Saturday, September 28, 2019

What Jeff Ma Could Teach the Watch Industry

In fairness, a lot of what will be referencing Jeff Ma's conversation with Dave Chang on Mr. Chang's podcast - The Dave Chang Show.

There were some very interesting notions that I thought might be worth a view through the lens of the watch world. For those of you unfamiliar, and I was certainly one of them, Jeff Ma is a graduate of MIT, with a degree in Mechanical Engineering, but is best known for his research and application of analytics in gambling (casinos, etc.) and now advises business leaders and a few professional sports teams on how to better understand analytics and think more clearly about how they run the day to day of their business.

A few ideas that they discussed:

Unconscious Bias
This is a notion that I have dipped into when thinking about what Bill James, Billy Beane and others have called out as foolish behavior.  What Mr. Ma went into detail about was the notion that we often think in terms of narratives rather than analytic realities.  And more often than not, the narrative is, in fact, false.  Essentially, what it boils down to is a pre-existing belief about how something should be, and how our unconscious bias will prevent us from looking at things as they really are.  Now as someone who spends the majority of his waking life working for a non-profit, social justing seeking organization, I know that unconscious bias is a very familiar term used when we try to understand societal inequities. But what Mr. Ma underscores is that unconscious bias will impact pretty much everything we do - which includes business.  

So how does that apply to the watch business?
Well, my fellow members of the Fourth and Fifth Estates can confirm that more often than not, a watch brand will hire a PR firm from the same pool of 2 firms that they always hire from.  Now the interesting thing is that they will typically work with Firm A for 2 years, not renew the contract and go with Firm B for 2 years, only to come back and work with Firm A again.  In other words?  Firm C who can actually provide solid analytical data that proves their firm could be as (if not more) effective will never be considered.  The same is true with brand leaders.  All too often, the same faces keep appearing in the same roles, merely changing jerseys like a professional footballer.  The unconscious bias prevents the hiring committees from making an informed hiring decision, because they are more comfortable hiring someone who fits the pre-conceived mold of what they are looking for, rather than the best person for the job.  Ever wonder why so many brand managers in the US are, more often than not, European expats?  

Misaligned Incentives -
Brand CEOs, and brand managers are most typically focused not on "winning" or having the most successful brand in terms of quantifiable data results.  More often than not, the greater concern is that of keeping their job, remaining employed.  While there are some true alternative thinkers and practitioners out there, that willingness to try something different is going to be stifled by the misaligned incentives they are operating under.  Is it better to make fewer watches, spend less money on red carpet PR events, sell what you have and not dump the majority of your product into the grey market?  YES.  But the misaligned incentives of the big-time watch world enforce a different mentality.  Winning is no longer having a successful respected brand, it is churning as many units out the door as possible, regardless of whether or not they are legitimate sales, or the red-headed step children of the grey market.  When a group of people in a brand are operating mostly from a position of self-preservation?  Well, I think you can see how that is going to turn out.

Omission Bias -
Essentially favoring inaction over action when we fear that the action might lead to further or worse harm.  Mr. Ma shares the story of when his mother suffered a stroke, and the doctor offered two options:
1.  Do nothing, the odds were only 22% that she would  survive beyond 60 days. 
2.  Operate, remove the blood clot and pro-actively relieve pressure on the brain, which might help the brain recover more quickly.  Now obviously brain surgery is nothing to be taken lightly, but the decision to operate had a higher probability of success, if it was successful.

And it is interesting to me to consider this, because in many ways the medical realities of suffering a stroke are not that dissimilar to the watch industry as a whole right now.  Think about how the stroke metaphor applies to the industry.  The industry, as a whole, is chasing option 1 - Inaction.  The fear of really rolling up their sleeves and understanding just how things are going to work is terrifying.  What if it's a mistake?  What if you get it wrong?  What if you don't get your bonus?  Essentially, the industry is playing not to lose, rather than playing to win.  Because the foolish hope that is being clung onto, is if they wait it out, and whistle past the graveyard, things will go back to the way they once were.  But what we are now understanding with the rupture of the grey market balloon?  Things were never that great to begin with.

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