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Get them to work for free

When Marco Hansell launched Speakr (originally called twtMob) in 2010, he had a
clear business concept: a venture that would coordinate influencer-based social
media campaigns via Twitter for Fortune 500 brands. He was also clear about the
kinds of programmers, developers, designers and copywriters he needed to help
launch it.
I knew I wouldnt have the money to pay them, so I needed to figure out how to
make it beneficial to them without costing me a lot, explains Hansell, who serves as
CEO of the Los Angeles-based company. It came down to me selling them on a
story and a vision they could believe in.
Hansell doled out IOUs to the six contractors who did eventually buy into his
vision. Each signed a convertible note agreement, whereby the moment the
company saw sales of $250,000 or attracted its first $1 million in venture
capital, they could either take their full salary for their work up to that point, in cash,
or opt for an equity share in the company commensurate to their back salary, plus
20 percent.
We structured it so there was a little risk on both sides, Hansell says. They knew
we werent just using them to make a quick buck, that wed be making a shared
sacrifice. Thats how we got buy-in.
The results: Within a year of launch, twtMob hit the $250,000 revenue trigger;
within 18 months it had generated close to $2 million in sales.
Being resource-constrained made us very grounded, very resourceful and very
smart about our decisions, Hansell says. We did a smaller number of things at a
really high quality.

That approach has paid off for all involved. Last fall, Speakr landed a second round
of VC funding, while the contractors who opted for an equity stake over cash now
own a pretty sizable percentage of the company relative to the amount of work they
did early on.

Building a data-driven strategy


Executives should focus on targeted efforts to source data, build models, and transform organizational culture.
Big data and analytics have climbed to the top of the corporate agenda. Together, they promise to transform the way
companies do business, delivering the kind of performance gains last seen in the 1990s, when organizations redesigned
their core processes. And as data-driven strategies take hold, they will become an increasingly important point of
competitive differentiation.
In our work with dozens of companies in six data-rich industries, we have found that fully exploiting data and analytics
requires three mutually supportive capabilities. First, companies must be able to identify, combine, and manage
multiple sources of data. Second, they need the capability to build advanced-analytics models for
predicting and optimizing outcomes. Third, and most critical, management must possess the muscle to
transform the organization so that the data and models actually yield better decisions. Two important
features underpin those competencies: a clear strategy for how to use data and analytics to compete and the deployment of
the right technology architecture and capabilities.
Just as important, a clear vision of the desired business impact must shape the integrated approach to data sourcing,
model building, and organizational transformation. That helps you avoid the common trap of starting by asking what the
data can do for you. Leaders should invest sufficient time and energy in aligning managers across the organization in
support of the mission.

1. Choose the right data


The universe of data and modeling has changed vastly over the past few years. The volume of information is growing
rapidly, while opportunities to expand insights by combining data are accelerating. Bigger and better data give
companies both more panoramic and more granular views of their business environment. The ability to see what was
previously invisible improves operations, customer experiences, and strategy. That means upping your game
in two areas.

Source data creatively

Often, companies already have the data they need to tackle business problems, but managers simply dont know how they
can use this information to make key decisions. Operations executives, for instance, might not grasp the potential value
of the daily or hourly factory and customer-service data they possess. Companies can encourage a more
comprehensive look at data by being specific about the business problems and opportunities they need to address.
Managers also need to get creative about the potential of external and new sources of data. Social media generates
terabytes of nontraditional, unstructured data in the form of conversations, photos, and video. Add to that the
streams of data flowing in from sensors, monitored processes, and external sources ranging from local
demographics to weather forecasts. One way to prompt broader thinking about potential data is to ask, What
decisions could we make if we had all the information we need?

Get the necessary IT support

Legacy IT structures may hinder new types of data sourcing, storage, and analysis. Existing IT architectures may prevent
the integration of siloed information, and managing unstructured data often remains beyond traditional IT capabilities.
Fully resolving these issues often takes years. However, business leaders can address short-term big-data needs by
working with CIOs to prioritize requirements. This means quickly identifying and connecting the most important data for
use in analytics and then mounting a cleanup operation to synchronize and merge overlapping data and to work around
missing information.

