How do you know if you’re being empathetic? It’s easy to throw the term around, but difficult to actually apply. This is important to understand in my chosen field of design, but can also help anyone improve their interactions with other people.
My yardstick for being empathetic is imagining myself make the same decisions, in the same situation, that another person made.
If I look at someone’s behavior and think, “That doesn’t make sense,” or “Why did they do that?!” then I’m not being empathetic. I’m missing a piece of context — about their knowledge, experiences, skills, emotional state, environment, etc. — that led them to do what they did. When I feel that way, I push myself to keep searching for the missing piece that will make their actions become the only rational ones to take.
Is this always possible? No. Even armed with the same knowledge, operating in the same environment, and possessing the same skills as another person, I will occasionally make different decisions than them. Every individual is unique, and interpret and act on stimuli differently.
Even so, imagining myself behave the same as another person is what I strive for. That’s my yardstick for empathy.
If you want to learn more about empathy and how to apply it to your work and personal life, I highly recommendPractical Empathyby Indi Young.
In 2018 I read 23 books, which is a solid 9 more than last year’s paltry 14, and 1 more than 2016). I credit the improvement to the 4-month sabbatical I took in the spring. Not working really frees up time 😄
For the last 2 years I said I needed to read more fiction since I only read 3 in 2016 and 2 in 2017. So how did I do? I’m proud to say I managed to read 7 fiction books this year (if you can count My Dad Wrote a Porno as “fiction”…). My reading still skews heavily to non-fiction, and specifically design, but that’s what I’m passionate about and it helps me professionally, so I’m ok with it.
I also apparently didn’t finish any books in January or February. I thought this might have been a mistake at first, but when I looked back on that time I realized it’s because I was wrapping things up at Optimizely, and reading both Quicksilver by Neal Stephenson and Story by Robert McKee at the same time, which are long books that took awhile to work through.
Story: Substance, Structure, Style, and the Principles of Screenwriting
by Robert McKee
I’ve read next to nothing about writing stories before, but Robert McKee’s primer on the subject is excellent. Even though I’m not a fiction author, I found his principles for writing compelling narratives valuable beyond just the domain of screenwriting.
Published and edited by Victionary
There wasn’t much to “read” in this book, but it was full of beautiful hand-lettered pieces that continue to inspire me to be a better letterer.
The Baroque Cycle
by Neal Stephenson
Neal Stephenson’s Baroque Cycle is a broad, staggering, 3-volume and 2,500+ page opus of historical science fiction, making it no small feat to complete (I read the first 2 this year, and am almost done with the 3rd volume). It takes place during the scientific revolution of the 17th and 18th centuries when the world transitioned out of feudal rule towards a more rational and merit-based society that we would recognize as modern. It weaves together a story between fictional and non-fictional characters, including Newton, Leibniz, Hooke, Wren, royalty, and other persons-of-quality. Although the series can be slow and byzantine at times, Stephenson makes up for it with his attention to detail and the sheer amount of research and effort he put into accurately capturing the time period and bringing the story to life. Even just having the audacity to put yourself in Newton’s head to speak from his perspective, much less to do so convincingly, makes the series worth the effort.
Good Strategy, Bad Strategy
by Richard P. Rumelt
Strategy is a fuzzy concept, but Rumelt makes it concrete and approachable with many examples of good and bad strategy. Read my full notes here. Highly recommended.
Bird by Bird: Some Instructions on Writing and Life
by Anne Lamott
A great little meditation on the writing process (and life!), sprinkled with useful tips and tricks throughout.
Creative Selection: Inside Apple’s design process
by Ken Kocienda
Ken Kocienda was a software engineer during the “golden age of Steve Jobs,” and provides a fascinating insight into the company’s design process. I’m still chewing on what I read (and hope to publish more thoughts soon), but it’s striking how different it is from any process I’ve ever seen at any company, and different from best practices written about in books. It’s basically all built around Steve Jobs’ exacting taste, with designers and developers demoing their work to Steve with the hope of earning his approval. Very difficult to replicate, but the results speak for themselves.
