Only the paranoid survive
“It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.” This quote (falsely) attributed to Mark Twain is unfortunately too true. Our brain are designed to imagine a future in which our plans succeed – no matter how unlikely that is.
Consequently it’s really hard to keep an eye out for real change on markets because we can’t help interpreting weak signals in ways that favor what we intended to do all along. How can we possibly expect the unexpected?
The trick is to continue to rethink our market position from different perspectives, again and again. Rather than “post-mortem” to explain away why plans went awry, we can “premortem” and imagine how market evolutions might not fit the story we tell ourselves, what Andy Grove use to call Strategic Inflection Points when the usual rules of business go out the window.
One way to rethink your position on your market is to ask yourself:
- What specific problem do we solve for customers? (Customers by drills because they need holes)
- What alternatives technologies solve this problem differently than we do? (mechanical drilling can be done by hand)
- Where do our competitors fit on a PRICE/PERFORMANCE/PAIN chart? What is the price/pain (hassle to use) trade-off at different performance levels.
Thinking it through highlights threats from alternative techs, not just the customers we’re used to. It also helps us pick improvement dimensions for our products.
At strategic level, lean thinking come down to:
- What further value are we going to offer to customers this year? (what new function, feature or performance improvement we need to work on to gain competitive advantage?)
- What operational problem do we need to solve to leverage the firm’s delivery performance? (Ask yourself: how can I improve flow and make work easier?)
Clear answers on these two questions will fuel the engine of improvement for the year to come and unveil both new opportunities and hitherto unseen threats. To quote Grove again: “Businesses fail either because they leave their customers [stop practicing question #1] or because their customers leave them [stop practicing question #2]