How do you test whether consumers will like your product or not?

How do you reformulate your product so that consumers will like it more?

In the online world, A/B testing is a good way to figure out what works and to improve on what works. In the offline world there are a host of other techniques that are often used. A good resource to learn about some of those techniques is Sensory Evaluation Techniques (5th Edition, 2015).

Many of these techniques have been used in the development of food products. For example, a brewer might want a high level of hop character in their beer and to do that the brewer purchases different lots of hops that cost different amounts of money. If the brewer purchased 5 different lots of hops then s/he can offer 5 different versions of the beer to a test panel and get them to rate the intensity of hop flavor on a 0-9 scale. The objective of the brewer is to produce a hoppy beer for the least amount of money. A panel of 20 tasters were used. They were randomly exposed to the beers with different hops used. They are exposed 3 times to the same beer type. Mean ratings for each beer type along with other types of analysis were used to determine which hops produced the desired level of hop character. All other things being equal, if two different types of hops produced the same level of desired hop character, then the least expensive hops should be used to make the beer.

This example illustrates that the goal of sensory evaluation techniques is often not to simply come up with the best formulation of a product, but also to come up with a formulation that is as cost effective as possible. You may, for example, use different types of sweeteners in your product formulation that cost different amounts of money to determine if you can get an identical taste using a cheaper sweetener.

Because the lead author had a professional interest in flavor compounds in beer and hops, and was vice president of research at Stroh Brewery Co. in Detroit Michigan, there are some good practical examples of how to apply sensory evaluation techniques in the context of making beer.

Reading a book on Sensory Evaluation Techniques is not exactly easy or enjoyable reading. One way to read the book is to only read enough to figure out what technique might be useful for the particular product development or testing objective you have and then to delve into that technique. Another way to read the book, and the one that I find myself using, is to read the case studies illustrating how a particular technique was employed. Reading these case studies is often quite interesting and can give you ideas about how you might want to apply the technique to your own product development problem.

I drove down to the farm property on thursday to sell some square bales of hay from the barn. After my online and farm work was done for the day I went to visit a local swimming hole and was pleasantly surprised to see that someone did some trail development since I visited last fall. I explored the trail for awhile and, given my recent interest in Forest Bathing, I felt like this was a trail where a person could do some serious forest bathing. I took some footage of a deep woody to riverine section of the walk. The ideal forests in this area are called Acadian Forests and are characterized by a diverse mix of hardwoods and softwood species, often with brilliant colors in the fall. It is springtime during this walk so the leaves are still in the process of emerging. At one point in the footage, I look at a rock type that is interesting and reminds me of coral rock.

On my drive down I decided to listen to Bill Mollison's 1983 Permaculture Design Course. When I hit the play button, the part that started playing happened to be about the many ways in which water and trees are interconnected. He refers, for example, to a forest as a "standing lake" and trees as "columns of water". He discusses how much surface area an acre of Eucalyptus Trees might expose to the atmosphere and comes up with an estimate of 1200 acres (there are studies on this). An intact forest is a huge condensing surface for water helping to regulate the humidity of the forest and the surrounds. He also discusses forest-based rain which occurs when humid air released by a forest supplies water to the atmosphere that causes rain downwind from that area of the forest. That area of the forest in turn adds humidity and the cycle is repeated. Remove large sections of forest and that type of rain does not happen. I have some skepticism about these claims as do many scientists, but I do acknowledge that Bill is putting forward his own mechanical theories on the origin of precipitation which are quite testable. There is some evidence to support his claims. Bill views trees as a "living system" that has a more profound effect on the availability of water in the landscape than most scientists would claim.

Bill's discussion of trees and water offers another reason why the term forest bathing is so apt. If a forest is a standing lake why wouldn't we call it bathing when we walking in or near a dense forest canopy?

I don't think forest bathing is something I will do everyday. Sometimes I will just go for a walk around the block for my physical exercise. When I am at the farm I will do more forest bathing because there is lots of forest land around here and lots of it I haven't yet explored. When I am in my favorite spots in a forest, next to a steam, I am generally not thinking that I want to forest bath here. I have interests in hydrology, forestry, and permaculture that caused me to be there and are contributing to my enjoyment of the forest. The fact that I am forest bathing is often of secondary concern but sometimes, in particularly beautiful sections of forest, I may feel compelled to make forest bathing a priority so I don't miss the feeling of beauty that the forest is radiating.

The term forest bathing might also be used to help remind us that trees and water are interconnected in many ways. The forest is not just a carbon sink, it is also a water sink and source.

Happy memorial day weekend and I hope you have the opportunity to do some forest bathing and figure out what it means to you.

There are many types of thinking but for the purposes of this blog I propose to divide the universe of thinking into two types: Magical and Functional.

Magical thinking occurs when we don't understand the functional nature of something. Functional thinking occurs when we are attempting to understand how something functions or have figured out how something functions and can apply that knowledge to solving problems.

The world is very complex and our understanding of many aspects of it are at a magical level. How does your car work? How does the forest work? How does your home plumbing work? How does your home electrical system work? How does your computer work? You may think you know the answers to these questions but as soon as you are confronted with the problem of fixing or evolving these systems, some magical thinking is often revealed.

On my walk today I wondered how much of our thinking about starting a business is magical version functional. Some entrepreneurs believe that passion, hard work, and faith are key. This seems pretty magical to me but I don't know that I can criticize it too much in terms of results. Many of our ancestors had this ethos.

There is a bit of magical thinking involved in starting most businesses. The most critical piece of magical thinking are the leap of faith assumptions that define what the startup believes to be true, but without much actual supporting evidence in the early stages of the business. A major goal in lean startup theory is to test these leap of faith assumptions so they become a functional theory of the firm. Some magical thinking is at the core of starting a new business but it generally gets converted to functional thinking as the leaps of faith are tested and refined in the marketplace.

