Month: February 2008

1979: Forecasting a New Market

(Reposted from timberry.bplans.com. In the summer of 1979, after we had moved from Mexico to Escondido Village on campus at Stanford, while waiting to start the MBA program, I worked with Creative Strategies International as a contract consultant. My last Mexico employer, Business International, owned Creative Strategies and helped me get the contract work.)

In 1979 Creative Strategies International, a high-tech market research company, assigned me the job of forecasting the market for automated teller machines in the U.S.

There were a very few of them already in place at the time. Maybe a few hundred.

I got the numbers as best I could. I found out how many banks there were, and how many branches. I got data for growth in banking customers and growth in branches. I got data for employees in banks.

I talked to dozens of experts. Product managers in companies making ATMs, or companies that could possibly be making them. Lots of bankers, lots of consultants to bankers, several journalists involved in bank-specific trade magazines.

Not all of them wanted to talk to me, but an older and more experienced vice president in the same firm (Tom Arnett was his name) had some good advice (and I’m paraphrasing here, it’s been 30 years):

They have to be interested in what they do, the market they’re in, or they couldn’t get up in the morning.

So hook them in fast. Tell them you’re forecasting the market for Creative Strategies. Tell them you’re thinking the market is going to grow at some percent — it doesn’t matter — but most experts disagree. Make it clear as quickly as possible that you’re going to offer opinions and information as part of the conversation, if they have time to talk to you.

Most of them will. They want to feel like experts. They want to be asked. And they want to know what you’re thinking too.

I used Tom’s advice a lot, and talked to a few dozen experts.

In the end, though, there was not technical or mathematical way to forecast ATMs. At least I was able to relate the projection to numbers of branches to give me some sense of error check, but it wasn’t clear that ATMs would all be in bank branches.

What made the biggest difference to that forecast was the placement of two ATMs at Stanford Shopping Center on the side of the Bank of America branch there. We lived in grad student family housing at the time, and we would ride our bikes over to the shopping center. The ATM was very convenient. It gave me cash fast. It gave me cash after banking hours. I used it a lot.

Most of the bankers told me people would never accept doing business with a machine. They’ll never warm up to that.

Happily, I believed what I saw instead of what the bankers told me. I projected a very fast growth rate for ATMs. As the years ticked off, it turned out I was very close. The forecast I made in 1979 gave a relatively accurate view of the future, given how much uncertainty was there in the system.

Take note, however: it was a human educated guess. The math helped me to compare my projection to the numbers of bank branches, but that was just a reality check. I was guessing.

1974: Jews? Yes, Tomato.

(Reposted from timberry.bplans.com.)

Although it was tame compared to recent years, Israel was very tense in 1974. It was just a few months after the Yom Kippur war. Still, tourism went on. I was a temporary tour guide, in charge of a group of about three dozen people going around the world from Mexico City.

The group was a Mexican group, mostly from Mexico City with some couples from other parts of Mexico. It was an expensive tour so they were economically well-to-do, which in Mexico usually correlates with speaking pretty good English.

Julio Sanchez and his wife Carmen were exceptions. They were from El Salvador and they didn’t speak English. At least they hadn’t spoken English at the beginning of the trip, but during the trip they picked up a lot. Waiters and hotel clerks and people along the day were much more likely to speak English than Spanish. So Julio and Carmen learned how to order meals, and find restrooms, and give taxi directions back to the hotel.

Despite the tension in Israel, it was also Jerusalem, an amazing city to visit, a place people in the group had wanted to visit all their lives. They’d visited the Taj Mahal, Hong Kong, and other splendid places, but Jerusalem was, to most of the group, the highlight. The organized tour went through as many of the main places in Jerusalem as possible — Bethlehem, the Wailing Wall, the stations of the cross — but not the Dead Sea. It was left out on purpose, because of the recent war, meaning tightened security, and more danger.

So it turned out that on the one free afternoon of the stay in Jerusalem, six of my group set out on their own to see the Dead Sea. Normal tours weren’t going there, but they found a taxi driver who, for a fat fee, was willing to take them. I didn’t know until later, but it wouldn’t have been up to me anyhow. They were all consenting adults. I was in charge of tours, logistics, meals, baggage, but not discipline.

They started late. They arrived at an abandoned Dead Sea bathing area late in the afternoon. They had to walk several hundred yards from the parking area and normal beach spot — which was pretty much abandoned — to the water. The taxi waited.

Night fell. They weren’t sure of which direction to walk back to the taxi. They argued. Then suddenly, spotlights, a loudspeaker in a language they didn’t understand. There were military vehicles, people in uniforms pointing guns at them. Angry men, shouting at them and pointing guns, loaded them into a military vehicle. They were driven through the night to a military outpost with a lot of searchlights, and led into a closed room with no windows.

They stood in front of an officer, surrounded by men with guns. There was not a lot of light in the room. The officer asked them questions, angrily, but it was a language they didn’t understand. They could only shrug and shake their heads. What had they done? They couldn’t even ask each other, because the men were angry if they tried to speak to each other at all, and more so because it was Spanish, a language they — the guards, the officer — didn’t understand.

It was at this point — I heard the story a few hours later, in the hotel — that Julio’s newfound English, learned just during the recent weeks of the trip, saved the day.

“Jews?” the officer asked angrily, “Are you Jews?”

Julio’s face brightened. At least, some words he recognized.

“Yes, thank you,” he answered. “Tomato, please.”

They said it took a couple of seconds before the group realized, and started laughing. The tension was broken. The captured tourists, suspected of being terrorists, and the guards, and the officer, laughed together. Both sides switched to English, and understood each other (Julio and Carmen needed help, but they were there with four fellow tourists who did speak English, and the Israeli army personnel all spoke English.)

The taxi was long gone, presumably hoping not to get disciplined for taking tourists to the deserted Dead Sea area at night. The Israeli solders took the tourists back to the hotel. Check points were passed, the story was told, there was a lot of laughter along the way.

So that’s the end of the story. It’s as true as it was when they told it to me that same night, in the hotel bar, where they found me waiting for their return and pretty worried.

This happened in 1974, when I lived in Mexico City and worked with United Press International. We worked six-day weeks at UPI, so we got six weeks of vacation.

And I took the picture here from our hotel, looking across the street, that same day: