Navigating the unpredictability of everything
- Successful strategies often evolve based on customer behavior and feedback, rather than adhering strictly to initial plans.
- Companies like Slack and WhatsApp found success by pivoting from their original ideas to meet customer needs, demonstrating the importance of adaptability.
- A robust strategy should include multiple pathways to success, reducing reliance on any single outcome and increasing resilience against unpredictability.
- Building a competitive moat, leveraging existing strengths, and keeping strategies simple can enhance a company's ability to navigate uncertainty.
- Companies should focus on what will not change in the future, such as customer desires and fundamental needs, rather than trying to predict specific changes.
- Engaging in rapid decision-making and learning from customer reactions can lead to improved strategies and outcomes.
- Exploring a range of possible futures and simplifying complex plans can help organizations better manage unpredictability and respond effectively to changing circumstances.
Summary만 읽었으면 Hedged Bets section을 놓쳤다. kelly criterion 관점에서 변동성 줄이는 정도로만 hedge를 이해했었음. net outcome 늘리는 개념은 약하게만 이해하고 있었는데 본문의 생명보험 예시를 보고 강화됨. 사진 구성 요소 조합도 hedge의 개념으로?
Strategies that defeat unpredictability
While it might not be possible to predict the future, it is possible for a strategy to side-step unpredictability through these mechanisms:
Build a moat
Covered in this companion article, a “moat” is a long-term, durable competitive advantage. A structural advantage that others cannot disrupt, lasting for years, is resilient to the volatility of your competitive market.
Have more than one way to succeed
A resilient plan is built of “or” not “and.” We could reach customers through social media or paid advertisement or influencer marketing or channel sales. A product that at least could be sold in all those ways is more likely to succeed than a product which can only be sold a single way.
Optionality defeats unpredictability:
- A product that is very low cost to create has many options for pricing, and therefore more likely to find effective pricing.
- A product in a large, growing market has many niches and personas and channels to potentially target, and therefore it’s more likely you’ll find some combination that works.
- Some indie developers build multiple small products, then pour their effort into whichever one happens to take off.
More examples are given in Nassim Taleb’s concept of Antifragility. In his words:
If you “have optionality,” you don’t have much need for what is commonly called intelligence, knowledge, insight, skills, and these complicated things that take place in our brain cells. For you don’t have to be right that often. All you need is the wisdom to not do unintelligent things to hurt yourself (some acts of omission) and recognize favorable outcomes when they occur.
—Nassim Taleb, Antifragile: Things That Gain from Disorder (2014)
Hedged bets
If you buy 30-year life insurance and live for 60 more years, you will make far more money than the insurance costs, so you come out ahead. If you buy 30-year life insurance and die in 2 years, your family will receive far more money than the insurance costs, so you come out ahead. Thus “insurance” is a way to always come out ahead, without predicting the future.
The catch: You’ve reduced your maximum upside. In the 60-year case, you paid insurance premiums for 30 years while receiving no money in return. On balance, however, this “tax” is worth it, because you’re trading slightly less maximum upside for predictable, net-positive outcomes.