Wednesday, August 15, 2012

Weird Word of the Week: HiPPO

Of course we all know the word "hippo" is short for "hippopotamus," which is Greek for "water horse," which is weird enough.

But today Madame L wants to mention the word "HiPPO," which is short for "highest-paid person's opinion," which is the way decisions are often made in many organizations, from small families to large businesses. 

And this way of decision-making is often counter-productive, as Madame L learned from this article in the May 2012 issue of "Wired" magazine: "The A/B Test."

Instead of having the "top" person make a decision, it works better --- that is, it makes more money and achieves other goals better, while making the non-"top" people happier --- than the HiPPO way. Here's a bit from the article itself:

     "As Google analytics expert Avinash Kaushik declares, 'Most websites suck because HiPPOs create them.'

     "Tech circles are rife with stories of the clueless boss who almost killed a project because of a 'mere opinion.' In Amazon’s early days, developer Greg Linden came up with the idea of giving personalized 'impulse buy' recommendations to customers as they checked out, based on what was in their shopping cart. He made a demo for the new feature but was shot down. Linden bristled at the thought that the idea might not even be tested. 'I was told I was forbidden to work on this any further. It should have stopped there.'

     "Instead Linden worked up an A/B test. It showed that Amazon stood to gain so much revenue from the feature that all arguments against it were instantly rendered null by the data. 'I do know that in some organizations, challenging an SVP would be a fatal mistake, right or wrong,' Linden wrote in a blog post on the subject. But once he’d done an objective test, putting the idea in front of real customers, the higher-ups had to bend. Amazon’s culture wouldn’t allow otherwise." 

Madame L recommends the entire article, which is full of Ah-ha! moments and useful principles.

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