Table of Contents
- 1. Napoleon
- 2. the weakest link
- 3. Theory of Strategy
- 4. examples
- 5. information
- 6. paradigm
- 7. Lincoln's question
Since the internet, there is no dearth of information. Regrettably, not all information is good and relevant. Information needs to be scrutinized. Two kinds of information are of special interest to us:
- confirming information,
- falsifying information.
Peter believes that a car has four wheels. Call this Peter's paradigm. Peter can spend days watching traffic. He will see Fords, Volkswagens and Toyotas go by. Each car has four wheels. But this is just confirming information.
If Peter googles "car three wheels", he would come across the Reliant Robin. This car with three wheels was a wonder of British engineering, manufactured in the 1970s. Obscure as it may be, the Robin contradicts the paradigm that cars have four wheels. It provides falsifying information.
This is relevant for obvious reasons. Confirming information does not test paradigms. It simply confirms the paradigm, no matter how much information one collects. Falsifying information is much more interesting. It actually tests the paradigm.
For example, market research can be a compilation of confirming information. A question like "Would you consider buying our shiny new product?" will give you 80% to 90% positive response. But the proof of the pudding is in the eating. Do people actually reach for their wallet to buy the product? That is the relevant, falsifying information.
Once again, it seems to be part of human nature to look for confirming information. On the other hand, falsifying information is as welcome as a leper.
A lot of information is learned from other players. These players are not neutral. They have a dog in the fight. The player may be fooling you. More commonly and more dangerously, the player may be fooling himself. How do you assess this information?
Discovering peoples' true motives requires listening, patient observation and keen people skills. It is beyond the scope of this book to go into this subject in depth. We will leave that to the psychologists. However, a simple approach that I find helpful is below.
Salespeople are taught to classify potential buyers (so called leads) into one of three categories:
- risk-averse, or
Consider sales techniques for copiers. Midway the conversation, the salesperson asks his lead a seemingly innocent, open question: "What do you require most from your copier of choice?" He then uses the answer to categorize his leads.
- If the lead explains that his clients pay top-dollar and are entitled to the best copies, the lead is status-driven.
- If the answer is that at crunch-time their office needs to produce hundreds of copies and make the Fedex-deadline, the lead is risk-averse.
- If his lead stresses the price per sheet, that makes him profit-oriented.
Depending on the category, the copier-to-be-sold then morphs into
- the top-of-the-line,
- the most reliable or
- the most affordable copier on the planet.
In short, successful salespeople discover the true motive of their client, and then pitch towards that motive. A strategist must do the same, even if he is not selling anything.
A company is competing in a market. Within our company, the competitors are dismissed as mistaken, as stupid, as price-fighters, as bottom-feeders, as 'racing to the bottom', or as 'mere niche players'.
But again, other players' actions are rarely stupid. Certainly, multiple competitors won't be stupid independently of each other. Just because our company fails to see the point, does not mean that there is none.
As time goes by, our company fails to get the market-share it hoped for. The market is now said to be 'acting bizarre'. But management's official position remains that the market will come around once it has seen the light. In the meanwhile, management hires an exterior consultant to establish a strategy to conquer its rightful market-share.
Our company makes a common, but costly mistake: it does not assess the strategy of other players. It does not ask what their motives and theirs paradigms are. It does not wonder to what information the other players may be privy. It simply dismisses them, thereby robbing itself of crucial information.
Like everybody else, our company suffers from a dearth of good information. But the solution is not hiring a consultant. The solution lies in the strategy of the other players. The good, falsifying information is locked up inside the competitors' behavior. How does the competition perceive the market? Where do they expect the market to head? What products do they expect to succeed? While other players also labor under incomplete information, their information may complement ours nicely.
Assessing the strategy of other players is crucial in developing your own strategy.
chairman Mao swims the Yangtze
You should be prepared for players fooling you. Still, the greater risk lies in players fooling themselves, and dragging you along. One such trap is a 'safe error'.
In the 1960's, an impressionable youth had been recruited by communists, and went to Mao's China to see the workers' paradise first-hand. He was invited to stay with the editor of a local newspaper, and was even asked to write some contributions in order to train his Chinese.
At some point, the youth noticed a report that chairman Mao had swam down the Yellow River. The youth confronted the editor. Surely a mistake had been made. Perhaps chairman Mao had swam across the river, no small aquatic feat in itself. But to swim down a 3,395 miles long river, in a single morning, was surely beyond even chairman Mao.
The editor stubbornly refused to rectify the article. The reason dawned only slowly on the youth. Overstating Mao's achievement was a harmless error for the editor. However, if the editor was perceived to criticize Mao, he might easily join the millions sacrificed to progress.
So the editor committed a safe error. This hedging of information is much more dangerous than people lying outright.