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The Life-Dinner Principle of ROI

2010 May 9

Why does a rabbit run faster than a fox?  Because while the fox is running for his dinner, the rabbit is running for his life.  Businesses work the same way.

This isn’t a post about motivations, but rather a very simple principle with far reaching consequences:  Priorities matter.  Things survive for a reason.  Existence implies viability.

Therefore we should always be on guard when given easy answers to hard questions and simple metrics to explain complex businesses.  Life is much more complicated than dinner.

Rabbits, Foxes and Cuckoo Birds

Richard Dawkins, in his book The Selfish Gene redefined how we think about culture and business by thinking deeply about things like rabbits, foxes and cuckoo birds. (It was in this book that he coined the term, meme).

Rabbits that are born slow are more likely to get eaten, enlarging the proportion of fast rabbits in the gene pool. Foxes who are fast enough to catch the slowest rabbits survive and continue to propagate, but only need to be fast enough to stay well fed.

If foxes became too efficient or rabbits became to slow, neither would survive. All of rabbits would get eaten and the foxes would either starve or have to seriously change their business model.

The cuckoo story is more bizarre.  They have evolved to lay eggs that look so much like those of other birds that they are able to drop them in their nests, leaving the unsuspecting victims to do the hard work of nurturing the cuckoo offspring.

Why haven’t the other birds evolved a defense mechanism against the ruse?  Most probably because the costs would outweigh the benefits.  They nurture far more of their own eggs than those of the deceitful cuckoos and that’s what they need to do in order to thrive.

Expending the energy of a few dinners is more than worth it when life hangs in the balance.  Nature is a great optimizer.

Life and Dinner in Business

Once you become aware of the life-dinner principle you start seeing it everywhere.  All too often, it is put in clichéd terms of “long-term vs. short-term,” but it’s really about  the difference between having a true commitment to excellence and just keeping up appearances.

Here are some examples:

Talent Development: When I was just getting started I was lucky to work for Katz Media, which has one of the best training programs in the industry.  They invested thousands of dollars to train me for the first three months of my employment, even before I met my first client.

They are more than willing to miss a few dinners to field the very best media sales team in the world, which is one reason why they have been the dominant media representation company for over a century.

When you look around at the world’s top companies, the ones that have prospered for decades, they invest seriously in their talent.  GE invests $1 billion in Crotonville and related programs.  P&G ensures that employees get experience in a variety of divisions and regions.  The list goes on.

Leadership vs. Optimization: Optimization is about getting more of what you want for fewer inputs.  Leadership is about getting your people to want what you want.  Leadership requires not only investment, but serious dedication to the overall mission.

It’s easy for an outside consultant to come in and optimize.  Leadership doesn’t show up in excel spreadsheets and there are always ways to squeeze out a few points of margin for a few quarters.  By then, the consulting project will be over and impressive ROI results will have been delivered.

Issuing directives is always easier than building a consensus.  Organizational charts always look better when they are simple and streamlined.  The real world, however, is quite a bit messier.

TouchPoints: I recently joined ZenithOptimedia, a communications planning company which has built a very successful program called TouchPoints that evaluates the performance of dozens of consumer contact points.

After over 400 studies worldwide, there is a growing body of evidence that many companies focus too much on dinner and not enough on life when it comes to their marketing.  Often, things such as professional recommendations and in-store staff are ignored in favor of more easily measurable marketing actions.

Ironically, poor performance in one consumer contact point will influence the others.  Rude people at the counter will undermine the TV campaign, while positive brand experiences will improve campaign efficiency.

As I’ve written before, brands are collections of synapses. Our brains don’t differentiate where brand impressions come from, just the effect they had on us.

A False Choice

Many would like to pose the life-dinner principle as a tradeoff – do you want to eat today or tomorrow?  It isn’t.  You have to do both.  What is really at issue is whether you truly want to win or just put up stats and make it look good.

Top athletes understand this.  They don’t ask, “Is it better to practice hard or play hard?”  To be at the top of your sport, field or industry you need to constantly work to be your best every day, even when no crowds are cheering and there is no relevant balance sheet item.

The danger is that dinner is always more obvious than life.  At the end of the day, you know if your belly is full or not.  Cancers, on the other hand, spread slowly, often becoming obvious only when it is too late.

How Do You Measure ROI?

In our quest for measurable ROI, it is forget that the term is meaningless without clear objectives.  Are we evaluating only for our dinner or for our life as well?

