What does ‘with’ mean?

Many reports on covid hospitalizations report admissions ‘with’ covid, yet people seem to interpret that to mean “due to.”

If you point out that ‘with’ does not mean ‘due to’, you may be accused of minimizing the situation rather than trying to apply basic reading comprehension.

Some of the negative blow back comes from those inexperienced with interpreting numbers. For them, the difference in meaning between ‘with’ and ‘due to’ seems trivial enough that they make a leap on what the report says, “what they really means is ‘due to.'”

What’s more is they do this without realizing it. When they think back to the report they remember the meaning they created for the report rather than what the report actually said.

The movie Inception was about implanting an idea in someone’s mind so that they thought it was their own idea.

What I describe above is reverse-inception, causing someone to believe their own idea is someone else’s. In this case, they think the idea that hospitalizations due to covid is what the reports say, when it is not.

This reminds me of when reporters asked Lance Armstrong if he took performance enhancing drugs and he would respond, “I never failed a drug test.”

Many would interpret Armstrong’s answer as a strong “no” when he didn’t directly say no. He reverse-incepted the answer into our heads. Later, he admitted that answer was his way of feeling like he wasn’t lying, even though he knew how folks would interpret it.

This is not to say that more folks aren’t being hospitalized due to Covid or having serious illness due to Covid. If you think that’s what this says, then you are reverse-incepting an idea onto me.

This is just to point out that if you read the reports on covid hospitalizations, carefully, you will notice they usually do not provide clear enough info on the number of folks hospitalized due to covid to draw sound conclusions.

When I point this out to folks, they ask, what does the report mean then? I’ve used some version of this simplified example to explain it.

Let’s say 100 kids per week are hospitalized for broken arms and all those admitted to the hospital are tested for Covid as standard practice, which they are.

Last week, 10 of those 100 kids tested positive for covid, while 10% in the general population were also testing positive.

This week, Omicron blows through the area and now 25% of people in the general population test positive for covid. Those familiar with data will expect to see this trend in test positivity in hospital admissions, as well.

Sure enough, the local hospital reports that 25 admissions tested positive for covid this week vs 10 last week, therefore the number of kids admitted to the hospital with covid more than doubled!

Here’s what they don’t mention: those 25 were admitted for broken arms, not covid; that the total number admitted for broken arms is on par with the previous week; that the test positivity rate was in-line with the rate in the general population in the area.

They also don’t mention how many people were admitted specifically for covid.

The next stage of reverse-inception is to doubt that the reports would dare be that misleading, because it seems like it would be too easy to be debunked and surely someone would so!

Folks did the same with Lance Armstrong. When they realized that his response didn’t directly deny taking drugs, they would reason that there’s no way he would dare be that misleading because it would be too easy to debunk. And, yet it took years to do so.

Read reports on covid carefully. Pay attention when you hear yourself saying things like “I think what they really mean is…” or “they are making it sound like…”. Those are sure signs that you may be getting reverse-incepted.

Why not build more hospital capacity?

We’ve been hearing that hospital capacity is an issue for 2 years.

I find it strange that building more hospital capacity doesn’t ever seem to be considered as a solution.

Hidden Profit Part 2: Bureaucratic Profit

One form of hidden profit is bureaucratic profit, which is what keeps bureaucracies going.

The familiar example is a government bureaucracy that survives on taxes. But, bureaucracies can crop up wherever there is a flow of cash to sustain it like businesses, charities, churches, trade organizations, governing bodies and so on.

A bureaucracy is group of folks that don’t necessarily add value to the organization, even though they are expert at making it look like they do.

When you scratch past the surface, what they contribute to the success of the business is elusive. But, they are masters are filling their calendars to look important and busy, being engaged in meetings and claiming credit for successes that couldn’t have happened without their input.

I can’t tell you how many times I’ve seen such folks leave organizations over the years and the organization didn’t miss a beat without them.

It kind of reminds me of that moment in a musical, just after a big song and dance, where the characters go on to the next scene and act as if the big song and dance never really happened, like it took place in someone’s head.

The organization keeps chugging. Sometimes, the remaining bureaucrats reminisce about a departed bureaucrat’s big song and dance, and that’s the main mark they left — stories of their song and dance.