Ogilvy on Advertising
by David Ogilvy
I hadn’t read much about advertising before, but Ogilvy’s book on the subject is great. It’s full of practical advice on how to write compelling headlines and ads that sell. Read my notes here.
Full List of Books Read
Story: Substance, Structure, Style, and the Principles of Screenwriting by Robert McKee (3/7/18)
The Color of Pixar by Tia Kratter (3/18/18)
Conversational Design by Erika Hall (3/27/18)
Quicksilver by Neal Stephenson (4/3/18)
Handstyle Lettering published and edited by Victionary (4/24/18)
Bimimicry: Innovation Inspired by Nature by Janine M. Benyus (5/4/18)
Design is Storytelling by Ellen Lupton (5/11/18)
Trip by Tao Lin (5/20/18)
Good Strategy, Bad Strategy: The Difference and Why it Matters by Richard P. Rumelt (5/27/18)
Bird by Bird: Some Instructions on Writing and Life by Anne Lamott (6/10/18)
The Inmates are Running the Asylum by Alan Cooper (6/13/18)
It Chooses You by Miranda July (6/13/18)
String Theory by David Foster Wallace (6/22/18)
Invisible Cities by Italo Calvino (6/28/18)
My Dad Wrote a Porno by Jamie Morton, James Cooper, Alice Levine, and Rocky Flintstone (7/1/18)
The User Experience Team of One by Leah Buley (7/8/18)
Change by Design by Tim Brown (9/3/18)
Darkness at Noon by Arthur Koestler (9/16/2018)
Creative Selection: Inside Apple’s design process during the golden age of Steve Jobs by Ken Kocienda (9/20/18)
The Confusion by Neal Stephenson (9/26/18)
How to Change Your Mind by Michael Pollan (10/27/18)
Ogilvy on Advertising by David Ogilvy (11/11/18)
Draft No. 4. On the writing process by John McPhee (11/14/18)
Design doesn’t own the customer experience. A great customer experience is the emergent outcome of the contributions of every department.
Design is not the center of the universe. Design is one function of many at an organization.
Other departments have more customer contact than you. Listen to them.
Don’t hand your work down from on high and expect everyone to worship its genius. You need to bring people along for the ride so that they see how you got to your solution, and can get there themselves.
Everyone can improve the customer’s experience, not just designers. Foster an environment where everyone applies a user-centered mindset to their work.
There’s no perfect, one-size-fits-all design process. Skilled designers have a variety of tools in their tool belt, and know when to use each one.
Done is better than perfect.
No design is perfect. Always be iterating.
Don’t fall in love with your designs. Be willing to kill your darlings.
You should always feel a little uncomfortable showing your work to peers. If you don’t, you’ve waited too long.
The only thing that matters to customers is what ships. Not your prototypes, wireframes, user journeys, or any other artifact of the design process.
The only true measure of your design’s success is the response from customers.
Stay curious. Regularly seek out new ideas, experiences, and perspectives.
Stay humble. You don’t know what’s best just because the word “designer” is in your title.
Don’t hide behind jargon and the cloak of the “creative.”
Great design is rooted in empathy. Empathy not just for the end user, but also for your coworkers, company, and society.
Having empathy for your customers means actually talking to them.
Don’t automatically ignore someone’s feedback because they’re more junior than you, or don’t have “designer” in their title. Don’t automatically listen to someone’s feedback because they’re more senior than you.
Design needs to be aligned to the needs of the business, and deliver measurable business value. Don’t design for design’s sake.
David Ogilvy is known as the “Father of Advertising.” He earned that moniker by pioneering the use of research to come up with effective ads and measure their impact. This was decades before the internet and the deluge of data we have available to us now. I can only imagine how much more potent he would be today.
He breaks down his methods in his book Ogivly on Advertising, which is just as relevant today as it was when it was written in 1983. Since I’ve found his techniques useful, I’m publishing my notes here so I can easily refer back to them and share them.
How to Write Headlines That Sell
Headlines are the most important part of your advertisements. According to research done by Ogilvy, “five times as many people read the headlines as read the body copy. It follows that unless your headline sells your product, you have wasted 90 per cent of your money.”
Promise a benefit. Make sure the benefit is important to your customer. For example, “whiter wash, more miles per gallon, freedom from pimples, fewer cavities.”
Make it persuasive, and make it unique. Persuasive headlines that aren’t unique, which your competitors can claim, aren’t effective.
Make it specific. Use percentages, time elapsed, dollars saved.
Personalize it to your audience, such as the city they’re in. (Or the words in their search query)
Include the brand and product name.
Make it as long or as short as it needs to be. Ogilvy’s research found that, “headlines with more than ten words get less readership than short headlines. On the other hand, a study of retail advertisements found that headlines of ten words sell more merchandise than short headlines. Conclusion: if you need a long headline, go ahead and write one, and if you want a short headline, that’s all right too.”
Make it clear and to the point, not clever or tricky.
Don’t use superlatives like, “Our product is the best in the world.” Market researcher George Gallup calls this “Brag and Boast.” They convince nobody.
Ideas for Headlines
Headlines that contain news are surefire. The news can be announcing a new product, or a new way to use an existing product. “And don’t scorn tried-and-true words like amazing, introducing, now, suddenly.”
Include information that’s useful to the reader, provided the information involves your product.
Try including a quote, such as from an expert or customers.
How to Write Persuasive Body Copy
According to Ogilvy, body copy is seldom read by more than 10% of people. But the 10% who read it are prospects. What you say determines the success of your ad, so it’s worth spending the time to get it right.
Address readers directly, as if you are speaking to them. "One human being to another, second person singular.”
Write short sentences and short paragraphs. Avoid complicated words. Use plain, everyday language.
Don’t write long-winded, philosophical essays. “Tell your reader what your product will do for him or her, and tell it with specifics.”
Write your copy in the form of a story. The headline can be a hook.
Avoid analogies. People often misunderstand them.
Just like with headlines, stay away from superlatives like, “Our product is the best in the world.”
Use testimonials from customers or experts (also known as “social proof”). Avoid celebrity testimonials. Most people forget the product and remember the celebrity. Further, people assume the celebrity has been bought, which is usually true.
Coupons and special offers work.
Always include the price of your products. “You may see a necklace in a jeweler’s window, but you don’t consider buying it because the price is not shown and you are too shy to go in and ask. It is the same way with advertisements. When the price of the product is left out, people have a way of turning the page.”
Long copy sells more than short. “I believe, without any research to support me, that advertisements with long copy convey the impression that you have something important to say, whether people read the copy or not.”
Stick to the facts about what your product is and can do.
Make the first paragraph a grabber to draw people into reading your copy.
Sub-headlines make copy more readable and scannable.
People often skip from the headline to the coupon to see the offer, so make the coupons mini-ads, complete with brand name, promise, and a mini photo of the product.
To keep prospects on the hook, try “limited edition,” “limited supply,” “last time at this price,” or “special price for promptness.”
Suggestions for Images
After headlines, images are the most important part of advertisements. They draw people in. Here’s what makes imagery effective:
The best images arouse the viewer’s curiosity. They look at it and ask, “What’s going on here?” This leads them to read the copy to find out. This is called “Story Appeal.”
If you don’t have a good story to tell, make your product the subject.
Show the end result of using your product. Before-and-after photographs are highly effective.
Photographs attract more readers, are more believable, and better remembered than illustrations.
Human faces that are larger than life size repel readers. Don’t use them.
Historical subjects bore people.
If your picture includes people, it’s most effective if it uses people your audience can identify with. Doctors if you’re trying to sell to doctors, men if you’re trying to appeal to men, and so on.
Include captions under your photographs. More people read captions than body copy, so make the caption a mini-advertisement.
KISS – Keep It Simple, Stupid.
“Readers look first at the illustration, then at the headline, then at the copy. So put these elements in that order.” This also follows the normal order of scanning.
More people read captions of images than body copy, so always include a caption under it. Captions should be mini-advertisements, so include the brand name and promise.
A Few More Tips for Effective Ads
These are some other principles I picked up from the book, which can be useful in many different types of ads.