  • Are we happy with brand awareness or do we also measure brand attributes such as quality, value and other category specific measures of satisfaction?
  • Are we satisfied with marketing campaigns that produce sales, or are we working towards consumer advocacy?
  • Do we measure only sales and profits, or are we pushing for an increasing return on capital?

Jim Collins, in his classic book Good to Great, pointed out that the best companies spend years determining which factors drive their business.  Key metrics are specific to a company’s strategy and culture and are therefore often elusive.  There is no textbook answer.

Dinner is simple.  Life is complicated.  Don’t let anyone ever tell you differently.

– Greg

27 Responses
  1. Ajoy Vakil permalink
    May 9, 2010

    Whew – Life & Dinner! Wonderful post Greg! What an interesting perspective!

    Ajoy Vakil

    Greg Reply:

    Thanks Ajoy.

    Have a great week!

    – Greg

  2. jay Sullivan permalink
    May 9, 2010

    I see you are a fan of Richard Dawkins too.

    I was once in a strategy session at a Fortune 500 company I will not name. Somebody said they wished a competitor would just go out of business. My comment was that this is really unlikely.

    Companies will do anything to survive and survival is a greater motivator than market share. A smaller company facing extinction will always be more motivated, more nimble and more creative facing a larger foe who has more resources, more technology, more leverage. The only way to win that battle would be to convince the smaller company they can survive better in some other business.

    Greg Reply:

    Jay,

    Yes, I’m a fan (of E.O. Wilson as well!).

    I think you’re right about smaller companies being more focused. I truly believe that a lot of people go to big companies simply to hide.

    However, I am amazed that a handful of very large companies are quite nimble as well, with an abundance of energy. Some of these companies are a century old, but keep innovating and are fearsome competitors. Those are really impressive.

    – Greg

  3. May 9, 2010

    I need to reread “Good To Great.” It’s right there on my shelf. Then apply it to my situation.

    I recommend “Talent is Overrated” as a companion volume. I’m half through. It’s life changing. Wish I had known this 30 years ago.
    .-= Dave Doolin´s last blog ..DIY WordPress: How To Add A Copyright Notice To A WordPress Theme =-.

    Greg Reply:

    Dave,

    Talent is )verated is a great book. It covers a lot of the same ground as Outliers, but does a much better job.

    I put it on my reading list for 2009>

    – Greg

  4. Sindhu permalink
    May 9, 2010

    Excellent Article. Love the start of the blog. I recently was reading Neuromarketing , and it covered these points of how to grab the attention and deliver one’s message in the given time span.

    Coming back to the blog, the Dinner and Life perspective is brilliant I think this attitude is required for each and every individual in the company.

    Good to great is one my favorite read.. and also Outliers though i do not agree some of the points made by Malcom, however his passion for digging data is something I revere him for.

    Thanks a ton !!!

    Greg Reply:

    Sindhu,

    Thanks. I’m glad you liked it.

    – Greg

  5. Ripounet permalink
    May 10, 2010

    Hi Greg
    First, i must say i really love this kind of posts that prove people think by themselves and want to share with others. Putting a concept in perspective, applying it to some other field (e.g. Life/Dinner principle applied to ROI) is great.

    However, i fear there be some kind of misunderstanding in your post about what is a dinner and what is life. As you correctly pointed out, l/d is not a tradeoff between eating today or eating tomorrow. I’d like to go further and state that l/d has nothing to do with short-term vs long-term issues. And it if did, “life” would correspond to the short-term strategy (saving my life by running faster now), not the other way around!

    I would probably not have made the l/d analogy to talk about similar companies trying to reach similar goals (say, market share) by different means. I prefer Jay’s way of putting it (he perfectly grasped that the key concept is asymmetry) : the small company does best because it has more immediate pressure, it either wins or dies.

    I think the following holds for the original l/d concept :

    Foxes and rabbits are different by nature, not by strategy.
    The battle is asymmetrical : winning is more important to one side (rabbits) than the other.Not because rabbits feel more motivated! Rather because they might die right now.
    No one is supposed to choose between the dinners and the life (for this chase Mr Fox gets dinner
    or not, Mr Rabbit loses his life or not)
    Selective pressure must apply stronger on one side (e.g. rabbits). This side shall be the “winner”.
    It is not necessarly the prey that adapts more efficiently than the predator. When the big pressure is on the predator’s side, then the predator wins (see Dawkin’s example of a see predator who is certain to starve to death if it doesn’t manage to eat a small fraction of that big school of golden fish)

    I agree with you that Life is, IRL, a complicated topic. Will you nevertheless let someone (me) tell you differently? From the l/d point of view, “life” is a quite easy binary concept : be the best right now, or die right now. No fancy long-term investment!