2. Build models that predict and optimize business outcomes


Data are essential, but performance improvements and competitive advantage arise from analytics models
that allow managers to predict and optimize outcomes. More important, the most effective approach to building a
model usually starts, not with the data, but with identifying a business opportunity and determining how the model can
improve performance. We have found that such hypothesis-led modeling generates faster outcomes and roots models in
practical data relationships that are more broadly understood by managers.
Remember, too, that any modeling exercise has inherent risk. Although advanced statistical methods indisputably make
for better models, statistics experts sometimes design models that are too complex to be practical and may exhaust most
organizations capabilities. Companies should repeatedly ask, Whats the least complex model that would improve our
performance?

3. Transform your companys capabilities


The lead concern senior executives express to us is that their managers dont understand or trust big databased models
and, consequently, dont use them.
Such problems often arise because of a mismatch between an organizations existing culture and capabilities
and emerging tactics to exploit analytics successfully. The new approaches either dont align with how companies
actually arrive at decisions or fail to provide a clear blueprint for realizing business goals. Tools seem to be
designed for experts in modeling rather than for people on the front lines, and few managers find the models engaging

enough to champion their usea key failing if companies want the new methods to permeate the organization. Bottom
line: using big data requires thoughtful organizational change, and three areas of action can get you there.
Develop business-relevant analytics that can be put to use

Many initial implementations of big data and analytics fail because they arent in sync with a companys day-to-day
processes and decision-making norms. Model designers need to understand the types of business judgments that
managers make to align their actions with broader company goals. Conversations with frontline managers will ensure that
analytics and tools complement existing decision processes, so companies can manage a range of trade-offs effectively.
Embed analytics in simple tools for the front lines

Managers need transparent methods for using the new models and algorithms on a daily basis. By necessity, terabytes of
data and sophisticated modeling are required to sharpen marketing, risk management, and operations. The key is to
separate the statistics experts and software developers from the managers who use the data-driven insights. The goal: to
give frontline managers intuitive tools and interfaces that help them with their jobs.

Develop capabilities to exploit big data

Even with simple and usable models, most organizations will need to upgrade their analytical skills and literacy. To make
analytics part of the fabric of daily operations, managers must view it as central to solving problems and
identifying opportunities. Efforts will vary, depending on a companys goals and desired time line. Adjusting cultures
and mind-sets typically requires a multifaceted approach that includes training, role modeling by leaders, and incentives
and metrics to reinforce behavior. Adult learners, for instance, often benefit from a field and forum approach, in which
they participate in real-world, analytics-based workplace decisions that allow them to learn by doing.
Our experience suggests that executives should act now to implement big data and analytics. But rather than undertaking
massive change, executives should concentrate on targeted efforts to source data, build models, and transform the
organizational culture. Such efforts help maintain flexibility. Thats essential, since the information itselfalong with the
technology for managing and analyzing itwill continue to grow and change, yielding new opportunities. As more
companies learn the core skills of using big data, building superior capabilities will become a decisive competitive asset.

The 4 keys to running a datadriven business

Image Credit: Emka74 / Shutterstock

December 4, 2013 11:40 AM


Jim Baer / LinkedIn
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This post is from LinkedIn data scientist Jim Baer, whos speaking this afternoon at
VentureBeats DataBeat conference in Redwood City.
Today, businesses have access to data far beyond anything data-focused corporations had 20 years
ago. The massive amounts of valuable data garnered from things like staff behavior and customer
interactions can become a companys biggest competitive advantage.
But how many of us are making the best use of that data? A data-driven approach to business means
using all that information to optimize existing business goals and investigate new possibilities. This
can mean conducting frequent experiments to make sure youre selling as much of your current
offerings as possible. Such tests can be as simple as checking whether to put the mustard on the
shelf next to the ketchup or the hot dogs or as sophisticated as testing whether a feature personalized
for each visitor to a webpage can raise both engagement and revenue.
You can also use data to make recommendations, inferring what will bring the greatest value to
your customers based on their history and characteristics. At LinkedIn, we do this to connect our
members with opportunity, whether it is identifying job openings that most suit a members career
experience or by recommending groups of like-minded professionals to engage in expert discussions.
Becoming a data-driven business can seem daunting, especially with a crowded market of companies
selling products and services that promise to unlock the power of your data. In my experience, there
are four foundational supports necessary in crafting a data-driven approach to business, although
your level of investment in each can vary widely depending on your companys goals and resources.
1.

