Wednesday, January 31, 2018

What Makes You Unique?

I recall a few years ago one of the kids came home from elementary school with a paper "award" that looked like this:

That afternoon, the school playground was littered with these things. Apparently the school had copied hundreds of the identical awards. Just fill in your child's name, and you have mass customization.

I got to thinking about the problem of uniqueness yesterday. I had breakfast at Baji's, but forgot my earbuds. So I was forced to listen to the guru bellowing wisdom at the next table, mansplaining to his "client" how to succeed as an entrepreneur: "...you need to have barriers to entry...bla bla bla...all about execution...bla bla bla...focus on your capabilities...bla bla bla...just like at Google...bla bla bla..."

Putting aside the superficial content, the most remarkable thing about the "conversation" is that I never once heard the entrepreneur speak. Not one single word - from when I ordered coffee to when I paid the check. So the guru thinks that his wisdom is right, regardless of what business he is talking about. Just follow his recipe, and success is yours - no matter who you are, what you do, what you're good at, or what challenges you face.

But we know from research (and experience) that there are many roads to success, each unique in some way. Research identifies this as the problem of "competitive heterogeneity," where companies differ in unique ways that lead to very different outcomes. In practice, if you listen (really listen) to people at work, you may come to see possibilities for success that apply to them because of their unique circumstances, their unique abilities, and their unique shortcomings. Of course, this means actions that might help one company to succeed may well fail for another. A sobering fact if you're a guru peddling a recipe.

Caution: Don't now conclude that generalizations cannot be true or useful. Research has taught us many useful generalizations about business success. For instance, we know that delegation and empowerment increases employee involvement and creativity. But like all generalizations, putting such an idea into practice brings in many other variables that can change what happens. Delegation that works for a creative video game studio in Chicago may not work well in a Mexican brewery or in a German automobile factory. In short, whether a generalization holds true in practice depends on the unique circumstances of the company in question.

Knowing generalizations about business is not enough. To succeed, you must also know when to apply your general knowledge in the right, specific circumstances. Know what makes your company unique. Only then can you begin to find your own, unique, path to success.


The problem of "competitive heterogeneity" is the subject of considerable research, including my book on The Red Queen.

Monday, January 15, 2018

Think You're Well Connected? Stop Fooling Yourself

You read a lot. You’re informed daily through Twitter, various blogs, and a few subscriptions. Your network is very large, and is made up of people who also have large networks. With technology at your fingertips, you are extremely well informed.

You’re fooling yourself.

Humans want to know what others think, and we’re especially persuaded when information is verified by different sources. The problem is that our “different” sources often tap the same information. You hear something from a Twitter feed that you like, that is confirmed on a blog, that is confirmed yet again by a video of a Ted talk. But what if each of these got their information from the same source? You are all recycling one single datum! It is bad to be poorly informed, but it is much worse to be poorly informed and not realize it.

For example:

“As CEO, I make sure I am in the thick of it. I stay right in the middle of things: product development, engineering, marketing, sales – they all keep me in the know.” So said the CEO of a software startup where I was conducting interviews. I met with him four times over four months, as he shaped the strategy of his budding company. He was surprised when they failed. All his information sources agreed that his strategy would win.

But let’s take a closer look. I asked everyone in his company to tell me whom they turned to for work-related advice and information. Using the matrix of these information flows among everyone in the firm, I mapped the company’s information network here - where the squares are people and the lines are their communications:


As you can see, this company's communication network is dense and saturated, with plenty of paths for information to get around. But that is precisely the problem. Throw one single datum into this company and it rapidly cycles throughout the whole system over and over and over. The central people in the middle – including the CEO – are no better informed than anybody else in this network; they just think they are. But they are simply hearing the same information as it gets recycled over and over apparently from different sources. No wonder they convinced themselves that their strategy made sense. They got the illusion of a second opinion without ever really getting a second opinion.

The solution?

Gather information from those who do not communicate with one another. In fact, you want to gather information from entire networks that do not communicate with one another. Truly rich and diverse information comes only when you hear, separately and independently, from “worlds” that do not overlap: From different parts of the earth, different economic sectors, different social demographics, different religions, languages, ideologies and cultures.

But gathering such varied data is difficult, and it is getting more difficult because of the IT revolution. Twitter will suggest that you listen to people who listen to each other. Amazon will suggest that you read something very much like what you just read. Even your search engine will try to make sure that you get results that are similar to the ones you clicked on last time. If you go with the flow, you’ll end up hearing the same narrow view recycled repeatedly – yet you’ll think you did your due diligence.

Don’t fool yourself.


One of the best academic approaches to information networks is by Duncan Watts.