The bell curve is alive and well. In fact, it is wherever you look.
The bell curve (AKA the normal distribution curve) suggests that in most fields there are some very poor performers and some exceptional performers. These are the two extremes of the curve. In the middle is the rump, where the majority lie.
For example, the curve can be applied to runners (a few dreadful ones, a few stars and the rump, the majority, in the middle), cooks, businesses, entrepreneurs and so forth. For the purposes of this article I would like you to consider how your business behaves, what it does and how it is seen by the outside world.
In most markets, it is fair to say that most businesses look virtually identical. They employ the same sort of people with the same qualifications and backgrounds to use the same software and hardware to sell the same products and services to the same types of customers, using similar websites and similar techniques to sell their similar products at similar prices. It is all so similar.
If you use the bell curve to consider your marketplace, you will find:
- a few dreadful competitors,
- a few stars, the hyper-performers and
- the rump in the middle.
More interesting will be the distribution of profits. The stars will be disproportionately more profitable. More often than not, the top 20% of performers will account for the top 80% of profits in the marketplace. There’s a thought.
Now things start to get interesting. The stars tend to behave in different ways from those in the rump.
Two brief examples:
Blogs – Rump bloggers tend to blog a couple of times a week. Maybe each blog takes one hour to write and runs to, say, 500 words. As a result, the blog looks like all the other general comment pieces that don’t really add a thing of great significance to the already burgeoning body of mediocrity that everyone feels the need to contribute to.
On the other hand, the star bloggers are very different. They might focus on writing relevant and significant pieces, taking, say, 10 hours to create a 5,000 word piece that people will stop and read because it has depth and breadth and is different from the glorified tweets that most blogs have become.
Prices – Price-takers exist in the rump (as opposed to price-makers in the stars). In the rump, most people feel they are competing on price. In a price-sensitive market, margins get squeezed and it becomes a buyers’ market. Stars behave differently. They charge disproportionately higher prices and set themselves apart. As a result, their margins are much higher and they can afford to spend more time and money investing in the brand, the offering, and creating proprietary value-adding products and services.
The same is true of the investments in strategy and planning, product and service design, brand development, training and development… In fact, I find it difficult to think of a single area where the stars do not get a disproportionately larger return on their investment…
So, why wouldn’t you??
This article has looked at the bell curve: at its simplest there are under-performers, the rump and over-performers.
But does the world really work this way with a nice even distribution between the highs, middles and lows? Clearly the answer is no.
Research conducted in 2011/12 by Ernest O’Boyle Jr. and Herman Aguinis (633,263 researchers, entertainers, politicians, and athletes in a total of 198 samples) found that performance in 94 percent of these groups did not follow a normal distribution. Rather these groups fall into what is called a “Power Law” distribution.
A “Power Law” distribution is sometimes referred to as the “long tail.” It indicates that people are not “normally distributed” (and the emphasis is on the word normal). In this statistical model there are a small number of people who are “hyper-performers,” a broad swathe of people who are “good performers” and a smaller number of people who are “low performers.” It essentially accounts for a much wider variation in performance among the sample.
It has very different characteristics from the Bell Curve. In the Power Curve most people fall below the mean (slightly). Roughly 10-15% of the population are above the average (often far above the average), a large population are slightly below average, and a small group are far below average. So the concept of “average” becomes meaningless.
In fact, the implication is that comparison to “average” isn’t very useful at all, because the small number of people who are “hyper-performers” accommodate a very high percentage of the total business value.
However, my assertion still holds true. There are few exceptional performers. Do you want to look like the run of the mill or the exceptional? Figure out what they do rather than follow the herd of mid-level performers.