Thinking Analytically

BusinessWeek published an interesting interview with Jeff Bezos, founder of Amazon.com. As a big Amazon.com customer/fan, I’m intrigued by his thoughts on innovation. Here are a few tid-bits:

• There’s no bad time to innovate.
• Frugality drives innovation. One of the only ways to get out of a tight box is to invent your way out.
• You have to be willing to be misunderstood if you’re going to innovate.
• Skills-focused companies focus on what they can do which puts a finite lifetime on a company. A more stable strategy is to start with “what do my customers need?”
• You know that when your harshest critics are among your best customers, you can’t be doing that badly.

He includes examples of innovation at Amazon.com such as the Kindle e-book reader. Which, by the way, is on my wish list. I’d love to review one for you but first I’d need to get one in my own hands. Check it out at Kindle: Amazon’s New Wireless Reading Device.

I enjoyed Tom Davenport’s (author of Competing on Analytics) recent predictions on prediction markets in his Next Big Thing blog at Harvard Business Press.

Predictably, he asks if prediction markets are “the next big thing.”  (Ok, enough with the prediction puns.)

Here are his observations regarding culture and markets:

For a company culture to value prediction markets, its culture would need to have certain (rare) attributes:

• Confidence that executives have valuable roles to play even if they don’t always have the right answer;
• A high level of trust in the intelligence and capabilities of employees;
• The willingness to follow numbers and analysis wherever they lead (as long as they are more-or-less consistent with common sense);
• A pretty strong analytical and financial orientation (since futures markets aren’t something that every Joe or Jane understands).

If you catch his post, be sure to check out the discussion that follows.

This month, McKinsey Quarterly published eight technology-enabled trends they feel will help shape businesses and the economy. Trend seven is near and dear to my heart – or should I say head? Putting more science into management falls under the heading of leveraging information in new ways. The authors explore some of analytical topics that are all the buzz in recent best sellers: “ideagoras”, customer segmentation, experimentation, prediction markets and recommendation engines.

Leaders should get out ahead of this trend to ensure that information makes organizations more rather than less effective. Information is often power; broadening access and increasing transparency will inevitably influence organizational politics and power structures. Environments that celebrate making choices on a factual basis must beware of analysis paralysis.

The close by suggesting the following books:

• Thomas H. Davenport and Jeanne G. Harris, Competing on Analytics: The New Science of Winning, Boston: Harvard Business School Press, 2007. (see my entry on wikiBookNotes.org)
• John Riedl and Joseph Konstan with Eric Vrooman, Word of Mouse: The Marketing Power of Collaborative Filtering, New York: Warner Books, 2002.
• Stefan H. Thomke, Experimentation Matters: Unlocking the Potential of New Technologies for Innovation, Boston: Harvard Business School Press, 2003.
• David Weinberger, Everything Is Miscellaneous: The Power of the New Digital Disorder, New York: Times Books, 2007.

I’ve only read the first.  I’m interested in any reviews of the others.