Kudos to Sharon Begley, Newsweek’s excellent science columnist, for her article “Don’t Just ‘Do Something’” in the June 21, 2010, issue of the magazine.

Tongue in cheek, Ms. Begley begins “Scientists are such spoilsports, always insisting on gathering data on the likely effects of a strategy before implementing it.” She then focuses on the oil spill and the pressure politicians feel (I add: pressure that perhaps they bring on themselves?) to do something even if there’s no evidence that the something-to-be-done will help. The pressure they feel to do something can prevail even if there is evidence that the something will make things worse. Apparently we the people believe that bad action is better than no action at all. If we didn’t believe that, we wouldn’t demand that politicians act. Not unlike, perhaps, demanding that doctors prescribe antibiotics to treat a virus.

Businesspeople feel the same pressure, of course. We feel the pressure to beat targets. We feel the pressure to turn things around. We feel the pressure to make our mark and show we’re in charge. We fall into a do-something trap.

I’ve seen it often in business war games. When given an opportunity to change their strategies, managers usually do so (and almost always do so if they’re taking over from another group of managers). They usually don’t stick with a previous strategy decision, whether or not it seems to be working. And those changed strategies often subtract value. How do I know? By simulating their businesses’ performance with and without the strategy changes.

I’ve seen it also in the tens of millions of strategy simulations I’ve run (using ACS’ patent-pending strategy decision tests) in a pricing tournament on which I’ve previously reported. Nearly 300 strategists have contributed pricing strategies to the tournament. Each person’s overall pricing strategy could include 0, 1, or 2 changes in strategy over time. About 28% of the strategists made 0 changes, 25% made 1 change, and 47% made 2 changes. The 47% making 2 changes performed slightly worse than the other groups. I am not saying that changing strategies necessarily hurts performance. I am saying that merely changing strategies — doing something when we have the chance — doesn’t necessarily help performance.

The question, of course, then becomes how can we know if changing course will help or hurt. That, Ms. Begley says, is what science is for. Where we don’t have established science, I’d add that it’s worth testing a strategy change in a safe environment before you act. And the first do something you should do is to not assume that doing something will make things better.

Further reading: A Dark and Stormy Night, Gross Galactic Product, It’s Working!, The Model Whisperer,  What You Pay For.

Kudos to Abercrombie for not slashing prices in the dismal retail climate. (”Abercrombie to Stick to Full Prices, Despite Bleak Outlook,” The Wall Street Journal, November 14, 2008.) Their sales are down – then again, whose aren’t? — but their margins are strong. Competitors that are cutting prices to maintain sales are suffering greatly reduced margins. As Abercrombie recognizes, today’s reduced margins are not the only casualty of price cuts; tomorrow’s reduced brand equity and reputation will take a toll too. Note, by the way, that we don’t know what the outcome of Abercrombie’s decision will be, though we predict it will be good. All we can do regarding them, and all anyone can do with any prediction, is to laud the quality of their decision.

Further reading: What You Pay For, Alignment, Making Competitors Intelligent.

Abercrombie update, May 17 2009. The Journal reported After Big Loss, Abercrombie to Cut Prices. Abercrombie has chosen to implement “meaningful reductions” in price. The result so far is that the rate of decline in Abercrombie’s sales has slowed: sales fell 22% in April, less than the decline in March. Meanwhile, gross margin dropped 3.5 percentage points. A good move? Depends on what you want, of course, sales or margin. And it depends on whether you believe that the price cut now will affect their brand and pricing power later. Apparently Abercrombie executives are concerned about downstream effects too: they concentrated the price cuts on just two of their brands.

Kudos to Pure Digital for their Flip line of picket-size camcorders. (”Gadget of the Stars” by N’Gai Croal, Newsweek, December 15, 2008.) They thought broadly and boldly, going from making disposable digital still cameras for drugstores and camera shops to a 32% share – versus Canon’s 10% and Sony’s 8% – in Flash-based camcorders. Not bad for a company that started in 2001. Note also how Pure Digital thinks differently from at least one of its competitors. According to Newsweek, Audiovox “plans more-aggressive marketing and pricing. ‘In this economy, people are looking for value,’ says [senior VP Ralph] Etna.” Meanwhile, Pure Digital’s CEO Jonathan Kaplan says “‘We want to show the world that we can innovate with tech and fun.’” (To be fair, that’s one sentence from Audiovox. Your voluble author remembers giving 45-minute interviews that were condensed into a single sentence.)

Further reading: You’ve Got the Data. Now What?, You Say You Want a Revolution, Exalted Numbers.