Demonstrations of how well your product works are effective. Try coming up with a demonstration that your reader can perform.
Don’t name competitors. The ad is less believable and more confusing. People often think the competitor is the hero.
Problem-solution is a tried-and-true ad technique.
Give people a reason why they should buy.
Emotion can be highly effective. Nostalgia, charm, sentimentality, etc. Consumers need a rational excuse to justify their emotional decisions.
Cartoons don’t sell well to adults.
The most successful products and services are differentiated from their competitors. This is most effective if you can differentiate via low cost or highest quality. A differentiator doesn’t need to be relevant to the product’s performance, however, to be effective. For example, Owens-Corning differentiated their insulation by advertising the color of the product, which has nothing to do with how the product performs.
Ogilvy’s principles are surprisingly evergreen, despite the technological changes. Towards the end of the book he quotes Bill Bernbach, another advertising giant, on why this is:
Human nature hasn’t changed for a billion years. It won’t even vary in the next billion years. Only the superficial things have changed. It is fashionable to talk about changing man. A communicator must be concerned with unchanging man – what compulsions drive him, what instincts dominate his every action, even though his language too often camouflages what really motivates him. For if you know these things about a man, you can touch him at the core of his being. One thing is unchangingly sure. The creative man with an insight into human nature, with the artistry to touch and move people, will succeed. Without them he will fail.
Strategy has always been a fuzzy concept in my mind. What goes into a strategy? What makes a strategy good or bad? How is it different from vision and goals? Good Strategy / Bad Strategy, by UCLA Anderson School of Management professor Richard P. Rumelt, takes a nebulous concept and makes it concrete. He explains what goes into developing a strategy, what makes a strategy good, and what makes a strategy bad – which makes good strategy even clearer.
As I read the book, I kept underlining passages and scribbling notes in the margins because it’s so full of good information and useful techniques that are just as applicable to my everyday work as they are to running a multi-national corporation. To help me use the concepts I learned, I decided to publish my notes and key takeaways so I can refer back to them later.
The Kernel of Strategy
Strategy is designing a way to deal with a challenge. A good strategy, therefore, must identify the challenge to be overcome, and design a way to overcome it. To do that, the kernel of a good strategy contains three elements: a diagnosis, a guiding policy, and coherent action.
A diagnosis defines the challenge. What’s holding you back from reaching your goals? A good diagnosis simplifies the often overwhelming complexity of reality down to a simpler story by identifying certain aspects of the situation as critical. A good diagnosis often uses a metaphor, analogy, or an existing accepted framework to make it simple and understandable, which then suggests a domain of action.
A guiding policy is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis. Like the guardrails on a highway, the guiding policy directs and constrains action in certain directions without defining exactly what shall be done.
A set of coherent actions dictate how the guiding policy will be carried out. The actions should be coherent, meaning the use of resources, policies, and maneuvers that are undertaken should be coordinated and support each other (not fight each other, or be independent from one another).
Good Strategy vs. Bad Strategy
Good strategy is simple and obvious.
Good strategy identifies the key challenge to overcome. Bad strategy fails to identify the nature of the challenge. If you don’t know what the problem is, you can’t evaluate alternative guiding policies or actions to take, and you can’t adjust your strategy as you learn more over time.
Good strategy includes actions to take to overcome the challenge. Actions are not “implementation” details; they are the punch in the strategy. Strategy is about how an organization will move forward. Bad strategy lacks actions to take. Bad strategy mistakes goals, ambition, vision, values, and effort for strategy (these things are important, but on their own are not strategy).
Good strategy is designed to be coherent – all the actions an organization takes should reinforce and support each other. Leaders must do this deliberately and coordinate action across departments. Bad strategy is just a list of “priorities” that don’t support each other, at best, or actively conflict with each other, undermine each other, and fight for resources, at worst. The rich and powerful can get away with this, but it makes for bad strategy.
This was the biggest “ah-ha!” moment for me. All strategy I’ve seen has just been a list of unconnected objectives. Designing a strategy that’s coherent and mutually reinforces itself is a huge step forward in crafting good strategies.