Build the Right Data Infrastructure for the Companys Goals

Data infrastructure is the underlying technological plumbing that collects, transmits, stores,
and delivers data to be leveraged for monitoring the business and understanding
opportunities. Without a solid data infrastructure there will not be a reliable source of data to guide
decisions.
However, there is no one-size-fits-all solution to creating a data infrastructure; there will always be
trade-offs between the cost of collecting and wielding data and the benefit for business goals.

For example, a gaming company may want to collect all of the data on how users play its games in
order to create effective features and grow the business. This will require investing in a huge
relational database that allows those building the games to ask a broad variety of questions.
However, if a winery is simply trying to understand how many people are visiting their website and
what types of actions they take on the site, they can rely on inexpensive (or even free) services to get
those answers. They can then focus their resources on tracking the elements in their wines that best
resonate with customers to craft future best-sellers.
In any case, approach the data infrastructure investment decision with a specific set of goals in mind,
but retain flexibility in the system wherever possible. As your business grows and evolves, your needs
will change (likely increase) and may require adjustments to infrastructure.
2.

Democratize Data Throughout the Company

Data infrastructure investments wont provide value unless the data collected is accessible.
The more people who can access and use data to measure performance, evaluate
improvements, and learn about the business and customers patterns, the better.
Democratized data allows employees outside of the technical departments to critically evaluate the
companys data and ponder implications for the business. It allows the right person, with the best
context on a specific area of the business, to directly evaluate whether the data supports
expectations. It also empowers a broad base of employees to find anomalies that can be important
opportunities or warnings.
For example, members of one product team might want to explore the sales impact that another team
saw when they changed serving sizes for a beverage product. Or, for an online dating website, the
same sudden rise in site traffic that delights the monetization team may concern the security team,
which suspects a bot attack. The key is to get data into the hands of those who recognize what it
means and for that data to correspond to clearly-defined metrics.
3.

Enable Experimentation

Experimentation tools provide the ability to test innovations and treatments and learn from the
performance data before making big bets. The simplest approaches to experimentation are beforeand-after types of evaluations to understand the effects of making a singular change to a test object.
However, most business questions call for more complex experiments, such as which features an
auto insurance company should add to policy offerings to increase renewal rates among customers.
This may involve multiple test groups of policyholders and a slew of different features to test and
compare results.

The best experimentation systems will streamline the creation and tracking of test groups, treatments,
and results to help simplify the process and scale it across an organization. But even a well-designed
testing platform needs careful experiment design to maximize the opportunity for genuine learning.
4.

Foster a Data-Driven Culture

A data-driven business culture requires the infusion of data to optimize familiar processes; it also
requires a company-wide philosophy of innovation and experimentation, where employees are
constantly seeking opportunities for new breakthrough products or features.
You can foster a data-driven culture by always asking for and consulting the data when making
decisions. This works best when data is demanded by top-level employees, requiring hard numbers
to back up claims of the benefits that a new program or feature will bring. In a data-driven culture,
youre always asking the question What do the numbers show?
For example, at LinkedIn, the heads of each product group give a weekly presentation to executives
in which they present the primary metrics for their business lines and discuss any notable changes
from plan.
The tools and infrastructure laid out above can be made or bought to fit your business goals with
various levels of expense and expertise. However, the investment in these will not yield the fruit of
data-driven success unless you also establish a company culture that requests evidence from data as
part of the standard decision-making process.
As we enter a new era where data is more easily accessed by companies of all sizes, those who
begin to leverage the massive amounts of unique data for their company will enjoy a competitive
advantage. Those who dont will eventually be left behind.

Jim Baer is senior director of Data Science at LinkedIn.

