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When You See Instability Coming

When the future is like the past, you don’t need new data. You can make a good decision based on old data. You can take the right action based on old data. When the future is like the past, taking the right action means doing what worked before.

When I work with executives in stable industries, they don’t need new data. They know what worked before. Their job is to monitor the machine that is their company, so it keeps working. Quality assurance and Six Sigma techniques are their prime concern. Their job is to make sure the company keeps doing what worked before, but more efficiently, if possible. Tomorrow. And the next day. Their job is to do the same thing over and over again, a little better each time.

Which some people look down on. Some think it’s not very interesting. Which is fine. If they don’t want to do the same thing over and over again, there’s plenty of unstable places in the world.

But when you’ve been in unstable places, you gain an appreciation for things that work. You’re grateful for the utility workers who got the electricity to your house like they did yesterday, maybe a little more efficiently. You’re grateful for the grocery stores that replenished the shelves overnight, maybe with more stuff. You’re grateful for the gas pumps that worked today the same way they did yesterday, maybe a little better. You’re grateful for the people who did the same thing today that they did yesterday, maybe a little better than last time. You’re grateful for the people who do the same thing over and over again.

That’s why it’s worrying when someone in a stable industry reaches out to a guy like me.

It means they see instability coming.

They see the world is changing. They’re worried that what they did yesterday won’t have the same effect tomorrow. They’re worried that some competitor or regulator or new type of customer will step between their action and the result. They’re worried that they can’t keep doing what they’re doing and expect the same result.

They’re worried about the space between action and result:

Which means they want intelligence on how the world is changing. To get them that, we start with the Positive-Sum/Zero-Sum frameworks described in A Spy’s Guide To Strategy to frame out the world, the players, the places and things that are changing.

Then, we start asking questions. And, we go look for data. Most of the time, we have the data, but it hasn’t been analyzed the right way. Sometimes, we need new data.

With the data, we answer the questions. We generate hypotheses. We start testing those hypotheses in small ways that are scalable (If you’re looking to take a job in a new company or invest in a new company, a way to figure out if they have a good future is to ask them how they test new ideas, and how many of those new ideas have been scaled to the whole company).

Then, the company is ready to act.

More importantly, the company has a process for understanding how to change when the world changes. The company is ready to change what it does in order to get the same results. Maybe, better results.

And then, I walk away. Because they don’t need me anymore.

Because the company is ready for instability.


We'll talk more about instability and how to handle it in the coming A Spy's Guide To Taking Risks.

To brush up on the D-A-D-A process, check out A Spy's Guide To Thinking.

#Instability #risk #hypotheses

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