Good strategy is about focusing and coordinating efforts to achieve an outcome, which necessarily means saying “No” to some goals, initiatives, and people. Bad strategy is the result of a leader who’s unwilling or unable to say “No.” The reason good strategy looks so simple is because it takes a lot of effort to maintain the coherence of its design by saying “No” to people.
Good strategy leverages sources of power to overcome an obstacle. It brings relative strength to bear against relative weakness (more on that below).
How to Identify Bad Strategy
Four Major Hallmarks of Bad Strategy
Fluff: A strategy written in gibberish masking as strategic concepts is classic bad strategy. It uses abstruse and inflated words to create the illusion of high-level thinking.
Failure to face the challenge: A strategy that does not define the challenge to overcome makes it impossible to evaluate, and impossible to improve.
Mistaking goals for strategy: Many bad strategies are just statements of desire rather than plans for overcoming obstacles.
Bad strategic objectives: A strategic objective is a means to overcoming an obstacle. Strategic objectives are “bad” when they fail to address critical issues or when they are impracticable.
Some Forms of Bad Strategy
Dog’s Dinner Objectives: A long list of “things to do,” often mislabeled as “strategies” or “objectives.” These lists usually grow out of planning meetings in which stakeholders state what they would like to accomplish, then they throw these initiatives onto a long list called the “strategic plan” so that no one’s feelings get hurt, and they apply the label “long-term” so that none of them need be done today.
In tech-land, I see a lot of companies conflate OKRs (Objectives and Key Results) with strategy. OKRs are an exercise in goal setting and measuring progress towards those goals (which is important), but it doesn’t replace strategy work. The process typically looks like this: once a year, each department head is asked to come up with their own departmental OKRs, which are supposed to be connected to company goals (increase revenue, decrease costs, etc.). Then each department breaks down their OKRs into sub-OKRs for their teams to carry out, which are then broken down into sub-sub-OKRs for sub-teams and/or specific people, so on down the chain. This process just perpetuates departmental silos and are rarely cohesive or mutually supportive of each other (if this does happen, it’s usually a happy accident). Department and team leaders often throw dependencies on other departments and teams, which causes extra work for teams that they often haven’t planned for and aren’t connected to their own OKRs, which drags down the efficiency and effectiveness of the entire organization. It’s easy for leaders to underestimate this drag since it’s hard to measure, and what isn’t measured isn’t managed.
As this book makes clear, setting objectives is not the same as creating a strategy to reach those goals. You still need to do the hard strategy work of making a diagnosis of what obstacle is holding you back, creating a guiding policy for overcoming the obstacle, and breaking that down into coherent actions for the company to take (which shouldn’t be based on what departments or people or expertise you already have, but instead you should look at what competencies you need to carry out your strategy and then apply existing teams and people to carrying them out, if they exist, and hire where you’re missing expertise, and get rid of competencies that are no longer needed in the strategy). OKRs can be applied at the top layer as company goals to reach, then applied again to the coherent actions (i.e. what’s the objective of each action, and how will you know if you reached it?), and further broken down for teams and people as needed. You still need an actual strategy before you can set OKRs, but most companies conflate OKRs with strategy.
Blue Sky Objectives: A blue-sky objective is a simple restatement of the desired state of affairs or of the challenge. It skips over the annoying fact that no one has a clue as to how to get there.
For example, “underperformance” isn’t a challenge, it’s a result. It’s a restatement of a goal. The true challenge are the reasons for the underperformance. Unless leadership offers a theory of why things haven’t worked in the past (a.k.a. a diagnosis), or why the challenge is difficult, it is hard to generate good strategy.
The Unwillingness or Inability to Choose: Any strategy that has universal buy-in signals the absence of choice. Because strategy focuses resources, energy, and attention on some objectives rather than others, a change in strategy will make some people worse off and there will be powerful forces opposed to almost any change in strategy (e.g. a department head who faces losing people, funding, headcount, support, etc., as a result of a change in strategy will most likely be opposed to the change). Therefore, strategy that has universal buy-in often indicates a leader who was unwilling to make a difficult choice as to the guiding policy and actions to take to overcome the obstacles.
