The World Bank released a report restating China’s real GDP downward by 40%. That’s a lot. It seems that with all of the highly sophisticated modeling that goes on to determine GDP, a very basic assumption – namely the relevance of converting currency into US Dollars, so we can all compare apples to apples – just wasn’t considered.
China manipulates its currency to keep its exports cheap, so we’re told. If left to float against the US Dollar, it would depreciate dramatically. This is the largest point of contention in US-China trade negotiations and one that shows no signs of closure soon. So US trade negotiators are well aware of this. The World Bank works hard to analyze China’s GDP. And these two facts were never put together.
The impact of this revision is startlingly. China’s economy is now less than half the size of the US economy. Intelligence estimates that judge spending on military are now significantly different, as are estimates on domestic spending and other key indicators for economic projections for the region.
Hundreds of very bright people engaged in highly sophisticated statistical manipulation, all blown to kingdom come because of a calculation so simple it was almost an afterthought.
We always launch our products to distribution first because we need to protect them. Once we’ve done this, we launch to retail. (I know you’ve only been doing retail for a few years, but doesn’t retail need a longer lead time?)
We have a new product development process that dictates we look at each product separately – not by channel or category. (Don’t channels need suites of products? If you just produce one, will it really work?)
When was the last time you used a decision tree with a handful of “plug” assumptions that no one in the room thinks to challenge? Does anyone even remember where that assumption came from?
How many times have we gone through strategic planning processes with SWOT analyses tacked on carelessly at the end? This type of work needs more than fifteen minutes of interrupted attention.
This is a difficult problem to address, because the problem is blindness to our own natural biases. We can’t easily see what we’re programmed to ignore. Smart people seek patterns. We don’t need to go over the same ground over and over, do we? Let’s take short cuts. But short cuts often become institutions. So how can you ensure that myopic
group think isn’t taking you and your team astray?
One of the best ways I’ve come across to deal with this is to bring non-team members into the discussion – the “foreigners” from finance, for example – who don’t understand the inner game of your own Byzantine methods.
But just being aware that you’re on to yourself is a good first step.