In the midst of teaching my children about the economics behind a lemonade stand, I realized that the lessons I am trying to teach my 7 year old daughter are either outdated or just plain wrong. With the changing face of business, even my simplest comments about trying to be in a high-traffic location don't really make a lot of sense in today’s world.
Me: "You should think about setting up in a place where there's a lot of people, you are more likely to get customers."
Passing along the knowledge that high volume leads to higher sales isn't exactly true. Yes, it’s always nice to have more opportunity, but my comment lacked a basic understanding of targeting. Also, the way I started the sentence isn't really true in business anymore. "You should think" doesn't align with modern reality. Taking a step back, I need to show her that we need to "examine the data" that shows where your customers are most likely to be. Maybe her soccer field is better than an indoor mall.
Me: "Make sure you prepare enough ingredients."
My comment to her was followed up by a plethora of questions like "how do you know how much XXX ingredient to have?" After she asked this question, I began to see that I was completely unprepared on the knowledge front. I definitely started this conversation without drinking my own lemonade (pun intended). Not only did I not know the lemonade business, but I hadn't even begun thinking about weather, holidays, or cyclical patterns that affect sales. Each of these factors are issues businesses inherently think about and take for granted, but never formalize into their plan. Luckily, in the end, the volume of ingredients came down to how much she could carry. *Phew* crisis averted.
Me: "Make a big sign so everyone who goes by can see it."
Outside of the obvious, there are many more marketing channels than a sign. I cringed even as I said this. I again, ran into my own pre-conceived notions about business. Bigger isn't necessarily better. I worry that putting this in her head is only going to make her think that's the only factor in success. Instead, I should have explained that boutique shops can make higher margin based on a quality product and targeted advertising.
Maybe I'm the problem here. It seems like as a parent with a business and computer science degree, I really should have better answers for my daughter. So I sat down, thought through what I'd said and began to talk about signals, patterns in data, and making decisions based on the data.
Daughter: "Dad, do you mean a signal like a red light?"
Yes. I started to explain to her that if car velocity was the target variable, then a red light would be the signal, albeit the cause… obviously, I am going to have to talk about this when she get older - or, more accurately, when I get a little wiser. Being in the forefront of the software industry, I'm seeing a trend to bring this science to the masses. Eureqa is one of our software partners that has opened doors and makes common sense of data science, and frankly, has blown the socks off retail analytics. I loaded the software onto one of our four node (32 core) clusters. I've started showing my daughter the software and what all the numbers mean. Not surprisingly, it has been easier when she can see the trend lines. At some point, I will need to teach my daughter about the data science behind the software, but for now, she trusts the data and what it tells her.
The perception she is forming of business is already radically different than mine. In my career, I've been helping businesses with collection and analysis of data through software. That's assumed for her. She already makes decisions based on technology (don’t get me started about a 7 year old having a phone or her texting me at bedtime). Her trust of data and patterns is, well, a generation ahead.
After one of my sessions of showing her the Eureqa software, she asked why everyone didn't use this technology. I almost fell down the rat hole of describing the "Simply Orange" case study to her (telling her that analytics are actually everywhere), but wisely, I just smiled, poured her a lemonade, and told her I thought everyone should use it and maybe she could be the one to show the world. If you haven't read the case study about how Coca Cola uses information to normalize their orange juice, you should. Its where we are headed.
I never thought I’d get so tongue tied explaining the business of a lemonade stand but it came out fine in the end with a little help.
PS: Julia@chicagoist, you are wrong about Simply Orange. Data science is the status quo today and should be embraced. It creates better products, not flawed ones. I'll put my money on the data science any day of the week, because in a few years my daughter is coming to eat your lunch.
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