When I’m feeling a mischievous, I like to interrupt these remembrances with something like, “Yes, he was a character, but do you have any examples of what he did to move the business forward? The revenue trajectory seemed to remain on course during his career here and has remained so since he left.”

Bureaucrat jobs exists more for the bureaucrat than for the organization. They might be interested in the steady income the job brings, the title it gives or the way the job can help them build their resume so they can get to the next rung on their career ladder.

Over years and decades, these bureaucracies become entrenched and tough to spot because the value they bring is assumed and there’s nothing to disrupt or put into question that assumption. It’s just assumed the company needs a VP of such-and-such, because it has had one for the last twenty years. Nobody has had to do a true cost-benefit analysis on the position, so it keeps going.

Bureaucracies are only threatened when there’s a massive disruption to the flow of cash that sustains. I can’t say for sure, but I assume Eastman Kodak had a massive bureaucracy before smartphones made the film and photo paper industry nearly go poof and the cash flow that sustained it also went poof. I would also venture a guess that many of the folks that were part of that bureaucracy, found other bureaucratic profits elsewhere to survive on.

The key point of this post is to introduce the concept of bureaucratic profit so you can recognize it.

There is a big spotlight on bottom line profits in our society while hidden profit, like bureaucratic profit, avoids detection.

Put another way, we often hear how bad it is for investors and founders to earn profits, but don’t hear much about all the folks that skim the bureaucratic profit before what’s left makes it to the owners with the notable exception of CEOs.

CEOs aren’t the only bureaucrats that deserve attention. SVPs, VPs, and Directors in company management are common positions for bureaucrats, as well as boards of directors.

If innovation isn’t easy, you’re doing it wrong

After some time working in mature companies it occurred to me how difficult companies make their innovation.

There is more action in just getting ideas through the political and operational hurdles. Ideas compete for executive approval and company resources. Ideas that win executive buy-in are then treated as if success is a fore drawn conclusion.

That’s how it worked at one of my former employers. My group went to the executives each year during planning with a list of 10 ideas to have them pick the 2-3 they wanted to try.

One year, we had a new CEO from a company with a healthier innovation culture (though he didn’t know it and neither did I, at the time).

We presented our 10 ideas and sat there with an awkward silence. He broke the silence after a bit, “So, what do you want from me?”

“Which 2 or 3 should we try?”

He responded, “Is there a reason you can’t try them all? I don’t know which one is going to work. Figure out ways to try them, even if on small scales, to find out.”

That completely changed how we approached our work. While he was there over the next three years we tried lots of stuff and found a lot of success. We spent zero time on the politics of trying to get buy in and almost all of time trying to figure out how to market research, proof of concepts, pilots and tests to figure out what would work for customers.

I now call this the ‘discovery innovation culture.’ It has some basic underlying principles, like the chances of success of any one thing is low, so try lots. Also, an ounce of customer reaction is worth 5 pounds of executive politics.

Sadly, I don’t think he knew the impact his innovation culture had on the business. He also did the typical CEO, top down ‘5 point plan’ like his predecessors and when that failed to make an impact, as most of such plans do, the board soured on him.

Ironically, the month after he left, the board approved rolling out one of the projects we discovered under his discovery innovation culture. It had a major impact on the business. He didn’t get a lick of credit for it.

It wasn’t his idea. It was a crazy idea that wouldn’t have seen the light of day in the political innovation culture. But, he didn’t stand in its way when one of the field leaders wanted to test it, like his predecessors would have.

Thinking back, I think he could have bought himself more time as CEO if he recognized what was happening and told the Board, Look, when I got here the innovation pipeline was bureaucratic and anemic. Innovation is the way to grow, but you have to be extremely lucky to grow if your pipeline only has 1 or 2 projects in it at a time. No wonder you have been struggling. I’m going to change that, but it’s going to take 3-5 years to see scalable projects coming out the other end of the pipelin. This is how we did it at the company I’m from and it works. Be patient.

After he left, his replacements brought back the political innovation culture.

In the 3 years under him my group alone rolled out about a half a dozen things that has stuck with the business.

Since he left about 10 years ago, the business has been going sideways and they’ve just been tweaking the stuff we rolled out. The energy has gone back to the politics of getting executive buy-in rather than just trying stuff and nothing new has come of it.