This is true, but there are ways of mitigating this that he doesn’t discuss, which I talk about in the “Closing Thoughts” section below.
Template-style “strategic planning:” Many strategies are developed by following a template of what a “strategy” should look like. Since strategy is somewhat nebulous, leaders are quick to adopt a template they can fill in since they have no other frame of reference for what goes into a strategy.
These templates usually take this form:
The Vision: Your unique vision of what the org will be like in the future. Often starts with “the best” or “the leading.”
The Mission: High-sounding politically correct statement of the purpose of the org.
The Values: The company’s values. Make sure they are non-controversial.
The Strategies: Fill in some aspirations/goals but call them strategies.
This template-style strategy skips over the hard work of identifying the key challenge to overcome, and setting out a guiding policy and actions to overcome the obstacle. It mistakes pious statements of the obvious as if they were decisive insights. The vision, mission, and goals are usually statements that no one would argue against, but that no one is inspired by, either.
I found myself alternating between laughing and shaking my head in disbelief because this section is so on the nose.
New Thought: This is the belief that you only need to envision success to achieve it, and that thinking about failure will lead to failure. The problem with this belief is that strategy requires you to analyze the situation to understand the problem to be solved, as well as anticipating the actions/reactions of customers and competitors, which requires considering both positive and negative outcomes. Ignoring negative outcomes does not set you up for success or prepare you for the unthinkable to happen. It crowds out critical thinking.
Sources of Power
Good strategy will leverage one or more sources of power to overcome the key obstacles. Rumelt describes 7 sources of power, but the list is not exhaustive:
Leverage: Leverage is finding an imbalance in a situation, and exploiting it to produce a disproportionately large payoff. Or, in resource constrained situations (e.g. a startup), it’s using the limited resources at hand to achieve the biggest result (i.e. not trying to do everything at once). Strategic leverage arises from a mixture of anticipating the actions and reactions of competitors and buyers, identifying a pivot point that will magnify the effects of focused effort (e.g. an unmet need of people, an underserved market, your relative strengths/weaknesses, a competence you’ve developed that can be applied to a new context, and so on), and making a concentrated application of effort on only the most critical objectives to get there.
This is a lesson in constraints – a company that isn’t rich in resources (i.e. money, people) is forced to find a sustainable business model and strategy, or perish. I see startups avoid making hard choices about what objectives to pursue by taking investor money to hire their way out of deciding what not to do. They can avoid designing a strategy by just throwing spaghetti at the wall and hoping something sticks, and if it doesn’t go back to the investors for more handouts. “Fail fast,” “Ready, fire, aim,” “Move fast and break things,” etc., are all Silicon Valley versions of this thinking worshiped by the industry. If a company is resource constrained, they’re forced to find a sustainable business model and strategy sooner. VC money has a habit of making companies lazy when it comes to the business fundamentals of strategy and turning a profit.
Proximate Objectives: Choose an objective that is close enough at hand to be feasible, i.e. proximate. This doesn’t mean your goal needs to lack ambition, or be easy to reach, or that you’re sandbagging. Rather, you should know enough about the nature of the challenge that the sub-problems to work through are solvable, and it’s a matter of focusing individual minds and energy on the right areas to reach an otherwise unreachable goal. For example, landing a man on the moon by 1969 was a proximate objective because Kennedy knew the technology and science necessary was within reach, and it was a matter of allocating, focusing, and coordinating resources properly.
Chain-link Systems: A system has chain-link logic when its performance is limited by its weakest link. In a business context, this typically means each department is dependent on the other such that if one department underperforms, the performance of the entire system will decline. In a strategic setting, this can cause organizations to become stuck, meaning the chain is not made stronger by strengthening one link – you must strengthen the whole chain (and thus becoming un-stuck is its own strategic challenge to overcome). On the flip side, if you design a chain link system, then you can achieve a level of excellence that’s hard for competitors to replicate. For example, IKEA designs its own furniture, builds its own stores, and manages the entire supply chain, which allows it to have lower costs and a superior customer experience. Their system is chain-linked together such that it’s hard for competitors to replicate it without replicating the entire system. IKEA is susceptible to getting stuck, however, if one link of its chain suffers.
Design: Good strategy is design – fitting various pieces together so they work as a coherent whole. Creating a guiding policy and actions that are coherent is a source of power since so few companies do this well. As stated above, a lot of strategies aren’t “designed” and instead are just a list of independent or conflicting objectives.
The tight integration of a designed strategy comes with a downside, however — it’s narrower in focus, more fragile, and less flexible in responding to change. If you’re a huge company with a lot of resources at your disposal (e.g. Microsoft), a tightly designed strategy could be a hinderance. But in situations where resources are constrained (e.g. a startup grasping for a foothold in the market), or the competitive challenge is high, a well-designed strategy can give you the advantage you need to be successful.
Focus: Focus refers to attacking a segment of the market with a product or service that delivers more value to that segment than other players do for the entire market. Doing this requires coordinating policies and objectives across an organization to produce extra power through their interacting and overlapping effects (see design, above), and then applying that power to the right market segment (see leverage, above).
This source of power exists in the UX and product world in the form of building for one specific persona who will love your product, capturing a small – but loyal – share of the market, rather than trying to build a product for “everyone” that captures a potentially bigger part of the market but that no one loves or is loyal to (making it susceptible to people switching to competitors). This advice is especially valuable for small companies and startups who are trying to establish themselves.
Growth: Growing the size of the business is not a strategy – it is the result of increased demand for your products and services. It is the reward for successful innovation, cleverness, efficiency, and creativity. In business, there is blind faith that growth is good, but that is not the case. Growth itself does not automatically create value.
The tech industry has unquestioned faith in growth. VC-backed companies are expected to grow as big as possible, as fast as possible. If you don’t agree, you’re said to lack ambition, and investors won’t fund you. This myth is perpetuated by the tech media. But as Rumelt points out, growth isn’t automatically good. Most companies don’t need to be, and can’t be, as big as companies like Google, Facebook, Apple, and Amazon. Tech companies grow in an artificial way, i.e. spending the money of their investors, not money they’re making from customers. This growth isn’t sustainable, and when they can’t turn a profit they shut down (or get acquired). What could have been a great company, at a smaller size or slower growth rate, now no longer exists. This generally doesn’t harm investors because they only need a handful of big exits out of their entire portfolio, so they pay for the ones that fail off of the profits from the few that actually make it big.
Using Advantage: An advantage is the result of differences – an asymmetry between rivals. Knowing your relative strengths and weaknesses, as well as the relative strengths and weaknesses of your competitors, can help you find an advantage. Strengths and weaknesses are “relative” because a strength you have in one context, or against one competitor, may be a weakness in another context, or against a different competitor. You must press where you have advantage and side-step situations in which you do not. You must exploit your rivals’ weaknesses and avoid leading with your own.
The most basic advantage is producing at a lower cost than your competitors, or delivering more perceived value than your competitors, or a mix of the two. The difficult part is sustaining an advantage. To do that, you need an “isolating mechanism” that prevents competitors from duplicating it. Isolating mechanisms include patents, reputations, commercial and social relationships, network effects, dramatic economies of scale, and tacit knowledge and skill gained through experience.
Once you have an advantage, you should strengthen it by deepening it, broadening it, creating higher demand for your products and services, or strengthening your isolating mechanisms (all explained fully in the book).
Dynamics: Dynamics are waves of change that roll through an industry. They are the net result of a myriad of shifts and advances in technology, cost, competition, politics, and buyer perceptions. Such waves of change are largely exogenous – that is, beyond the control of any one organization. If you can see them coming, they are like an earthquake that creates new high ground and levels what had previously been high ground, leaving behind new sources of advantage for you to exploit.
There are 5 guideposts to look out for: 1. Rising fixed costs; 2. Deregulation; 3. Predictable Biases; 4. Incumbent Response; and 5. Attractor States (i.e. where an industry “should” go). (All of these are explained fully in the book).
