…big data.
You would think WordPress would be an easy sell nowadays. WordPress is not the right tool for every website, but the size of that pool is shrinking. It powers a significant chunk of the web.
Automattic has already leveraged WordPress into business with their VIP WordPress service, meant for high traffic sites. Facebook runs their company blogs on it. Practically every large news publisher has something running on VIP WordPress, like NY Times, Washington Post, CNN, and many others. Using that platform, now it is actively (aka spending ad dollars) going after the SMB market with a hosted solution against the lower priced services like Bluehost or Host Gator.
WordPress has a yearly “State of the Word” thingie. The most recent one:
The significant bit during the speech was the creation of the WordPress Growth Council. Why? Proprietary CMS competitors will spend $320 million on advertising, some of it directly against WordPress. In Matt’s words (around 27:30 in the video):
“Advertising does work…even though I think we have a better product and infinitely better community, we are starting to see in certain markets these tools which are typical proprietary, start to pick up shares.”
The Growth Council as a concept is not flushed out, but Matt / Automattic wants to start working on it, and he wants a small number of companies that work with WordPress to help figure it out. It will be interesting to see what direction they take.