The Empty Calorie Theory: Mistaking growth for a signal of the underlying health of a system.
I think three recent/relevant experiences highlight the theory:
The Economic Crisis. Rather than focusing on the fundamentals of a healthy economy (job creation, low debt leverage) analysts turned to superficial factors (house values, high stock value, credit expansion) as evidence that our economy was performing well. It’s like purchasing a house and assuming everything is ok because it has a fresh coat of paint and the lawn is neatly mowed. Failure to look at the underlying health of the economy lead to collapse because most superficial indicators can be ginned up (see, Enron and Worldcom for micro examples). The extension of credit and boom in purchases were empty calories powering our economy, but they were built on a fiction. Eventually, a correction occurred.
Law Firms. The billable hour is viewed as the micro-indicator of how well an associate is working. It’s a benchmark, but it should not be the be-all-and-end-all. Is an associate billing 2600 hours great for the firm and associate? That depends on what the hours consist of (well, 2600 hours of billable time can never be healthy) and the time frame we are considering. If the hours are all document review, then, the associate probably hasn’t learned much. If they’re writing briefs and taking depositions, then they’re on the right path. Focusing just on the hours is a terrible indicator of the value, worth, and professional development of an associate. Hours are the empty calories fed into law firms billing system – they’ll sustain a firm (and individual career in the short run) but once a client gets wise and demands flat billing (or an associate is asked to do real work), a correction occurs.
Nutrition. The most literal example. You can stuff your face with Twinkies and soda all day, feel full, and be sustained. In the short-run, you’re fine. But in the long-run, these empty calories ravage your body. Correction has to occur or something drastic happens.
Many examples exist where looking at a deeper level of data has uncovered far more critical insights than the top level information.
We’re hitting a curious inflection point where the availability of data provides opportunities for precise measurement and planning solutions for problems in a more detailed manner. That’s undeniably a great thing. If done right.
This is especially important for social media marketing as one of its touted advantages is the ability to measure quantitative impact. The variables we use to measure that impact become critical. Focusing on empty calories just because the data is available is a huge mistake.
Is the number Facebook fans and Twitter followers a good measure of health? Well, run a massive promotion and earn 2 million followers. Then refuse to follow up and engage with that audience and those 2 million followers show up on your “balance sheet” but they mean nothing to you (or, rather, you mean nothing to them) moving forward.
The fans and follower counts are empty calories. They make you feel good in the short run, but mean little over a period of time.
Engagement is a better long-term proxy for social media health (as are conversations on non-owned channels) – but those numbers are less flashy and tougher to understand. Thus, the fascination with fan counts.
Focus long-term. Focus on fundamentals. Big numbers are sexy, but make sure they actually mean something.
[] Sports is a wonderful example. Point/run differential tells you more about the strength of a team than wins. On base percentage tells you more about a batter’s value to a team than traditional metrics like batting average.