GLOBIS Faculty Kenichi Suzuki shares some tips on how to utilize numbers for more effective communication in business.
Last time, I left you with a conundrum: What’s the price of love?
What kind of data or graphs would you need to translate your ideas?
Let’s try to calculate the price.
There are all kinds of love. But for the sake of brevity here, we will focus on boy meets girl.
When I do this exercise in the class I teach at GLOBIS University, the students come up with lots of ideas: converting gifts and time spent going on dates into money, or somehow working it out from the value of life insurance or the cost of a divorce settlement.
Of course, many say that love is priceless and cannot be converted into money anyway. But let’s look at the analysis made by my colleague Atsushi Nishiguchi, an expert on weddings and matchmaking.
Nishiguchi found a survey conducted by the life insurance company AXA. According to the survey of single Japanese working women aged 25 to 44, the average annual income of their ideal man was 5.52 million yen. Let’s imagine a typical woman found her match, a man she loved with all her heart. What would be the lowest income she would accept for her hand in marriage? The answer was a mere 2.7 million yen. From this, we can determine that the difference, 2.82 million yen, is the price of love for one year.
Source: AXA Japan press release, March 15, 2010 (translated)
So rather than directly asking the price of love, he worked out the answer by comparing it to the trial calculation. I think it’s a great analysis.
The essence of analysis is comparison.
In our example, we took a case where there was love, and a case where the women were not thinking about love. Then we compared them to get our price. In fact, we carry out this kind of numerical analysis every single day.
Imagine you usually buy milk from a supermarket for $2.00. One morning, you run out of milk for breakfast. You run to the convenience store near your apartment before work. The price is $2.50. You decide to buy the milk anyway because you compare the time it will take to get to the supermarket is not worth saving $0.50 and buying it later.
It is not an exaggeration to say that there is no analysis without comparison. Comparison lets us extract meaning from the numbers. Most of the time, we do it without even noticing. By becoming aware of what we are comparing and why, our analysis will be that much sharper.
Comparing by dividing
The root of the word "analysis” comes from Greek analyein: to break up or loosen into smaller parts. Oxford Dictionaries define analysis as the “[d]etailed examination of the elements or structure of something.” It goes further to say it is the “process of separating something into its constituent elements.” So, in addition to comparing, let's keep in mind that the idea of division is important for analysis. That is, divide then compare.
So why compare?
To answer that, let’s think back to why we might want to analyze in the first place.
Let’s start with problem-solving. I’m sure you have been asked by your boss to explain why you believe a certain action will fix a problem, and why your solution will lead to a specific outcome. It is therefore necessary to have a firm grasp of the cause-and-effect relationship between an action you chose and its result.
Roughly speaking, analysis in business must answer the following types of questions:
Where is the problem?
Why did the problem occur?
Comparison serves as a hint in answering both.
So, from now on, when you see numbers, try remembering to compare them. When you do, be sure to ask yourself again what you are comparing. The answer you get will help you understand the problem more deeply.
A long and rich life
So, let me leave you with another conundrum before next week’s column.
Does being rich make you live longer?
What kind of data or graphs would you need to translate your ideas? And what kind of graph do you think will result from the question? Until next time...
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