Profound Change & Bigger Profits: Closer than you think?

Posted on | November 11, 2013 | 13 Comments

What do an economics professor and your company’s profits have in common? Not much, and that’s why your profits likely aren’t what they should be.

Ever hear of a guy named Steve Levitt? Dr. Levitt holds degrees from Harvard and MIT yet freely admits, “The only reason I made it through college is the schools didn’t want to hassle with flunking me.” Proof he isn’t joking: He holds the record at his high school for the lowest ever math score: 2%. Yet Steve Levitt found a way to work around his math struggles and has become one of the world’s most famous economists.

After graduating, Dr. Levitt took a job as a professor. There he lived in anonymity until he started experimenting. “What if I take a completely different approach to economics?” he asked himself. “Instead of living in a world of numbers, what if I applied my skills to the world of association?”

“For example, instead of writing papers about the possible impact of currency fluctuations in Timbuktu (boring!), what if I study the association between drug dealers and McDonald’s workers? Unique names and inner-city academic performance?” (strange but interesting!)

Taking a different track, something his fellow economists considered idiotic, Dr. Levitt is now a global celebrity. Perhaps you’re among the 4 million+ worldwide who’ve read the book that spawned his fame, Freakonomics.

Last month I attended a conference where Dr. Levitt spoke about the most ignored opportunity that businesses have to change their fortune: experimentation.

Dr. Levitt: “One area where the academic and scientific arenas excel is experimentation. Professionals in those fields are challenged to ask different questions and seek different solutions. In business, it’s the opposite! The business world is so resistant to change. But we’ve found that even the tiniest experiments within a business make profound differences in bottom line profits.”

Real life examples that prove Dr. Levitt’s statement:

• A bike share business in Denmark was suffering many thefts from its bike cages.
The experiment: Hang a big poster of an eye inside the cage. (Weird, right?)
The result: 62% decrease in thefts.

• Wal-Mart’s sales were falling despite massive increases in marketing.
The experiment: Increase the size of its shopping carts.
The result: 50% increase in sales.

• Target’s shipping costs were skyrocketing.
The experiment: Sell detergents in concentrated formulas, thereby reducing package sizes by 75%.
The result: 110,000 tons less plastic and cardboard waste, 400 Million fewer gallons of water shipped, 500,000 fewer gallons diesel fuel.

• My own problem from years ago:
No realtors referring me business even though our bank’s rates were the lowest in town.
The experiment: Stop advertising low rates and start educating realtors on how to sell more houses.
The result: Quick bounce from no results to leading mortgage provider in town.
(A special thanks to my #1 mentor, my dad, for that one but that’s a blog for another day!)

So here’s my challenge for you:
Immediately after reading this blog, take five minutes and brainstorm five low cost, simple experiments you can run in your organization. Not large scale changes that require massive planning, just small scale experiments you can run on the side.

Sample questions to ask yourself:
• How can you show more appreciation to your customers?
• What offers can you make that your customers will find compelling?
• What’s another way you can deliver your products to your customers?
• Whose business is a good complement to yours? How can you work together?
• What’s a problem your customers face that you can help them solve?

C’mon, kind reader, try something new! Prove to Dr. Levitt and to yourself that your business is not the norm, that you are willing to experiment your way to bigger profits.

Share

Comments

13 Responses to “Profound Change & Bigger Profits: Closer than you think?”

  1. ryan williams
    November 12th, 2013 @ 6:41 am

    Dr. levitates follow up book to this is equally as spectacular by the way, what a great person and thinker..

    For those of you reading this and hope a magical change will happen by not ACTING ON some of this advice, well it won’t.

    Take 30 minutes and turn your email and phone off and pick one of these suggested areas to focus on this month. It will work, i promise you it will. If you don’t focus on these details that will transform your business, then nobody else will !

    Great stuff buddy…

    ryan

  2. ryan williams
    November 12th, 2013 @ 6:42 am

    - or Dr. Levitt’s – : )

  3. Dennis Sheehan
    November 12th, 2013 @ 8:51 am

    Ben,

    Good one! You always have a fascinating angle on things. And as an economist myself, I believe that more economists should be highly respected, famous, and rich. :-)

    Have you seen Jim Manzi’s book, “Uncontrolled”? He discusses experiments in business, politics, and social sciences. And incidentally criticizes some research that Levitt is well known for.

    So now I am going to go think about experimenting……maybe on my students today.

    Dennis

  4. Ken Bachman
    November 12th, 2013 @ 9:31 am

    Ben,

    You always inspire me to think outside the box. I hate the box. It confines and restricts my potential. Gonna tear it down!

    Ken

  5. Terry Laughlin
    November 12th, 2013 @ 11:23 am

    Ben
    Am I reading your blog incorrectly? I thought you were in the language-teaching business, but in this post you refer to yourself as a mortgage provider? Day job?

  6. Ben Lawrence
    November 12th, 2013 @ 4:59 pm

    Excellent question, Terry, and proof my language teaching skills need additional refinement :) You are correct that I’m in the language business. The mortgage position was from years ago, soon after college. (Back in the ’90′s when our friends in Wilkes-Barre, PA introduced me to Total Immersion Swimming!) By the way: Congrats again on your recent marathon swim. What fun to read about your adventures.

  7. Ben Lawrence
    November 12th, 2013 @ 5:00 pm

    Ken, if anyone has a crowbar and sawzall within reach of his desk, it’s you. Down with the box! How honored I am to be among those challenging you to break beyond it.

  8. Ben Lawrence
    November 12th, 2013 @ 5:03 pm

    Dennis, Thank you for the book suggestion. You have spent so many years connecting the academic and business worlds.. How can we feature you as a guest presenter? Hmmm…. Something to consider during your next looooong bike ride.

  9. Ben Lawrence
    November 12th, 2013 @ 5:05 pm

    Ryan, You just uncovered the KEY to making this stuff work: Taking time to work ON our business vs. IN it. Long live Michael Gerber’s E-Myth!
    You’re right, it doesn’t take long to come up with a few experiments and if they’re the right kind it won’t take long to try them, either. Thanks for commenting.

  10. Heather Betts
    November 13th, 2013 @ 11:34 am

    Ben, great blog; we have to be WILLING and brave enough to take the leap of faith outside the proverbial “box” no matter what business/job/discipline we spend our living doing. I look forward to reading many more of your blogs. Our ability to sometimes redirect our thinking about how we do “things” is directly related to how we treat others and see ourselves in our everyday lives. Kudos for shedding light on this important topic. Look forward to more of your great insights!

  11. Joel Blunk
    November 13th, 2013 @ 4:38 pm

    Well done, Ben. Thanks for helping me think outside the box once more, and begin to put that Duke Econ degree to work – finally! You coming from your wheelhouse helps me find mine.

  12. Ben Lawrence
    November 15th, 2013 @ 10:44 am

    Joel, Somewhere out there is a former Duke professor smiling as a result of your comment. You are Renaissance Man if ever there was one. See you outside the box!

  13. Ben Lawrence
    November 15th, 2013 @ 10:47 am

    Great point, Heather. There’s a big difference between having to do something and wanting to do something. The best leaders I’ve ever worked or played with have a gift for instilling the latter.

Leave a Reply






  • E-mail updates

    Enter your email address:

  • Quote


    "It takes many good deeds to build a good reputation, and only one bad one to lose it."
    -Benjamin Franklin

  • About Ben Lawrence

    Ben Lawrence Ben's expertise is helping organizations reach their full potential through an empathetic, value-first, challenger-based focus on their customers.  Data analysts want to choke him but entrepreneurial, sales driven, profitable, customer-centric organizations (or those who aspire to become one) love him.

    Ben lives in Pennsylvania with his wife, three daughters, dog Elvis and foo foo but badass dog Ginger. He is a competitive triathlete and member of the National Eagle Scout Association.

  • RSS Ben Lawrence blog feed

  • Categories

  • Archives