Author: Rajesh Jain

Published December 26, 2023

1

The Road Taken…Or Not

Every day, we are faced with an array of decisions. Some are routine and seem inconsequential, while others possess the power to shape the trajectories of our lives, especially in the business world. My own journey has been punctuated by these pivotal moments.

In the summer of 1994, I grappled with the future of my failing image processing venture. By the end of that year (after having decided to shut down the imaging startup), I was contemplating the nature of my next enterprise – an India-centric Internet startup or a different pursuit. Over the years, I found myself at the crossroads more than once: deciding on content domains in ’96, choosing a buyer for IndiaWorld in ’99, relinquishing control of Netcore to a professional CEO in 2007, contemplating a political startup for the 2014 elections, reevaluating Nayi Disha’s direction in 2019, and in 2022, making a momentous decision about acquiring Unbxd for a staggering $100 million – a milestone for Netcore.

Each decision took me down a certain path. In every case, there was an alternative. I had to decide on the future direction within a limited timeframe. While I could take multiple inputs from others, the final call was mine. Every decision was about the future – one I had no way of knowing or predicting. I would never have perfect information to decide. Decision-making often boiled down to a leap of faith into an unpredictable tomorrow.  If I was wrong, the decision could bring some pain and even entail financial losses.

When I have to make big decisions, I  do what perhaps many of us do – list out the pros and cons, talk to a few people we trust for inputs, imagine the possible futures based on the choices we make, play out the worst-case scenario should the decision go bad, and perhaps even procrastinate. And yet, there comes a time when the decision cannot be delayed anymore. A deadline approaches. With hesitating finality, an answer must be given, a path must be chosen. One is never fully sure of how things will play out so there is always a moment of self-doubt, and even a “if only I had chosen the other path” feeling. In big and important decisions, there is no going back. For an entrepreneur and leader, there is no higher-up to pass on the buck for a bad decision. A mistake will have costs, and it may quite some time till one realises that an error of judgement has been made. There is the other side – the joy and ecstasy of having made the right move, which becomes a game changer taking the business into a new orbit. Every entrepreneur knows this dance well – between self-doubt and conviction, between lamenting what might have been and the euphoria of a decision that propels a business to new heights.

So, amidst this whirlwind of emotions and consequences, is there a way to consistently make better decisions? Let’s learn from the wisdom of others.

2

Decisions and Outcomes

Annie Duke writes in “How to Decide”: “Because any decision determines only the set of possible outcomes (some good, some bad, some in between), this means good outcomes can result from both good and bad decisions, and bad outcomes can result from both good and bad decisions.” Here is a helpful graphic:

Annie explains the four cells:

• An Earned Reward comes when you make a good-quality decision that results in a good outcome, like when you proceed through a green light and get through the intersection safely.
• Dumb Luck comes when you make a poor-quality decision that turns out well. You can be waiting at a traffic light and fail to notice the light has turned green because you are deeply entranced by the world’s most important tweet. If, while you are sitting there failing to proceed through the intersection, you happen to avoid getting in an accident with a car whose driver ignores the red light in their direction and barrels through the intersection, that doesn’t make looking at Twitter while driving a good decision. That’s just Dumb Luck.
• Bad Luck comes when you make a good-quality decision that turns out poorly. You can proceed through a green light and get in an accident with someone turning into traffic. That’s a bad outcome, but it wasn’t because your decision to follow the traffic laws was poor.
• Just Deserts means making a poor-quality decision that results in a bad outcome, like running a red light and getting in an accident.

Some additional inputs:

• The only thing you have control over that can influence the way your life turns out is the quality of your decisions.
• Determining whether a decision is good or bad means examining the quality of the beliefs informing the decision, the available options, and how the future might turn out given any choice you make.
• Resulting: A mental shortcut in which we use the quality of an outcome to figure out the quality of a decision…A necessary part of becoming a better decision-maker is learning from experience. Experience contains the lessons for improving future decisions. Resulting causes you to learn the wrong lessons.
• Luck exerts its influence between your decision and which of the possible paths you end up on. It is the element you have no control over that determines which of the possible outcomes you actually observe in the short run.