Kudos to Mayor Oh Se-hoon of Seoul for… well, we’ll just include several quotations from him in his interview with Newsweek Chairman Richard M. Smith (”A Young Mayor Pushes Reform,” Newsweek, December 15, 2008). “‘Korea heavily depends on trade with the outside world, and the products we export with a touch of culture will be sold at a more expensive price.’” “‘We already have 30,000 design students coming out of school every year. … Our goal is to have people say that if you want to see the latest design trend, you should go to Seoul.’” About making Seoul a global and business-friendly city: “‘We want to be friendly to foreigners, and that is probably the best advantage we can have.’” About being judged: “‘If I have created a working environment where public officials try new things, I should be recognized as a successful mayor.’”

Cost-cutters and bailers-out: notice the emphasis on investment, creativity, and vision. How different that is from budgets, giving the customer what they “ask for,” and defining success as a good quarter. Abercrombie, Pure Digital, and Seoul have a lot in common. Would you invest in them, or in their competitors? Further reading: The Good, the Bad, and the Lucky.

One of my favorite websites (at least until November 4) is fivethirtyeight.com (“Electoral Projections Done Right”). Named for the number of electors in the Electoral College, the site cleverly combines polling data with thousands of scenario simulations to assess what might happen in the presidential election now underway in the United States. It is testimony to the combined power of creativity, rigor, and computer power. It is to conventional projections what Microsoft Excel is to a pocket calculator.

(If you like what you see at fivethirtyeight.com, take a look at ACS’ Decision Tournaments™ and Robert Axelrod’s book The Evolution of Cooperation.)

Those of you who have visited ACS’ new website, whatifyourstrategy.com, deserve to know who deserves the credit for it: the fine folks at Substance, Inc. They took lofty ideas and ambitious vision and brought them to electronic life. Substance did a great job, and we thank them.

Where did the ideas for our new website come from? I credit my colleague Mark Jacobs. We at ACS practiced what Mark preached in his blog post What are you?, and we thought through who we are. Thank you, Mark.

The Wall Street Journal wrote on September 23, 2008, about Honda’s flexible production facilities. It can take GM or Ford weeks or months, and many millions of dollars, to modify a plant to build a different model. It can take Honda’s plant in East Liberty, Ohio, as little as five minutes to switch from building Civic compacts to CR-V crossovers.

There are many advantages to that flexibility, and the article describes some of them. As a “what if your strategy” exercise for the reader, see how many you can imagine. (For practice, think about bathtubs.) Notice that not all of the benefits are about production. There are as many benefits for business strategy.

When I was an undergraduate at Yale, I listened to Avalon Professor of the History of Science Derek de Solla Price (1922-1983) talk about knowledge. As I remember through the fog of decades, he said that the best insights to be gotten from science would come from looking across fields (silos, if you will). It occurs to me that that’s what Honda has done, intentionally or not. Mass-production factories are hard-wired, which is nirvana for economies of scale and anathema for adaptability. Flexible factories are a stretch for a person who thinks in terms of mass production, and they are a perfectly natural concept to a computer scientist, for whom hard-wiring is awful. Instead of Microsoft Word, can you imagine Microsoft Poet, a processor for words that rhyme, and Microsoft Prose, a processor for words that don’t?

Kudos to Honda, to others who use flexible factories, and to those who design flexible factories.

An honorable mention to Chrysler. On September 24, the Journal wrote that Chrysler is moving its electric cars to market quickly “by relying on outside suppliers for many … key components. That is a big change from the auto industry’s traditional approach.”

Much of what we read and hear in the media is about averages, trends, and “the market.” When we see such information, it’s natural to worry that they know something I don’t. It’s natural to fear being left behind, being left high and dry. Welcome to the great (as in large) masses. Here’s your uniform. Don’t worry, one size fits all.

There may be wisdom in crowds and safety in numbers, but there’s not much inspiration in a herd or thought in groupthink.

The innovator, the leader, and the winner don’t yell “Quick, do what everyone else is doing!” They do something different.

To be fair, doing something different isn’t a sufficient condition for success. If it were, my idea for an espresso tap, alongside the hot and cold water, would have made me a rich man. Do something different that’s good.

And so let us here congratulate the companies that are doing something different and good. The companies that defy the averages, buck the trends, make their markets. The companies that make their success even in tough conditions. Apple is a perennial favorite, with designs and foresight that behemoths never seem to beat. Singapore Airlines, priced high and making money with a superior service when most airlines think of nothing but cost. Method, revolutionizing home-cleaning products. And which company do you admire more, General Motors  ($181 billion in revenue) or Porsche ($7 billion in revenue)?

It’s your turn. Which companies would you nominate as counterpoints, mavericks, and exemplars of good-different? Let us know your favorite(s) and why they make your list.