New & Risky

This is a post from Kevin Hillstrom’s “MineThatData” blog, which we highly recommend.

I once worked with a company that launched a new business. The new business went from three million to eight million to seventeen million to twenty million … and then … it stalled. The brand killed the business, as the business was losing money. We’ll never know if the business could have made it through the dip.

Way back in the late 1990s, when I ran circulation at Eddie Bauer, we introduced new creative – younger models, branding, less product density. It was a disaster … -10% across the board. It is very painful to lose $60,000,000 demand and $15,000,000 profit because of creative changes. Very painful. No bonuses for managerial employees because of the decisions of two or three people. Twelve to eighteen months of pain is all it takes before you reverse course … and then it’s terribly hard to make up the $60,000,000 demand and $15,000,000 profit. But, again, we’ll never know if you lose $60,000,000 demand every year, or if in three years, you are posting $90,000,000 positives once customers get used to the change.

The great sadness of the “data driven” era is that we simply cannot afford to measure success on a long-term basis. And as a result, we”ll never know if changes can work, because we kill off the changes before they every get a chance to work.

One company told me that they instituted a huge change to their website … posted -20% for about three months, then flat performance, then positives, so that by the end of the year, the results were positive. Now, in a short-term data-driven world, you’d never ever get the opportunity to see that the outcome could become positive, because some data-driven analyst would kill off your initiative and potentially cost you your job in the process.

New = Risky. We may need to give new a longer chance to succeed.