In her book, Annie outlines six steps to better decision-making:

• Step 1—Identify the reasonable set of possible outcomes.
• Step 2—Identify your preference using the payoff for each outcome—to what degree do you like or dislike each outcome, given your values?
• Step 3—Estimate the likelihood of each outcome unfolding.
• Step 4—Assess the relative likelihood of outcomes you like and dislike for the option under consideration.
• Step 5—Repeat Steps 1–4 for other options under consideration.
• Step 6—Compare the options to one another.

She adds: “Your greatest challenge as a decision-maker is seeing things that, by their nature, are going to be hazy. For past decisions, you’re reconstructing the decision while navigating your way through distortion-inducing biases. For new decisions, you’re looking into the future, which is inherently uncertain. This six-step process will help you improve the quality of both new decisions on your horizon and your assessment of past decisions. It’s hard to accurately assess a decision after the fact, in the shadow of an outcome that has already happened. But if you have a good decision process going forward, and keep a record of it, you’ll be a lot better off. You won’t have to wonder after the fact whether a decision was good or bad, under the haze of resulting and hindsight bias.”

Here is more from ChatGPT on the key ideas in the book:

1. Backcasting and Precommitment: When faced with a decision, imagine a future where a positive outcome has occurred, then work backward to figure out the steps that led to that outcome. Precommit to decisions and set clear criteria before entering a situation where emotions might sway your choices.
2. Decide in Bets: When making a decision, think of it as placing a bet on a particular outcome. Assess the risks, rewards, and probabilities associated with each option.
3. Seek Feedback: Constructive feedback can help improve your decision-making process. Create an environment where you and others can provide feedback without fear of retribution.
4. Use Decision Journals: Keep a journal of your decisions. Note the context, the decision made, the expected outcome, and the reasons for the decision. This helps you learn from your experiences and refine your process over time.
5. Decision Hygiene: Introduce practices that minimize biases and errors in decisions. This includes techniques such as considering the opposite of your initial instinct, breaking decisions into smaller components, and being wary of data that seems too good to be true.
6. Tackle Decisions Sequentially: Instead of trying to decide all at once, break decisions into smaller parts and tackle them one at a time. This can reduce complexity and make the process more manageable.
7. Use Tools and Frameworks: Tools like decision trees, pros-and-cons lists, and weighted factor models can help structure your thinking and lead to better decision outcomes.

3

Zoom In, Zoom Out

In their book, “Decisive”, Chip Heath and Dan Heath write:

“A remarkable aspect of your mental life is that you are rarely stumped,” said Daniel Kahneman, a psychologist who won the Nobel Prize in economics for his research on the way that people’s decisions depart from the strict rationality assumed by economists. In his fascinating book, Thinking, Fast and Slow, he describes the ease with which we draw conclusions: “The normal state of your mind is that you have intuitive feelings and opinions about almost everything that comes your way. You like or dislike people long before you know much about them; you trust or distrust strangers without knowing why; you feel that an enterprise is bound to succeed without analyzing it.”

Kahneman says that we are quick to jump to conclusions because we give too much weight to the information that’s right in front of us, while failing to consider the information that’s just offstage. He called this tendency “what you see is all there is.”…We’ll refer to this tendency as a “spotlight” effect.

… That, in essence, is the core difficulty of decision making: What’s in the spotlight will rarely be everything we need to make a good decision, but we won’t always remember to shift the light. Sometimes, in fact, we’ll forget there’s a spotlight at all, dwelling so long in the tiny circle of light that we forget there’s a broader landscape beyond it.

