The Life-Dinner Principle of ROI
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.