The Economist: Fostering a data-driven culture

This report explores the challenges in nurturing data-driven decision making, and what
companies can do to meet them. See preview.
The importance of data-driven thinking is not new. Many executives are familiar with the concept. The rise of datadriven companies, from Facebook to Walmart, shows how powerful the approach can be. But what does it mean in
practice? And what are the benefits of adopting a data-driven culture within an organisation?
Let us start with what a data-driven culture is not. It is not a belief that data are an issue for someone else in the
company, a job for a data specialist or perhaps the IT department. There is still a perception that a data specialist,
perhaps a recent statistics graduate, should be parachuted in to an organisation to advise on how to work magic
with data, much as a computer security expert would be called on to help shore up a companys IT networks.
This is flawed thinking. IT security is indeed a job for experts, but data are everyones business. Forward-looking
companies are integrating data into their day-to-day operations. They are placing data at the heart of almost all

important decisions. And they are tolerant of questioningeven dissentabout business decisions being made, as
long as the questioning is based on data and their analysis. This is what it means to adopt a datadriven culture.
An Economist Intelligence Unit survey of 530 senior executives, sponsored by Tableau Software, together with
interviews with four leading industry experts, delves into this trend and highlights best practices. Evidence from
these exercises shows that data are gaining a foothold within all parts of organisations, even in areas where they
have previously had little impact. The survey and interviews also highlight the tensions involved in democratising
data, and some of the methods that can be used to defuse them.
Perhaps most importantly, this report echoes a critical point that data advocates make repeatedly: working with data
is good for a companys bottom line. There is abundant anecdotal evidence in favour of this claimretailers like
Tesco have used data to gain market share and casinos have reaped rewards by turning marketing into a science.
Our survey backs this up with evidence that links financial performance and the successful exploitation of data. It is
a reminder that a focus on data can transform businesses.

Appreciating the financial power of data


The survey reveals a clear link between financial performance and use of data. Eleven percent of respondents
state that, in comparison to peers, their organisation makes substantially better use of data. But top-performing
companies comprise more than a third of this group, demonstrating the connection between datadriven decisionmaking and organisational performance. And the reverse is true for underperforming companies. Seventeen percent
of executives identified their companies as lagging behind peers in financial performance. Among this group, not a
single one claimed that his or her organisation held a substantial advantage over rivals when it comes to use of
data.
The benefits of data are being seen in almost all parts of companies. When asked to rate the importance of data to
different organisational units, 43% of respondents say that data are extremely important to strategic decision
making. This figure is higher than that for any other unit, but there are many other areas where respondents say
data are yielding benefits. Just under 40% say data are extremely important to marketing and communications, as
well as finance and accounting.
Some areas remain relatively untouched by data, but probably not for long. Just 11% of respondents rate data as
extremely important to the human resources (HR) function, for example. A new crop of start-ups is trying to change
that. At one, TalentBin, engineers have built software that scours LinkedIn and social media, from Twitter to Quora,
to build a profile designed for recruiters. It is based on the idea that the best candidates for a position are not
necessarily looking for a new job, but might be open to being approached about one. TalentBin uses online data to
identify those people, and it seems to be working: since launching in May, the company has signed up clients like
eBay and Dolby.
The survey also reveals that data-driven companies have an expansive attitude to data use by employees. Almost a
third of respondents at companies that lead peers in data use say that employees across the organisation should be
applying data analysis techniques compared with 17% at companies that trail peers in data use.

Share data and prosper


Appreciating the power of data is, of course, only the first step on the road to a data-driven culture. For older
companies, especially those that have achieved success with minimal use of data, the transition to a data-driven
culture does not
necessarily come naturally. Many of my clients are clearly aware of the importance of data, says Jerry ODwyer, a
principal at Deloitte Consulting. But they dont know where to start in terms of where they should focus to get the
most value, as well as how to translate the data into actionable insight. Becoming data-driven is very difficult
for many executives, agrees William Schmarzo, chief technology officer at EMC, an information technology
company. They are reluctant to turn over decision-making to people who make decisions on the basis of data rather
than expertise.
Our survey provides guidance for executives who want to make the change. Data often exist in silos, for example,
sometimes overseen by protective divisional heads. But more than half of respondents from top-performing
companies say that promotion of data-sharing has helped generate a data-driven culture in their organisation.
Moving data collection to the centre of a company is another example. Data collection is cited as very
important/essential to data culture by 76% of executives from top-performing companies compared with 42% from
companies that lag their peers.
Increased availability of training is a further factor to consider. Around one in three respondents say it is very
important to have programmes or partnerships in place to make employees more data-literate. Awareness of this
need is even higher among executives at companies that out-perform their peers financially; 50% of respondents
from this group rate training as highly important.
The survey also provides some suggestions for what not to do. Issues around sharing data appear to be the biggest
challenge. About one-third of respondents say that their company struggles to achieve a data-driven culture in part
because of concerns about the privacy and security issues that arise when data are shared. Just over 30% of
respondents attribute a reluctance by department heads to share data as a cause for failing to realise a data-driven
culture.