They identify the four villains of decision-making:

• You encounter a choice. But narrow framing makes you miss options.
• You analyze your options. But the confirmation bias leads you to gather self-serving information.
• You make a choice. But short-term emotion will often tempt you to make the wrong one.
• Then you live with it. But you’ll often be overconfident about how the future will unfold.

The solutions, remembered by the mnemonic WRAP for the four verbs:

• Widen Your Options. How can you expand your set of choices?
• Reality-Test Your Assumptions. How can you get outside your head and collect information that you can trust?
• Attain Distance Before Deciding. How can you overcome short-term emotion and conflicted feelings to make the best choice?
• Prepare to Be Wrong. How can we plan for an uncertain future so that we give our decisions the best chance to succeed?

One of the ideas they discuss is “Zoom Out, Zoom In” as part of the process to attain distance before deciding. It’s a way of gaining a broader perspective on a problem or decision. Here’s a summary:

Zoom Out

• This means taking a step back to see the bigger picture. When we’re deeply involved in a situation, it’s easy to lose perspective and get caught up in the minutiae. By “zooming out,” you can detach from the immediate details and see things in a broader context.
• One tactic is to consider how other people in similar situations have handled similar decisions or challenges. This broader vantage point can offer valuable insights.
• Another approach is to ask, “What would I advise a close friend to do if they were in this situation?” This reframing can help sidestep personal biases and offer clarity.

Zoom In

• After zooming out, it’s crucial to “zoom in” to get a close-up view of the situation. This means immersing yourself in the specifics to ensure you’re not missing any essential details.
• One way to do this is by grounding decisions in concrete, tangible facts and realities. It might involve firsthand observation or seeking out detailed feedback.
• By focusing closely, you can make sure you’re not overlooking critical elements that could impact your decision.

This combination of “big-picture view and close-up” offers a balanced perspective. While zooming out provides a broader context and reduces emotional biases, zooming in ensures that decisions are grounded in the real, tangible aspects of the situation at hand. It’s a method to counteract both the tunnel vision that can come with being too close to a problem and the potential oversight of missing crucial details.

4

Consequential and Irreversible

Shane Parrish writes in his book, “Clear Thinking”: “In order to get the results we desire, we must do two things. We must first create the space to reason in our thoughts, feelings, and actions; and second, we must deliberately use that space to think clearly. Once you have mastered this skill, you will find you have an unstoppable advantage. Decisions made through clear thinking will put you in increasingly better positions, and success will only compound from there.”

In 2020, I had done a course offered by Shane Parrish on “Decision by Design.” In the introduction to the course, Shane wrote: “Great decision making happens more like running multiple experiments at once. You create multiple hypotheses and test them simultaneously. You refine the experiments that are working based on the failed ones.  While each decision is its own unique situation, there are common skills that put you on the path toward success. You can think of it more like a sandwich, the top and bottom are important, but the order of the ingredients in the middle changes every time.  That’s why instead of teaching you a linear process, in this program we’re focusing on teaching you how to master the skills that apply throughout the process. So you can come into any decision, at any point, and add incredible value. Or you can see any problem at any point and identify where something may have gone wrong.”

The course covered 12 skills:

One of my biggest takeaways from the course for me was the importance of identifying consequential and irreversible decisions. This is a graphic from Shane’s book:

He writes: “When a decision is highly consequential and irreversible, its effects ripple throughout your life, and there’s no way to stop them. Some people call these “lead dominoes.” When decisions are like lead dominoes, the cost of a mistake is high. Exactly the opposite is true of a decision that’s inconsequential and easily reversed. The cost of a mistake is low: if you don’t like the outcome, you can just reverse it. The biggest mistake in cases like these is wasting time and mental energy. If you can take something back, or it doesn’t really matter, continuing to gather information becomes a drain on resources.”

He suggests three principles:

• The ASAP principle: If the cost to undo the decision is low, make it as soon as possible.
• The ALAP principle: If the cost to undo a decision is high, make it as late as possible.
• The Stop, FLOP, Know principle: Stop gathering more information and execute your decision when either you Stop gathering useful information, you First Lose an OPportunity (FLOP), or you come to Know something that makes it evident what option you should choose.

Here is another helpful graphic:

Elaborating on the last principle, Shane writes: “It’s finally time to act when you come to know something that makes it clear what you should do. Sometimes you gather a critical piece of information that makes your decision easy, perhaps a First Lost Opportunity. Other times, especially in more ambiguous situations like relationships, it’s just a gut feeling that doesn’t go away or change. Either way, there’s always a moment when you simply know at a core level exactly what to do.”

5

First-Principles Thinking

Ozan Varol, in his book “Think like a Rocket Scientist”, writes: “Process, by definition, is backward looking. It was developed in response to yesterday’s troubles. If we treat it like a sacred pact—if we don’t question it—process can impede forward movement. Over time, our organizational arteries get clogged with outdated procedures…When necessary, we must unlearn what we know and start over. This is why Andrew Wiles—the mathematician who solved the centuries-old Fermat’s last theorem—said, “It’s bad to have too good a memory if you want to be a mathematician. You need to forget the way you approached [the problem] the previous time.”…Knowledge is good. But knowledge should inform, not constrain. Knowledge should enlighten, not obscure. Only through the evolution of our existing knowledge will the future come into focus. The tyranny of our knowledge is only part of the problem. We’re constrained not only by what we’ve done in the past, but also by what others have done as well.”

What Ozan advocates is first-principles thinking. He writes:

The credit for first-principles thinking goes to Aristotle, who defined it as “the first basis from which a thing is known.” The French philosopher and scientist René Descartes described it as systematically doubting everything you can possibly doubt, until you’re left with unquestionable truths. Instead of regarding the status quo as an absolute, you take a machete to it. Instead of letting your original vision—or the visions of others—shape the path forward, you abandon all allegiances to them. You hack through existing assumptions as if you’re hacking through a jungle until you’re left with the fundamental components.

…For Musk, using first principles meant starting with the laws of physics and asking himself what’s required to put a rocket in space. He stripped a rocket down to its smallest subcomponents—its fundamental raw materials. “What is a rocket made of?” he asked himself. “Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber. And then I asked, what is the value of those materials on the commodity market? It turned out that the materials cost of a rocket was around 2 percent of the typical price—which is a crazy ratio.”… So Musk decided to cut his own metal and construct his next-generation rockets from scratch.

…[Invisible rules] are habits and behaviors that have unnecessarily rigidified into rules. They’re unlike written rules, which are visible. The written rules appear right there in the standard operating procedures and can be amended or deleted…[I]nvisible rules…are the silent killers that constrain our thinking without our being aware of it.

…[F]irst-principles thinking should be deployed where it matters the most. To mop the mist collected on your mental windshield in those areas and expose the invisible rules governing your life, spend a day questioning your assumptions. With each commitment, each presumption, each budget item, ask yourself, What if this weren’t true? Why am I doing it this way? Can I get rid of this or replace it with something better?

…If you’re trying to transform an industry, it makes sense to look outside the industry for talent. That’s where you’ll find people who aren’t blinded by the invisible rules—the white tablecloths—that constrain their thinking. In its early days, SpaceX would often hire people from the automotive and cell-phone industries. These are fields where technologies change rapidly, requiring quick learning and adaptation—the hallmark of first-principles thinkers.

First-principles thinking is a problem-solving and decision-making approach that involves breaking down complex ideas and problems into their most fundamental underlying components or principles. Instead of relying on analogies, conventions, or past norms, first-principles thinking directs us to dive deep into the problem and understand its basic elements. Once identified, these fundamental principles can then be reassembled in a creative manner to devise innovative solutions. In essence, first-principles thinking prevents one from getting trapped in prevailing modes of thought and opens the door for genuine innovation by returning to the basics and building from there.

6

Second-level Thinking

Second-level thinking is a concept often attributed to Howard Marks. He calls it, “The Most Important Thing.” In the context of decision-making, it refers to the ability to think beyond the immediate and obvious implications of a decision and to consider the next-level consequences and possibilities that might not be readily apparent.

First-level thinking is superficial and simplistic. It might involve making decisions based on obvious facts or popular consensus. For instance, in an investment context, first-level thinking might be: “This company’s earnings are rising, so its stock is a good buy.” Second-level thinking delves deeper, asking questions like: “If everyone believes this company’s stock is a good buy because earnings are rising, perhaps it’s already overvalued. What are the underlying factors driving the earnings growth? Can they be sustained? What are the broader market dynamics at play? How might competitors respond?”

Second-level thinking is about understanding the complexities and nuances of a situation, challenging the initial assumptions, and looking for deeper insights that might give one an edge in decision-making. It’s about trying to see things that others don’t, predicting how situations might play out based on a multitude of factors, and making decisions that account for these deeper insights.

From Howard Marks’ book: “Remember, your goal in investing isn’t to earn average returns; you want to do better than average. Thus, your thinking has to be better than that of others—both more powerful and at a higher level. Since other investors may be smart, well-informed and highly computerized, you must find an edge they don’t have. You must think of something they haven’t thought of, see things they miss or bring insight they don’t possess. You have to react differently and behave differently. In short, being right may be a necessary condition for investment success, but it won’t be sufficient. You must be more right than others … which by definition means your thinking has to be different.”

In an investor note, he wrote: “Second-level thinkers double-think (and triple-think) every angle of every situation. A good example can be seen in the hypothetical newspaper contest John Maynard Keynes wrote about in 1936. Readers would be shown 100 photos and asked to choose the six prettiest girls, with prizes going to the readers who chose the girls readers voted for most often. Naive entrants would try to win by picking the prettiest girls. But note that the contest would reward the readers who chose not the prettiest girls, but the most popular. Thus the road to winning would lie not in figuring out which were the prettiest, but in predicting which girls the average entrant would consider prettiest. Clearly, to do so, the winner would have to be a second-level thinker. (The first-level thinker wouldn’t even recognize the difference.)”

By engaging in second-order thinking, we can make more informed decisions that are likely to have positive outcomes in the long run. This type of thinking can help us to avoid making decisions that may seem beneficial in the short term but could have negative consequences in the future. In addition to considering the long-term consequences of our decisions, second-order thinking also involves considering the potential unintended consequences. For example, a decision that seems to be beneficial for one group of people may have negative consequences for another group. By taking into account the potential unintended (and often unseen) effects of our decisions, we can make more better choices.

Second-order thinking is a valuable skill that can be applied to all areas of our lives. By developing our ability to think in this way, we can make better decisions that are more likely to lead to positive outcomes.

7

Rapid Response Teams

Pawel Moetyl, in his book, “Labyrinth”, looks at “the most prevalent weak spots in decision-making processes, not only in business but in life in general; during crisis and calmer times; in both individual and group decisions.” Pawel tries to “to answer the question of how to make decisions that are simultaneously rational, effective, and wise.” Among the common errors he identifies: relying on past successes, ignoring significant information, conducting superficial analysis, yielding to outside pressure, putting too much faith in luck, or misinterpreting important data.

Pawel writes:

There are three fundamental approaches to the decision-making process, each with its own particular advantages depending on circumstances.

The first approach is called routinized decision-making—essentially an intuitive approach in which we make a decision unconsciously, drawing on repeated experiences and ingrained habits and decision-making mechanisms without thinking too much about them. It sounds dangerous, but the routinized approach is the one that we naturally use for making recurring decisions in known conditions (i.e., when we know exactly what the effects of an action will be). In such conditions, routinized decision-making not only works, but thanks to the extra automaticity of this method of deciding, it also saves our brains the time and energy needed for more important, conscious choices.

In advocacy mode, when we encounter a problem that requires us to make a decision, we rely on our prior experience, knowledge, and sense of the situation to point us toward an appropriate solution. Once we find a starting point, we look for information to confirm that our idea is a good one, and if we find that information, we make our decision and then act on it. In this mode, decision-makers and teams operate quickly and effectively, looking for key pieces of information that are pertinent to the choice to be made. Advocacy therefore works in numerous situations where we are dealing with classically understood risk management—that is, when we know what the consequences of a decision will be and how likely it is that they will occur…The vast majority of business decisions are made in this mode, as it enables us to save one of our most precious resources: time.

In the context of a black swan event, …the third decision-making approach—inquiry—should be the only option. With inquiry mode, the decision-maker tries to analyze all the available data, to review the evidence from all angles, involving as many people and perspectives as possible. This leads to open, constructive discussion and an intellectual battle of ideas (detailed discussion of different options, actions, and possible scenarios), but without affective (personal) conflicts…Inquiry is certainly the most time-consuming approach, but it helps anyone using it to make the best possible decisions, based on a thorough analysis of the data and assessment of possible scenarios.

A rapid response team is one way to deal with black swans. Writes Pawel: “An organization that reacts faster than its competitors can not only not lose in a black swan situation, but may even gain. At the same time, truly unexpected situations typically create chaos in an organization, and too much time passes before the key people recover from the shock and set in action the appropriate mechanisms. For this reason, more and more organizations are setting up rapid response teams (sometimes even calling them the black swan response team), made up of people from a number of departments, with varying competencies and a range of experiences, whose task is to shorten the time is takes to react to a crisis. These teams meet often and rehearse reacting to different types of black swans. They analyze how to respond to events on a global, sectoral, organizational, team, and individual level, looking for weak points in the company that require immediate action. They also force others to discuss new solutions and promote the inquiry mode.”

Among some of the rules suggested:

• If you find yourself in a black swan situation, go into inquiry mode. Whatever your intuition or experience is telling you may be wrong.
• Set up your own Executive Committee. Surround yourself with people who don’t think like you. Value those who disagree with you, and who aren’t afraid to say it.
• When improving an organization, also pay attention to the best and most efficient processes. In a black swan situation, they can fail. Do you have a backup plan?
• Shoot down Concordes and hunt for monkey habits. Eliminating loss-making projects and bad practices frees up time for other things, increasing a company’s agility and flexibility.

Pawel adds: “Rapid response teams act so that any eventual black swan attacks with less force. They relentlessly test an organization and its components from the point of view of the unexpected. They optimize processes, structures, resources, and working practices. They free up time and energy. An effect of their work is a kind of decisional Kaizen, constantly seeking minimal gains that make a firm more agile and thus better prepared for a surprise scenario.”

8

Asking Right Questions

In any decision-making process, one of the biggest hurdles is the question and process. Paul Magnone, Christopher Frank and Oded Netzer provide some interesting insights in their book, “Decisions over Decimals.” They write:

What distinguishes a person who makes smart, confident data‐driven decisions? It is not exceptional analytic skills. Instead, successful decision‐makers balance data, experience, and intuition. They quickly sort through information, apply judgment, and are fierce interrogators of data to cultivate sharp insights. They know there is more to decision‐making than just the data. They resist being intoxicated by information. Instead, they apply first‐order principles to understand what the decision really is, why it must be taken, and to what end. They then seek the relevant data to help make that decision. In short, they make informed decisions with incomplete information.

This approach to fast decision‐making taps into a different set of skills, requiring a change in mindset by combining information and intuition. We call this approach Quantitative Intuition (QI). QI is the product of years of discovery about making effective and efficient decisions. For too long, the debate has been on the value, veracity, and variety of Big Data. This trend has shifted the problem from data exploration to data sifting. This book dives into this emerging method to reimagine making decisions with imperfect information. By sharing a set of rapid response tools to get to the core of any business challenge, QI enables the reader to quickly interrogate and integrate data to make quick, effective, and often bold decisions. QI emphasizes the need to break the allure that an abundance of data is a crystal ball to eliminate all uncertainty and lead to perfect decisions.