    Best regard 🙂

    +1 one-year Dawkins big fan!!

    Greg Reply:

    Ripounet,

    Thanks for sharing you perspective.

    Regarding short term vs long term, I agree and made the same point in the article (I guess not clearly enough).

    About the goals thing, I guess we’ll just have to agree to disagree. The battle for resources is so central to evolution that Darwin himself credits Malthus’ paper On Populations (an economics paper, btw) as being the catalyst for the formation of the theory.

    So if fighting for resources is central to evolution, an essential part of each organism’s strategy must be to get their share of those resources (and it’s a similar story for businesses).

    – Greg

    Ripounet Reply:

    Hi again
    Thanx for this quick reply! (btw, i’m still amazed to have found a blog with this interesting 9-may-post while i was googling for some french resource on “l/d” on … may 10th).

    I acknowledge how difficult it is to make one’s point clear (took me, say, 1 hour to write my previous 20-line comment), so i will try to clarify.

    I think we do agree about most of the dynamic thing! Darwinian evolution, struggle for life and resource, natural selection, fancy individual strategies do apply to business. And although there exists some major differences between market evolution and species evolution, they do share great ideas and analogies are often relevant.

    My whole point was just a purist correction about what Dawkins meant when he introduced his original “life/dinner principle”. When the fox is chasing the rabbit, i would hope you agree with me that this is not a situation in which any side might choose between investing for a dinner or investing for life. The rabbit does not have this choice. The fox does not have this choice. I felt i had to point it out, because ROI is about investment.

    For the rest of the market/darwinism analogy, of course you are right and i agree 🙂

    And yes, one may say correctly that the fox lineage (tepidly) invests on increased speed, and the rabbit lineage (efficiently) invests on increased speed.

    Best regards

    Greg Reply:

    Ripounet,

    Yes, I do think we mostly agree. The only point of dissonance is about investment. I see investment as integral to evolution (calories invested in an activity such as child rearing, altruism, etc. have to pay off from a genetic point of view). Dawkins, Wilson and other sociobiologists (or evolutionary psychologists if you prefer) have used the same analogy.

    Thanks again for both of your comments.

    – Greg

  6. May 10, 2010

    Very interesting article … For an organisation to survive it has to be sustainable and profitable, have ‘a true commitment to excellence’. Too often this commitment is overlooked due to a lack of perceived, or short term, ROI and profitability. Many companies drop the sustainability focus because of the effect on short term profitability. Is this because people just can’t see past the next months sales figures??

    Greg Reply:

    Terry,

    It’s an interesting question. As I wrote in the article, I don’t think it’s strictly a short-term vs. long-term issue. Rather, it most people have a bias for easily verifiable information. Also, there are some competence and passion issues attached.

    – Greg

  7. May 11, 2010

    I was so cheered on by this article, Greg, you summed up in totality my frustration with typical business practices. You are a brilliant illustrator of concepts; I am grateful for your talent and your position. I champion the greater goal and find segmented optimization as you described it, a disservice to a business’ overall mission. I see so many companies chasing their tails, competing to fit in rather than stand out by using these crutches, these fashions of the day. Yes, fashions. Is it just me who finds it a bit vain? I see it as keeping up with the Jones’ behavior. Beter, not great. I probably just stole that from you.

    I’m glad I fumbled across your article, I’ll be watching your tweets.

    Lisa

    Greg Reply:

    Lisa,

    Thanks a lot for this. Both the comment here and on linked in were very nice and heartfelt. They are much appreciated.

    – Greg

  8. Cheryl Howard permalink
    May 15, 2010

    I am a former GE employee. I worked with hundreds of people at GE who focused on true work excellence and were proud of their effort. We strove for great improvement year to year, but we did have a long-term focus. Then Wall Street analysts would say that our results, which were better than most companies overall, just didn’t meet their expectations, and the stock would dip. Am I correct in thinking that Wall Street standards are narrowly focused on the dinner?

    Greg Reply:

    Cheryl,

    I would say so. And someone else always pays!