The term magical thinking is often used as as a put down in debates. A recent example is The Magical Thinking of Ecomodernism. The solution to alot of the problems of modernity may not be solved simply through a clear functional understanding of how things work, it may also require some magical thinking involving passion, hard work, and faith that local solutions can be found.

Shinrin-yoku is the Japanese term for forest bathing. I learned this as a result of reading a new book called Forest Bathing: How trees can help you find health and happiness (April, 2018) by the leading Japanese researcher in this area Dr. Qing Li.

The book is a joy to read. It includes lots of forest imagery from Japan and you can learn alot about Japan from his discussion of Japanese forest culture and the role that forests play in contemporary cities in Japan. They really do appear to take the concept of forest bathing seriously in Japan with certain forests certified specifically for forest therapy.

Forest bathing sounds like it might be new-age tripping, but Dr. Qing Li reports alot of the research he has done over the years measuring levels of stress hormones, levels cancer killing immune cells, sleep duration, mood changes and other aspects of physical and mental health that changes as a result of exposure to forests. How much exposure, where, when, and why are all discussed in the book. You can get a preview of the art and science of Shinrin-Yoku by watching Kirsten Dirksen's interview with Dr. Qing Li.

I was under some stress this week and decided this morning that I needed to do some Shinrin-Yoku. I found a logging road leading through a young forest to an old pasture full of wild apple trees. When I exited the young forest I was drawn to a small stream that I wanted to follow back to the headwaters. I never got there but following a small stream through a wild apple tree forest is my idea of beautiful so it was an immersive way for me to forest bathe. I did manage to forget about my worries and stresses. On my drive back home I also had a breakthrough on the problem that was causing me the stress. Appears that stressing about a problem may block solving the problem. Shinrin-Yoku has many benefits.

Shinrin-Yoku is an approach to mental and physical health that is becoming more relevant as we spend more time indoors, in urban environments, and with our electronic devices. Shinrin-Yoku is about using all your senses again to experience nature. It would appear that forest trails between 2 and 4 kilometers offer a good dose of forest therapy. Doing it in the afternoon may offer more benefits than in the morning but for me the morning is when I find it easiest to do. You don't need to live in a rural area to practice Shinrin-Yoku as many cities support nice walking trails through wooded areas. Some forests are denser with trees and better places to practice Shinrin-Yoku. One interesting figure in the book is the 40 most beautiful forests in the world which might be a good bucket list for those wanting to do some forest bathing tourism.

Wikipedia defines a fudge factor as an ad hoc quantity or element introduced into a calculation, formula or model in order to make it fit observations or expectations.

A common use of a fudge factor is in project management where you estimate how long a project might take and then multiply that time by some fudge factor to account for events or difficulties you can't anticipate. The size of the fudge factor might vary by task type or by how much estimating skill you have.

Another use of a fudge factor is in pricing your services. You might, for example, price your services differently depending on how busy you are. If you are busy already then you might multiply your going rate by some premium (e.g., x1.20 = 20% more) because you don't really need to add more work to your plate. If the customer bites at that price then it would be worth taking on the extra work but if they don't then you already have more than enough work at your going rate. Many different factors might influence your service pricing and the corresponding fudge factors you might want to use.

Fudge factors are also common in valuation where the value of a company is estimated to be some multiple of earnings (or some other quantity) common to companies in that industry. This reduces a very complex analysis to a simple rule of thumb that may or may not prove to be predictively accurate.

I recently did some year-end accounting for my farm and had to apply a fudge factor to my books to account for some uncertainty in my final numbers. A farm is like a small manufacturing plant that incurs lots of different types of expenses and receipts. The farm accounting fudge factor involved not claiming a certain amount of expenses that my bookkeeping told me I could claim. I left them unclaimed because I wanted to give myself a margin of error in case I was ever audited. The use of fudge factors in accounting is generally frowned upon and for good reason (see below), however, there is a cost to striving for extreme accuracy and there are judgement calls as to whether certain expense should be claimed. There is also procrastination and deadlines that force you to spend less time than you would like re-examining your receipts and numbers. To protect myself, and to terminate the accounting process faster, I used a fudge factor that involved not claiming a certain amount of expenses on the off chance that I might be audited. If audited, the government may end up owing me money. I can sleep soundly at night knowing that.

Fudge factors in accounting are often used to inflate earnings to make a company look more profitable than it is. Such practices are often called "creative accounting". Creativity in accounting is apparently a bad thing but you will often hear people say a good accountant will pay for themself - not because they are "creative" but are good at finding ways to decrease income and increase expenses. See The Ethics of Creative Accounting for more discussion of "creativity" as it applies to accounting.

Does the use of a fudge factor indicate that there is a problem with your approach to estimating, pricing, valuation, and accounting? It very well could be, but I also think that there is just alot of uncertainty out there that that involves diminishing returns to try to tame. You can keep on trying to estimate how long it will take to build a house but mother nature, suppliers, workers and financial institutions can all throw a wrench into your meticulously prepared estimates. People of action may be happy with throwing a fudge factor onto an estimate and getting on with the business at hand.

What causes these adjustments to be called fudge factors is that they seem ad hoc, not based in any solid theory but perhaps based on experience. The definition of a fudge factor does not indicate why we might be tempted to introduce an ad hoc quantity into our calculations. In this blog, I've provided a few reasons why we might be tempted which often comes down to a fudge factor being a strategy for dealing with uncertainty and time constraints. Because entrepreneurs and investors are often mired in uncertainty and have a limited amount of time to get things done, fudge factors may be the key to moving forward.