When I see organizations that are struggling to stay relevant, I tend to see the political innovation cultures that result in anemic innovation pipelines that usually do not produce enough successes to keep the business ahead of its evolving competition, which is innovating at faster rates in more discovery innovation cultures.

Hidden Profit: Expenses are profits for someone

We usually bucket profit as what’s left over after paying all expenses. We neglect that those expenses are also profits for somebody.

Huh?

Consider an organization that doesn’t operate for profit, like REI Outdoor. It’s organized as a co-op, which is owned by customers who have signed up to be members (which is a lot like a rewards program at other businesses).

Since REI doesn’t earn a profit, you’d think it’d charge less.

It doesn’t.

Why? Because it has the same costs as any sporting goods retailer like costs of goods sold, real estate, labor, marketing, shipping, distribution, executive compensation and utilities.

Not being for-profit doesn’t change any of that.

While we don’t usually think of salary as a profit for the employee, it is. It may not be exorbitant profit, but it’s enough to keep them showing up.

What about the CEO? Google says he make $3 million a year. Pretty good for a guy who runs a co-op. Would you consider that he profits from REI?

In my view, profit is something that you would be reluctant to give up. Most of us would be reluctant to give up our pay, even if we don’t make $3 million, so we are profiting from what ever pays us.

The point of the post isn’t that REI may not be all it’s cracked up to be.

The point is to consider that more than just owners of for-profit companies earn profit. We all do.

With that lens, the world looks different as you will see profits in more places than you did before and places that we don’t typically associate with profit-seeking. For example, you will see it in charities, government, churches, schools, trade organizations, sports leagues, awards shows and all sorts of governing organizations like US Soccer or USA Gymnastics and even in mountain bike trail building.

Certainly, there could be more than monetary reasons for being involved such things. You might be an outdoor enthusiast and you really dig working at REI because of that. That’s cool. But, my guess is a lot fewer folks would show up to work for REI if they paid half or a third of competing retailers.

How to lose a loyal customer: Exhibit AT&T

AT&T recently installed fiber optic in my neighborhood and surrounding neighborhoods and offered most of my neighbors gigabit internet service for $45 per month.

They sent two sales reps to my door to sell me the new service, only to discover that it wasn’t available at my address.

So, AT&T lost a 13 year customer. The cancellation conversation went something like this:

AT&T Rep: “We can upgrade you from 75 Mps to 100 Mps for $50 per month, which will save you about $20.”

Me: “So, you are offering me 1/10th what you offer my neighbors for $5/month more when you competitor is offering 5x that? Does that sound like a good deal to you?”

AT&T Rep: “No sir. I see what you’re saying.”

I’ve been pleased with my AT&T service for 13 years. I never complained or threatened to cancel to try to get a better deal as lots of folks do. It was doing the job. I never noticed issues with buffering or speeds, even as the number of devices connected to the net in my household has grown.

But, they shifted the goalposts by offering a product that appears to be 10x better than what they give me at a lower price to my neighbors, which suddenly shifted the paradigm on the service they give me to look like mush.

It added fuel to fire when the sales reps assured me that it was ‘very rare’ for them to skip houses and that it was usually just a matter of ‘getting their computers updated’ or ‘having someone come out and run the lines’. They made it sound easy. They gave me some hope that it was still coming.

Then, when I followed up with customer service, as one of the sales folks suggested I do, I was told that there were no plans to make it available. That seemed strange to me since the AT&T boxes sit one lot away from our block in the middle of a neighborhood that now has fiber.

One benefit that I got out of the experience is to be less hesitant to evaluate my options and switch. I discovered that switching was much easier than staying and trying to convince them to give me the service that they had two people try to sell me.

That’s the beauty of the power of exit versus the power of voice and a good example of why competition is a good thing. I wish their were even more competitors for internet service. I’m looking forward to more wireless competitors popping up with 5G and satellites.

Here’s how I ended my cancellation conversation: “If you ever want to win my business back, it’s pretty simple. Give me what you can give my neighbors.”

And that resulted in what?

One problem in the business world is that business folks approach business problems as if they are school assignments to be graded rather than trying to make something customers want.

Another problem in the business world is that their bosses often do grade their work as a school assignment, on the inputs rather than the outputs.

One of my old bosses taught me a trick to snap people out of this. Ask “and that resulted in what?”