    – Greg

  9. June 5, 2010

    Greg:
    I’m thrilled to have stumbled upon you and your site. Can you please give this a look http://budurl.com/ya87 and tell us — what do you make of…

    a new metric called “conversion efficiency,” which divides “event completing sessions” by “sessions,” Seton Hall was able to determine that Facebook visitors were more motivated to convert than visitors from marketing programs, natural search, referring sites, or direct load.

    … and Seton Hall’s conclusion. First, it seems that this, once again, falls into the short-term ROI mindset. But it also seems to be a bit of a bullshit metric.

    It seems to me that “more motivated to convert” is fairly… well… bullshit. I don’t really want to know that. That’s not really valuable to know… again, setting aside the whole time frame issue.

    Greg Reply:

    Jeffrey,

    Any plunge into the unknown is necessarily an iterative process.

    Good luck and keep the faith!

    – Greg

    Greg Reply:

    Jeff,

    I was going through the site and realized I gave your comment, which raised an interesting issue, short shrift. Sorry about that. My only excuse in that in my efforts to reply to every comment, I sometimes rush through and overlook some gems.

    The article is indeed bullshit and not just because of the time frame issue. It is exactly this “I have an answer and now will scour the earth to prove I’m right” approach that so often discredits digital marketers.

    However, I think there is a bigger issue at work: the myth of scientific marketing (coincidently, this is the subject of my post tomorrow).

    The idea is that marketers should aim to have a clear idea of cause and effect. This is not only impractical, it is exactly the opposite of how real science is actually done.

    The interesting problems are always in the realm of the unknown. Moving forward requires some trial and error, blind alleys and red herrings. Most of the time your hunches are wrong and nothing is ever really proven. Every once in a while, you uncover a little bit more about how things really work.

    This is not only a much more reasonable approach to marketing, it also explains the data better. We understand TV extremely well, which is why it’s share of ad spending has stayed fairly constant since the dawn of the web. We don’t understand digital very well which is why it has been slow to win a serious share of ad budgets (except for direct response).

    With regard to Facebook pages, I think that ROI efforts are generally misguided. I started a FB page a few months ago and have only about 140 followers, far below my other social media efforts. However, one thing I have noticed is that a large percentage of people on it are not connected to me on Twitter and LinkedIn, so I get the chance to engage them where before I did not. It seems that some people are just Facebook people.

    Is it worth it? I don’t really know, and won’t know for a long while, maybe never. But the investment in time isn’t all that great and I’m learning a bit. Most of all, FB amounts to a fairly small part of my overall “brand investment portfolio” (I like that term – I think I might have just invented it. It may be a keeper). I’m fully aware that some of what I do will be a waste of time, but I don’t really care. What’s important to me is the return on my total investment, which I am happy to say is immensely positive:-))

    Thanks again for your comment.

    – Greg

  10. June 6, 2010

    Hi Greg,
    I loved this article. For me, reading this confirmed I’m in it for “life” not dinner. I made a business decision this week, althought a small one, and I am so happy with it. Growing is a long, slow process with no short cuts. I am counting on my ROI to be worth it!
    Thanks for your insight!
    Lisa

    Greg Reply:

    Lisa,

    Thanks. I’m glad to hear that things are going well with Lisa Robin Designs!

    – Greg

  11. July 15, 2010

    Thoughtful points, thoughtfully made. In my mind, it’s not just what the Life-Dinner Principle of ROI implies for how ROI is measured. It’s also about how the associated work is instrumented + enabled in ways that improve the odds that the ROI, when measured, will be there.

    Go further, and it’s about how assuredly the work, as done, delivers an ROI which, when measured, is improving. IMO, the key, in all of this, is people. The more directly measures of ROI loop back into talent development + leadership, the higher the odds the whole, complex, beast will be higher performing.

    Trust this adds some value.

    Greg Reply:

    Good points. Thanks, John.

    – Greg

  12. November 28, 2010

    I suppose you know, that you simplified all these things a little bit, but the core of the post is really true. You have a good sense of humour simplifiing business to this level. The truth is bitter. Companies and their managers are in a habit to play a game of marketing, research, TALENT search:))))), personnel development, strategic planning:))))), CORPORATE CULTURE…etc etc etc…Dead idols. They cannot speak, cannot talk, cannot walk, do nothing, and people serve them…It is not for life – it just for a habit (all do this) and for money (this position needs to do this).
    It is NEVER for life. People doing this start their new business or go to other company if this business will be killed by doing things for habit and money. And nobody will cry at the funeral.

    Greg Reply:

    Thanks for sharing your thoughts Elena.

    – Greg

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