How to wield Occam’s Razor to build robust strategy.

How to wield Occam’s Razor to build robust strategy.

Jun 6, 2017 | Strategy

In its simplest form, ‘Occums Razor‘ is code for seeking the simplest explanation possible that fits all the facts. In Einstein’s words: “Everything should be made as simple as possible, but not simpler”

Development of Strategy is usually made overly complicated by all sorts of factors that should not really play a role, mostly to do with the status quo, sunk costs, emotional assessments of risk and reward, and the distortions our own psychology makes on what we see and understand.

Strategy is all about making choices about what you will do, and what you will not do, but it is not about the detail of how it will be done, and should always be based as far as possible on facts. Where facts are unavailable or ambiguous, as in new and fast developing markets, there is no substitute for experience and wisdom born of domain knowledge.

No strategy conversation should be immune to discussion of what others may do. You can choose what you do, but you cannot choose what others may do, independently, or perhaps as a result of what you do. This is game theory, and is important in developing your strategy, as no initiative is implemented in a vacuum. In its pure form, game theory is a mathematical set of relationships, used extensively in economic modelling, but in life responses are rarely just logical and predictable, which is why economic modelling is so often seen to be wide of the mark with the benefit of hindsight.

In building strategy, there is a third tool that is extremely useful, but most often ignored: Options theory. This emerged out of work done modelling financial markets, specifically derivative products  in an effort to price them to maximise returns, and is now standard practise. In its simplest form, it means that you never take an action until you absolutely have to in order to move to the next step. In the vernacular, it is ‘keeping your options open’ a term we would all have used extensively without necessarily thinking about the implications.

To avoid too much unproductive complication, you can ‘Occum’ scenarios that have elements of both game theory and options theory in your strategy deliberations.

How do you make this mumbo Jumbo work for you?

  • Use Occum’s razor to remove all the extraneous factors that are simply not significant to the outcomes. Break everything down into its simplest form. Einstein achieved this monumentally with E=MC2.
  • Consider the implications of game theory. ‘When we do this… they will do that’. A word of warning here, it is very easy to see this in a tactical manner, and that would be the wrong thing to do, as it will give you an incomplete big picture.
  • Apply Options theory to the steps you are modelling, considering the latest point at which you have to make a decision that determines the direction of later ones.

Do all three together in a collaborative and data rich series of conversations and you will emerge with a robust strategy, at least one that can be articulated simply, and implemented in logical sequence with known performance measures.

 

2017 Internet trends report by Mary Meeker at KPCB

2017 Internet trends report by Mary Meeker at KPCB

Jun 4, 2017 | Governance, Leadership, Strategy

Since 2001 Kleiner Perkins Caulfield & Byers has released a report on the technical and behavioural trends driving the internet, compiled by Mary Meeker. It has become the bible of everyone associated in any way with the net as a generator of revenue and value.

The 2017 report was released at the annual Code conference on May 31.

The amount of work required to assemble this bible must be humongous, then it is given away as a contribution to the development of the industry where KPCP operates.

It is to my mind one of the greatest pieces of content marketing we will ever see.

Making any attempt to summarise the powerpoint summary of the report would be disingenuous, I recommend you flick through the slides, all 355 of them in the report and consider the implications for your business.

 

 

The most important lesson from writing 1,500 blog posts

The most important lesson from writing 1,500 blog posts

Jun 2, 2017 | Governance, Marketing, Strategy

This is the 1,500th post on the StrategyAudit site, and the journey has been a surprising one.

I am  not a writer, I stumbled into blogging as a way to market my services as a consultant.

However, it has become way more than that.

Writing a blog, particularly when the commitment is 3 posts a week, is about self-discovery.

When I started I never realised how much I did not know, but was curious to find out.

Writing has humbled me, as I struggle to form views on topics, and then articulate them in ways that convey the meaning as I intend.

That sentence is full of traps, all of which I run into regularly.

It is also why some themes keep on cropping up, I see or hear something that adds to the understanding I have, it puts a different spin on something that leads to a different outcome in differing contexts, asks a question in a different way.

Writing also removes the requirement that people be mind-readers.

No longer do they have to interpret body language and gestures, or  read between the lines of a  mangled verbal explanation, and generally guess what it is I am getting at.

Writing forces improved communication, and clarity of thought and conclusion. It forces the distinction between correlation and causality, and demands a sufficiently deep analysis of problems to expose the root causes rather than just seeing the symptoms.

Writing also exposes mercilessly any failings of logic and common sense.

A gratifying number of people have read, commented and shared my various musings over the 1,500 posts, but the  one who has benefited most is me.

So, thank you for being a part of the process, and spending your valuable time engaging with me on the journey of discovery.

A particular thanks to those who have been my clients, as most of the writing has come from you in one way or another, combined with the collected wisdom now at our fingertips, should we take the time and make the effort to sort it all out from the self-interested crap and cat photos that infest the web.

Finally, at the core of why I do this is the basic observation that if I give you a widget, I do not  have it any more, but if I give you an idea, we both have it.

We have a way to go yet.

 

5 habits of really successful B2B sales people.

5 habits of really successful B2B sales people.