"BIG DATA" - DATA DRIVEN BUSINESS


There are many definitions of Big Data going around. We are convinced
that the most important application of Big Data is the use of data in real
time to make predictions and take actions assuring growth and
margins. Before the term Big Data was created it still existed as a method,
using as much data as possible to make smart decisions.

Big Data is how you can grow margins and market share with the help of all
your data. And your data is not only what you have in your own
databases, it is also what you have available on the internet. The challenge
is how to find it, how to gather it, how to analyze it and how to act on it. And
should it be used for:
Acquisitions
Cross selling
Retention
Cost reduction
Resource optimization
All of the above?

Big Data leads to competitive advantage


Big Data is The next frontier for innovation, competition, and
productivity. And there are a growing number of both B2C companies and
of B2B companies who use their data in a way that increase performance.
However, collecting and analyzing the data is not enough it must be
presented in real time to influence decisions and make sure actions are
taken as a direct consequence. It can have a material impact on the
productivity, profitability or efficiency of the organization but Gartner
predicts through 2015, more than 85% of Fortune 500 organizations will fail
to effectively exploit big data for competitive advantage.

Is this really something for my company?


According to a 2013 publication by McKinsey & Company , the payoff from
joining the big-data and advanced-analytics management revolution is no
longer in doubt. Successful case studies and research show that when
companies inject data and analytics deep into their operations, they can

deliver productivity and profit gains that are 5 to 6 percent higher than
those of the competition.
However, most organizations are ill prepared to address both the technical
and management challenges posed by big data; as a direct result, few will
be able to effectively exploit this trend for competitive advantage. At least
in the near future.
According to Gartner predictions approximately two-thirds of all companies
are investing, or are planning to invest, in Big Data. Are you one of those
or not?
What happens to those who do not start in time?

From historical data to real time


It started as a computer driven business in the 50s and has not changed a
lot. BI is still a huge business even if it uses historical data and older
technology. But with the new, vast amounts of data that is created and the
tough market place with global competition for all industries, real time
decision making is crucial to gain market share. Batched technology and
inhouse data does not match the challenge. The right product to the right
price to the right customer at the right time is the way forward. The old
shotgun approach is dead.

When the data is unstructured everyone must be a big data analyst


Findwises interest and expertise is not limited to structured data, but
instead to join structured and unstructured data as well as create structured
data fact-finding by mining a big repository of unstructured data.
The modern world produces massive amounts of data that, to a large extent,
is unstructured and transient. It comes from a variety of sources and types
as text, video, geospatial data, information captured by a sensor in a plant
or a vehicle, or from social interaction via the web. Data volumes double
every two years meaning the sheer amounts of data is staggering compared
to only a few years back. With the knowledge that 75% of all new data is

created by the consumer it is imperative to find and analyze that data. It is


now possible due to new technology developments to gather, store and
analyze large data sets at a much lower cost than before. Familiarity with
data analysis becomes part of the skill set required of ordinary business
users, not experts with analyst in their titles.

BI looks at what happened we predict in real time what is going to happen


There are many examples of enterprises outperforming their peers when
using data driven decision tools. But when traditional BI is a tool for
becoming an expert of past events to try to look forward, we are experts of
predicting the future in real time. We use Big Data for real time predictive
analytics.
For the last few years Findwise has seen the opportunity to apply our own
Language Technologies and Content/Data Processing framework within this
field, in research as well as in practice . A few examples are Social Media
Monitoring to identify inuencers and apply sentiment analysis of
various products and services, Predictive Maintenance in the
process industry, Pattern Mining in Electronic Health Records to
identify relationships between diagnosis, medicine and comorbidity
in Health-Care, Dialogue Systems within cars, and many other areas.
Creating operational visibility is another area of applied Big Data where
we have experience from several industries:
The gaming industry where our dashboards with drill downs from visualized
traffic lights on the highest level provides Operational Intelligence from
more than 80 platforms globally.
Logistics - Creating full operational visibility in logistics process and creating
full operational visibility on customer facing API:s
Banking - call center aiming for enhanced response time and proactivity
through visibility on what the client did in real-time when the call is done.
eCommerce - Operational visibility on system landscape at one of the
largest eCommerce site in the Nordics.

