What would you do, if you weren't afraid?

2 juil.

"What I'm interested in is to think not only of the built, but also the unbuilt. One must be concerned with the ghost of what could have been to understand what can be." Ludwig Wittgenstein

A little over a year and a month ago, I was taking the train back to Paris from a workshop, when I jokingly said, about the principle of optionality, that the best strategy was to always put off a decision to the future: as you will likely always have better information then, than you do right now.

I regretted saying it immediately though, because while that is a theoretically safe approach, it is often also a sub-optimal one.

There are fundamentally two approaches or drivers behind decision-making in the world.

The first, and most pervasive is the principle of the approach outlined above.

That principle is to make decisions with the objective of << not losing >>.

When you don't want to lose, you delay the point at which you have to commit, as much as possible, in order to ensure you have as much information as possible before you commit.

<< Not wanting to lose, >> of course, is different from << wanting to win >>.

If you want to win, you actually need to do the opposite: you need to commit early: not try: commit.

You need to understand that the approach is not just to be committed: but to test and learn and adapt.

This means taking small and regular risks and bets, thus informing yourself.

It goes beyond just a test-and-learn approach: because this is not an exercise in optimization: that path too will lead to stagnation.

To truly win, you also need to make inevitable what is dormant: something I briefly covered in my note on achieving 10x growth.

Or as Wittgenstein often said:

"What I'm interested in is to think not only of the built, but also the unbuilt. One must be concerned with the ghost of what could have been to understand what can be."

Very often we do things because they make sense: but we don't test the alternative.

And one needs to understand the unbuilt in order to understand the true potential and yield of an action, a strategy, a product, a service, a market.

This is the trouble with investing in innovation or in new ideas: how do you prove something is worth investing in, when no map exists: especially when your day-to-day business is still profitable.

But that is exactly what you need to do. That doesn't mean you need to go all in in terms of organizational structures like Google did, by effectively creating a portfolio holding company in the form of Alphabet, thereby creating a justification to reinvest Google's profits in areas not directly (and sometimes not even indirectly) related to search advertising.

You can't prove something works or doesn't: until you test it. And you can't think of only testing what can help you immediately.

You need to design your go-to-market strategies, your product strategies, your growth and innovation strategies in a way that they're constantly testing not just optimizations, but alternatives: to your go-to-market strategies, to your product strategies, to your growth and innovation strategies.

This is a profound shift for most people because it moves the approach from executing what you know, to executing to learn.

Over the past many decades we've seen a rising inequality: which is based on those who have trying to increase their optionality: their ability to withstand stressors through money. However the risk isn't lower today, it's higher.

As optionalities rise, so do tail risks: the possibilities of extreme or unpredictable events that could disrupt, challenge, or destroy the advantage they've built.

To understand the binary possibilities, look at two approaches that are (so far) successful.

That of Apple, and that of Amazon.

Apple through focus on a limited number of products and services has built up massive cash reserves: which it is arguably (definitely?) unable to reinvest because it doesn't really have the operating approach to do so.

Versus Amazon, for example, which enters related industry after related industry: and indeed exposes (turns into businesses) many of it's "internal organ(s)izations" to competitors to make them world class.

This is something I covered briefly in my essay on how organizational strategies and football, which also introduced an effective model to understand where yours fits. (If your strategy doesn't fit on that model, you might want it to: because otherwise it could imply you don't really have one.)

The drive to optionality - to giving yourself more time and more information can be done both ways: the Apple way (by massing hoards of cash), or the Amazon way (by entering and competing in industry after industry.)

It is Amazon's way (reinvest capital in "testing" other possibilities) that invariably carries less risk though. Apple may have a 200bn$ war chest: but Apple's risk is reputational or design-oriented: and the day a viable alternative to Apple emerges, that 200bn$ war chest will not be a line of defense, it will be meaningless.

This is why Facebook has tried so hard to first buy Snapchat and then build various feature clones on Facebook itself, Instagram, and so on: having optionality (cash in hand) doesn't protect you from obsolescence. Only investment in new areas does.

So if you're holding back because you're afraid: don't. The correct response when you're afraid is to lean in to the fear: to de-mystify it scientifically: through investments and test-cases.

You can raise your optionality to infinity, but in a world of high tail risks, your optionality, when tested, will not be the shield you hope or expect it to be.

Where should you invest? Where do you even begin? Check out the Cognitive Transformation Matrix I talked about previously: in a world of fast-changing behaviors due to rapidly changing technology environments (and therefore customer interfaces and interactions), the Matrix is a useful tool to frame your decisions with.

Here's the direct slideshare link:

https://www.slideshare.net/AdityaAnupkumar/business-strategy-for-an-exponential-world