Attractor states are especially interesting because he defines it as where an industry “should” end up in the light of technological forces and the structure of demand. By “should,” he means to emphasize an evolution in the direction of efficiency – meeting the needs and demands of buyers as efficiently as possible. They’re different from corporate visions because the attractor state is based on overall efficiency rather than a single company’s desire to capture most of the pie. Attractor states are what pundits and industry analysts write about. There’s no guarantee, however, that the attractor state will ever come to pass. As it relates to strategy, you can anticipate most players to chase the attractor state. This leads many companies to waste resources chasing the wrong vision, and faltering as a result (e.g. Cisco rode the wave of “dumb pipes” and “IP everywhere” that AT&T and other telecom companies should have exploited). If you “zig” when other companies “zag”, you can build yourself an advantage.
As a strategist, you should seek to do your own analysis of where an industry is going, and create a strategy based on that (rather than what pundits “predict” will happen). Combining your own proprietary knowledge of your customers, technology, and capabilities with industry trends can give you deeper insights that analysts on the outside can’t see. Taking that a step further, you should also look for second-order effects as a result of industry dynamics. For example, the rise of the microprocessor was predicted by many, and largely came true. But what most people didn’t predict was the second-order effect that commoditized microprocessors getting embedded in more products led to increased demand for software, making the ability to write good software a competitive advantage.
Inertia: Inertia is an organization’s unwillingness or inability to adapt to changing circumstances. As a strategist, you can exploit this by anticipating that it will take many years for large and well-established competitors to alter their basic functioning. For example, Netflix pushed past Blockbuster because the latter could or would not abandon its focus on retail stores.
Entropy: Entropy causes organizations to become less organized and less focused over time. As a strategist, you need to watch out for this in your organization to actively maintain your purpose, form, and methods, even if there are no changes in strategy or competition. You can also use it as a weakness to exploit against your competitors by anticipating that entropy will creep into their business lines. For example, less focused product lines are a sign of entropy. GM’s car lines used to have distinct price points, models, and target buyers, but over time entropy caused each line to creep into each other and overlap, causing declining sales from consumer confusion.
One of the things that surprised me as I read the book is how much overlap there is between doing strategy work and design work – diagnosing the problem, creating multiple potential solutions (i.e. the double diamond), looking at situations from multiple perspectives, weighing tradeoffs in potential solutions, and more. The core of strategy, as he defines it, is identifying and solving problems. Sound familiar? That’s the core of design! He even states, “A master strategist is a designer.”
Rumelt goes on to hold up many examples of winning strategies and advantages from understanding customer needs, behaviors, pain points, and building for a specific customer segment. In other words, doing user-centered design. He doesn’t specifically reference any UX methods, but it was clear to me that the tools of UX work apply to strategy work as well.
The overlap with design doesn’t end there. He has a section about how strategy work is rooted in intuition and subjectivity. There’s no way to prove a strategy is the “best” or “right” one. A strategy is a judgement of a situation and the best path forward. You can say the exact same thing about design as well.
Since a strategy can’t be proven to be right, Rumelt recommends considering a strategy a “hypothesis” that can be tested and refined over time. Leaders should listen for signals that their strategy is or is not working, and make adjustments accordingly. In other words, strategists should iterate on their solutions, same as designers.
Furthermore, this subjectivity causes all kinds of challenges for leaders, such as saying “no” to people, selling people on their version of reality, and so on. He doesn’t talk about how to overcome these challenges, but as I read the book I realized these are issues that designers have to learn how to deal with.
Effective designers have to sell their work to people to get it built. Then they have to be prepared for criticism, feedback, questions, and alternate ideas. Since their work can’t be “proven” to be correct, it’s open to attack from anyone and everyone. If their work gets built and shipped to customers, they still need to be open to it being “wrong” (or at least not perfect), listen to feedback from customers, and iterate further as needed. All of these soft skills are ways of dealing with the problems leaders face when implementing a strategy.
In other words, design work is strategy work. As Rumelt says, “Good strategy is design, and design is about fitting various pieces together so they work as a coherent whole.”
If you enjoyed this post (and I’m assuming you did if you made it this far), then I highly recommend reading the book yourself. I only covered the highlights here, and the book goes into a lot more depth on all of these topics. Enjoy!