Wednesday, December 31, 2014

Do you want to be another statistic?

I was reading about standard deviations and normal distributions yesterday when I got hit with an ah-ha moment.  Here's what I know about normal distribution. The top of the curve in the centre is the mean or the average of all data points plotted on a graph.

In normal distribution, there are approximately 34% of all data points to the left and 34% of all data points to the right of one standard deviation from the mean. Going out two standard deviations from the mean, you will find a total approximately 48% to each side of the mean.

Passed two standard deviations, there is only about 2% on each side.

Whew, that's heavy statistical lifting. To make it simple. Look at the graph to the right. Each white line represents a standard deviation from the middle. If we were looking at businesses revenues against customer loyalty, you would find a similar type of curve. What got me excited was the curve explained that only 2% of businesses would be wildly successful while the 96% cry in mediocrity about the economy. And the remaining 2% would be so bad, their voices would be lost as would their businesses.

It explains why 50% of businesses fail in the first two years of opening. If you're on the left side of this curve, customer loyalty is lower than average and thus, you're losing ground everyday you open your doors.

It also explained why about 97% of airlines worldwide fail. Only 3% were truly remarkable to stay in business. Think Virgin, Southwest Airlines and WestJet.

Most businesses track their sales growth year over year. They expect greater than average increases in growth  but aren't willing to make greater than average sacrifices. Average is bad. It's what everyone else has and it's where everyone else competes.

Jim Collins states that the enemy of great is good. To be good is not enough in our hyper competitive market where customers can order product at the click of a mouse.

To be better than average, a business has to be in the 2% of the graph to the extreme right, two degrees of standard deviation away from the mean.

What does it mean to be two degrees away? It means not doing what everyone else does. It means climbing a tree and venturing out on the skinny branch not afraid of falling. It's all about being different in a remarkable way. It means paying maniac attention to detail to wow a customer. It means telling a story so compelling that customers want to tattoo your brand on their bodies.

What are you doing to go two standard deviations away from everyone else? That's where greatness lives.

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