We help you get started with data driven business


Findwise is offering a complete set of services in order to help our clients
take the step into the data driven business world. Strategy workshops management training business analysis - building the right business
system that is taking care of all the new possibilities that comes with data
driven business.
It is not about the data it is how you act on it

An
Introduction
to Data-Driven
Math
Decisions
for Managers
Who Dont Like
Walter
Frick
MAY 19, 2014

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Not a week goes by without us publishing something here at HBR about the value of
data in business. Big data, small data, internal, external, experimental,
observational everywhere we look, information is being captured, quantified,
and used to make business decisions.
Not everyone needs to become a quant. But it is worth brushing up on the basics of
quantitative analysis, so as to understand and improve the use of data in your business.
Weve created a reading list of the best HBR articles on the subject to get you started.
Why data matters
Companies are vacuuming up data to make better decisions about everything from
product development and advertising to hiring. In their 2012 feature on big data,

Andrew McAfee and Erik Brynjolfsson describe the opportunity and report that
companies in the top third of their industry in the use of data-driven decision making
were, on average, 5% more productive and 6% more profitable than their competitors
even after accounting for several confounding factors.
This shouldnt come as a surprise, argues McAfee in a pair of recent posts. Data and
algorithms have a tendency to outperform human intuition in a wide variety of
circumstances.
Picking the right metrics
There is a difference between numbers and numbers that matter, write Jeff Bladt and
Bob Filbin in a post from last year. One of the most important steps in beginning to
make decisions with data is to pick the right metrics. Good metrics are consistent,
cheap, and quick to collect. But most importantly, they must capture something your
business cares about.
The difference between analytics and experiments
Data can come from all manner of sources, including customer surveys, business
intelligence software, and third party research. One of the most important distinctions
to make is between analytics and experiments. The former provides data on what is
happening in a business, the latter actively tests out different approaches with different
consumer or employee segments and measures the difference in response. For more on
what analytics can be used for, read Thomas Davenports 2013 HBR articleAnalytics
3.0. For more on running successful experiments, try these two articles.
Ask the right questions of data
Though statistical analysis will be left to quantitative analysts, managers have a critical
role to play in the beginning and end of the process, framing the question and analyzing
the results. In the 2013 article Keep Up with Your Quants, Thomas Davenport lists six
questions that managers should ask to push back on their analysts conclusions:
1. What was the source of your data?
2. How well do the sample data represent the population?
3. Does your data distribution include outliers? How did they affect the results?
4. What assumptions are behind your analysis? Might certain conditions render your
assumptions and your model invalid?
5. Why did you decide on that particular analytical approach? What alternatives did you
consider?
6. How likely is it that the independent variables are actually causing the changes in
the dependent variable? Might other analyses establish causality more clearly?
The article offers a primer on how to frame data questions as well. For a shorter walkthrough on how to think like a data scientist, try this post on applying very basic

statistical reasoning to the everyday example of meetings.

Correlation vs. cause-and-effect


The phrase correlation is not causation is commonplace, but figuring out just what it
implies in the business context isnt so easy. When is it reasonable to act on the basis of
a correlation discovered in a companys data?
In this post, Thomas Redman examines causal reasoning in the context of his own diet,
to give a sense of how cause-and-effect works. And BCGs David Ritter offers a
framework for deciding when correlation is enough to act on here:

The more frequent the correlation, and the lower the risk of being wrong, the more it
makes sense to act based on that correlation.
Know the basics of data visualization
Rule #1: No more crap circles. To decide how to best display your data, ask these five
questions. Make sure to browse some of the best infographics of all time. And before
you present your data to the board, consult this series on persuading with data. (Dont
forget to tell a good story.)
Learn statistics
A couple of years ago, Davenport declared in HBR that data scientists have the sexiest
job of the 21st century. His advice to the rest of us? If you dont have a passing
understanding of introductory statistics, it might be worth a refresher.
That doesnt have to mean going back to school, as Nate Silver advises in an interview
with HBR. The best training is almost always going to be hands on training, he
says. Getting your hands dirty with the data set is, I think, far and away better than
spending too much time doing reading and so forth.

Walter Frick is an associate editor at the Harvard Business Review. Follow him on
Twitter @wfrick.

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