May 30, 2017 | Customers, Sales

Last week, I was unfortunately the target of an unwanted sales pitch from someone who would not take ‘Not today’ or ‘No thank you’ or  ‘I am not interested’ or ‘Piss off I am busy’  as an adequate response to his ministrations.

Clearly he had been to a sales training course that had at its core,  the ‘ignore any feedback you might get, plough on regardless using this template‘ school of selling. This morning I stumbled across this video on YouTube, that nailed exactly the situation, except I was not in an office.

Sales is the key function in any business, without sales, there is no business.  Why is it then that sales people are often towards the bottom of the organisational totem, why do we allow anyone but our most trusted, intelligent, persuasive, sales trained, and effective employees anywhere near our source of revenue… customers.

Really effective sales people, those who bring in business that sticks, should be well rewarded, after all, they can easily go to your competition.

What sets the great sales people apart? How can you pick them?

Seems to me there are several characteristics that make super salespeople, based on years of watching them.

They speak to you as they would to their best friend.  The bloke in the video above not only worked to a script which did not fit the situation, he was absolutely full of faux enthusiasm, a sure sign of snake oil to come. If you want to engage someone, it pays to be respectful,  to seek their permission to speak, and deliver a message, and do it with humility that implies that you are doing them a favour, as you would your best friend, just because you can.

They build trust. Trust is a vastly overused word in sales training, everyone advises to build it, then sets about destroying any possibility by being assertive and overpromising. Trust is built on performance, not promises, so demonstrate that you deliver. Humans build trust in others by actually seeing evidence that they do what they say they will do, or by having those we already trust assure us of their veracity. This is why testimonials work on websites but they must be videoed, the person specifically identified, and they must be similar to you to be trusted. You would not trust the sales manager of ABC used cars to tell you the truth about their exemplary customer service, but you might trust someone who looks and sounds like you saying that they had great service from ABC used cars.  Your prospects must feel like they are buying from you, not that you are selling to them. The hard sell is out, it can work in some transactional and low value situations, but almost always leaves a bad taste that removes the possibility of a repeat.

Only subtle Anchoring is used. Anchoring is perhaps the most used sales tactic there is, you see it every day, and it screams ‘ hard sell’. Again, it can and often does work, it generates immediacy and urgency, which is why we have legislation that invokes a ‘cooling off’ period in some circumstances. Anchoring is when you see something promoted with words similar to ‘Normally this will cost $300 but if you buy in the next 10 minutes, we will give you this once only offer of this magnificent thingo for only $39.95‘. It does sound like a bargain, only because of the contrast between the so called ‘normal’ price and the deal not because $39.95 is itself a great deal. Anchoring does not have to be about price, although it most often is. Anchoring is about contrast, good vs bad, them vs us, up Vs down, any contrast will do.

They give reasons. When you give a prospect a reason ‘why’ that is credible to them, they will feel somewhat compelled to agree with you. This is the discipline of communicating the benefits rather than the features, and the more personal the benefit the better. A reason delivered with the word ‘because’ is always more powerful. ‘I want you to have this gizmo because it will double your productivity‘ rather than ‘This gizmo will double your productivity’. People are not silly, they know you are selling something, but if they believe that the reason you are selling to them is that you are looking out for them, that it is for their benefit rather than yours that you are having this conversation, they will tend to trust you, just that little bit more. It also puts the onus of making the decision onto them, so they will have a far greater commitment to the decision, than if they feel you pushed them into it.

They sell to the heart, not the head. We all know this, but so often we sell to the head because it seems  easier, and certainly requires less work. It is clear that nobody buys an expensive sports car because it will cover the standing 1/4 in under 5 seconds, they buy it because it tells everyone else that they can. Understanding the emotional triggers that apply in any selling situation rather than relying on the rational ones, which are always more  obvious,  will make you far more effective.

Call me when I can help you be more effective.

Header image courtesy www.gapingvoid.com. I use Hugh McLeod’s insights quite a bit

Trust: very easy to say, very hard to do.

Trust: very easy to say, very hard to do.

May 29, 2017 | Governance, Leadership

Trust is the basis of our humanity, without trust, we cannot have relationships of any value, and the breach of trust once given  is an emotional wrench. The greater the level of trust given the greater the emotional pain on realising that trust has been breached.

Collaboration relies on trust, the notion that we need to put the best interests of a group ahead of our personal best interests is fundamental to success in any true collaboration.

Unfortunately, they are as rare as hens teeth.

The notion of commons, comes from medieval times, a common ground on which everyone had equal right to graze. However, if one person doubled the number of head he grazed, he gets a short term benefit, to the detriment of the others, and the foundation of the commons, trust and mutual obligation, is broken.

Trust is also something that is highly individual.

People can learn to trust each other, while not having any trust in the institutions they represent. This is perhaps best demonstrated by the Christmas 1914 football match on the western front between the opposing German and British forces in the trenches. The military leadership on both sides were appalled, that their fighting men were able to put aside the deadly enmity they so valued sufficiently to have a game of football in the spirit of Christmas.

We are wary of trust because it makes us vulnerable, we give it only after it has been earned, after the ‘trustee” has demonstrated that the trust will not be breached, that it will not only do us no harm, but that it is in our mutual best interests that we trust each other.

This presentation by David DeSteno on the psychology of trust is well worth watching and absorbing into  the way you consider your relationships.