The Markets They Are a-Changin’ / How do you make a complex long term decision?
|Mar 25, 2019||3|
Welcome to the radical Briefing 0009. One of the core tenets of our work is to have you not only think about the future but also to ‘feel’ it. As humans, we excel at linear thinking. So when technology is expanding on an exponential curve, how do we prepare when we are not intuitively wired that way? We must spend time thinking, planning, practicing, and prototyping the future. There is no time left to wait and see where the market goes and to hope your investment was right. Muscle needs to be built, expertise honed – not only in terms of what that means for your product and industry but also the tools you will use to forecast, make decisions and lead. The future of business is the future of business. We recommend you make a start. We are here to help.
The Markets They Are a-Changin’
Ever since modern-day consumer economics we position products on the “product pyramid”, which in itself is based on the classic concept of a demand curve: Products are either high margin and low volume (e.g. luxury goods) or low margin and high volume (e.g. mass-market goods). Marketing has long ago mapped this product pyramid to Maslow’s hierarchy of needs – products at the bottom of the pyramid (low margin / high volume / typically low cost) fulfill the basic needs of the consumer, products high up in the pyramid (high margin / low volume / typically expensive) cater to the higher-order human desires and needs such as belonging, self-esteem, and self-actualization.
These pyramids are crumbling – leading to dramatic changes in the way products are conceptualized, and companies are being built. In market after market, what was a pyramid now turns into an hour-glass shape: A fat, low margin / high volume bottom and a big high margin / low volume head and pretty much nothing in the middle.
This shift is due to the changes brought about by exponentially accelerating technology and a shift from scarcity to abundance – and a core topic we explore in our upcoming book on “The Future (of) Business”. For now – ask yourself where on the product pyramid you operate today and what viable strategies for going up or down on the pyramid you have available.
Insights worth reading this week:
Exponential View: Micromobility with Horace Dediu (Video Download)
How do you make a complex long term decision?
One of the most difficult tasks as a business leader is to make long term decisions. You are asked to decide on strategies whose impact will not be felt for years. You must hold course to a complex decision where the outcome is not guaranteed. You are ultimately the one accountable and responsible for all decisions made.
And yet, there is very little guidance out there on how to make tough long-term decisions. Several books on the science of decision-making have attempted to address this – Steven Johnson’s book Farsighted and Daniel Kahneman, Thinking, Fast and Slow are very well written and insightful, and still, fall short on tangible advice.
In my work at Mozilla, we attempted to create our own model – we called a MAP process (Multiple Alternative Perspective) to help inform our decisions. To explain at a high-level, we would begin with a well-researched proposal, then go one-to-one with a handful of stakes holders to garner their opinion, discover areas of concern and check for blind-sight; making the proposal even stronger. By going one to one, we removed the ‘group think’ of initially sharing in a large group setting. We would then be ready to move to a broader group of 15+ diverse people, often coming from different areas of the organization. Then sharing with the entire company when appropriate. This process worked on multiple levels, creating buy-in with key stakeholders right from the beginning, ensuring arguments were addressed early, and giving an opportunity for the decision to be made more robust from multiple diverse perspectives. Furthermore, the decision-making process was documented, including if the scope of the decision to be made was changed. Aiding transparency as weeks, months and even years passed. The process is by no means a silver bullet, and a mixture of evidence-based proposals coupled with diverse perspectives is a good place to start.
Long term decision making is truly hard. We have to agree with Adam Grant, ever more convinced of “…the psychologist Ellen Langer’s advice for making tough choices: “Don’t make the right decision. Make the decision right”. Since you’ll never have enough information to make the best choice, all you can do is make the best of the choice you’ve made.” There’s a lot to be said for owning your choices and making it work.
Leadership articles worth reading this week: