The
October, 2003
Metrist
Newsletter

(and how Lee might have won the war if he had)

By Ken Novak, Metrist Partners

Have you seen Adam Lashinsky’s cover story in the September 1 Fortune on Meg Whitman and eBay? It’s an excellent piece, with a lot to say to those of us in the web business. Three years after the dot-com “bust”, eBay is still among Fortune’s fastest-growing companies.

If you're a Fortune subscriber, you can reach Lashinsky's article here. Only the first few paragraphs are available to non-subscribers, but if you send us your e-mail address by clicking here, we'll send his entire piece to you. It's worth reading.

But what does that have to do with Confederate General Robert E. Lee? Lee, second in his class at West Point, was a brilliant general, but failed at Gettysburg when he made a classic military blunder.

Simply put, he outran his scouts.

Back then, scouts usually took the form of cavalry, moving quickly on horseback, engaged not only in combat but also in intelligence gathering: where the enemy was, how many there were, and how prepared they appeared to be. General J.E.B. Stuart’s cavalry was Lee’s decision support staff. (Click here to read more about Lee and how his lack of information at Gettysburg changed the course of the Civil War.)

While General Lee had scouts on horseback, eBay CEO Margaret “Meg” Whitman has managers who have immediate access to site data, and who are driven and trained to find the business information in those data. In a sense, their scouts are the reports, standard and ad hoc, that they use continually.

“Being metrics-driven,” Whitman says, “is an important part of scaling to be a very large company. In the early days you could feel it, you could touch it. Now that's more difficult, so it has to be measured.”

Lee’s blunder cost the lives of thousands of men; eBay’s reliance on analytic “scouting” reduces the risk of thousands of business decisions every week. Statistics, Lashinsky says, have become eBay’s international language. “The more stats [we have], the more early warnings [we get] and the more levers [we can] pull to make things work.”

And work they do: $2 billion in revenue (on $20 billion in transactions), and $400 million in earnings in 2003. How many other dot-coms are performing that well? Exactly.

Whitman’s primary rule is, “If you can't measure it, you can't control it.” “Managing by the numbers” doesn't mean disregarding managerial intuition. But, as you scale, it means testing intuition against results.

How can you learn from eBay's success? Make certain the data you have becomes the information you need.  

1) Evaluate the ability of your “scouts” to give you a picture of the battlefield. Is your current reporting system giving you the ability to develop a picture of your business? If not, then the data you already have isn't becoming the information you need. eBay's managers know all their various operating ratios, and so do their managers.

2) There are no "silver bullets". Look for the small changes that add up to better results. Are your menus and search boxes placed and sized right? Are your targeted landing pages highlighting the most responsive alternatives for those particular customer targets? Those small changes can add up to improved bottom lines.  eBay's managers have have benchmarks for judging any "tweaks" in a rational and supportable way. And they tweak continually.

3) "Managing by the numbers" requires testing before committing to new executions. Marketers rightly question the validity of “lab” tests. But many also resist live testing because they shy from putting test executions in front of real customers. In an upcoming article, I'll discuss how live copy or format tests can be executed cleanly and quickly (same-day quickly, in most cases), and pay off in improved productivity immediately. We've done lots of advertising testing, and know the statistics to minimize the testing disruption for a given level of decision-making confidence. If you want to learn more before then, please contact us at Metrist Partners.

We've learned how to organize web log data into “maps” that have been used in winning campaigns. And we do it quickly, because we know your next campaign is just over the ridge.

Next newsletter: How baseball cards helped a Chicago web company increase their rate of sales

Ken Novak is a Principal Consultant at Metrist Partners. His more than twenty years of marketing measurement work have led to bottom-line results in the tens of millions of dollars. Contact him at ken@metrist.com. Metrist Partners specializes in custom Internet Analysis and Reporting for clients such as Peapod, iNest, Elsevier Science, and GoToCall.

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