… Being able to combine qualitative thinking and intuition means possessing the ability to make confident decisions with incomplete information while counterbalancing our fear of failure. It means transforming different pieces of information into a decision by adopting a parallel view of all issues that matter, rather than just considering each piece of information separately and sequentially. Furthermore, it means enhancing our business acumen with the ability to spot patterns while also challenging how much value we are willing to attribute to those patterns and the data.

A starting point in the process is asking what the authors term as “divergent questions.” An explainer: “These are open‐ended questions that encourage many answers. These questions can best be understood as exploratory—as means for analyzing a situation, problem, or complexity in greater detail and then predicting different outcomes. Frequently the goal is to stimulate creative thought or to expand the conversation.” Some examples:

• Go/No Go: Why are we talking about this now?
• Clarification: What is the meaning?
• Assumptions: What are your assumptions?
• Foundational: How do we know this to be true?
• Action: What could be done? What should be done?
• Cause: What is the context? Why did this happen?
• Effect: What will be the impact or outcome?

In any problem solution or decision-making exercise, the key is to get to the crux. As the authors write: “[The] first step is to ask ourselves one straightforward but extremely powerful question: What do I wish I knew to make the best decision possible?” Their solution:

IWIK, as we’ll henceforth refer to the formula “I wish I knew,” has a particular goal: to identify the core fundamental issue that needs to be solved. IWIK accelerates your team’s thinking to establish awareness of what you know and what knowledge is necessary to make an informed decision. By focusing on what matters, IWIK speeds up the decision‐making process.

… Agile decision‐making is grounded in how you think, not how hard you work. Either through repetition or observation, we have all developed habits that undermine our ability to solve a problem. We jump into solution mode, accepting what is asked of us at face value, often confusing activity with impact. In our rush toward a solution, we neglect to frame the problem. We need to understand this crucial insight: The quality of your decision is directly proportional to the effort invested in framing the problem. The frame enables you to narrow what you need to solve.

IWIK is a tool—a thinking technique, if you will—that’s designed to help you frame the problem. It clarifies priorities, uncovers the essential information needed, quickly identifies knowledge gaps, defines assumptions, and reveals biases that might threaten to influence, slow, or shape a decision.

There are four parts to the IWIK process, as the authors outline:

• Ask: Getting the right people to think about the right questions. “The goal of the initial communication is to kick‐start the thinking process, to prime the brain pump, so to speak. You’re not overwhelming them with sticky notes, whiteboards, or breakout sessions; you’re just asking them to start considering and contemplating. As a result, by the time you meet in person or virtually for your session, each participant should be in the right mindset to think creatively.”
• Brainstorm: Optimizing the discovery of information. “You should plan to conduct successive rounds of sessions with various stakeholders. By its very nature, the goal of the exercise is to expose knowledge gaps, and it is essential, as a leader, to understand and appreciate that some people are more comfortable than others highlighting what they don’t know and acknowledging the limits of their competencies. Small group discussions have the advantage of unlocking conversations that may not happen in other group settings because of fear or inhibition.”
• Capture: Leading IWIK discussions. “Your role is that of a scribe. When you ask your colleagues or clients “What do you wish you knew?”, you’re extending an invitation to them to think expansively without concern for existing data, time, resources, headwinds, budgets, or guard rails… An interesting dynamic occurs after you pose the IWIK question: The mode slowly shifts from a quiet, awkward silence to one of high energy. Once the questions start flowing, your colleagues, liberated from the pressure to know and have answers, may actually feel unable to stop…The output of an IWIK session will be a series of statements or questions highlighting what people want to know.”
• Deliberate: Ordering, aggregating, and synthesizing IWIKs. “The goal of organizing the IWIKs is to identify patterns in the requests and look for duplicates and outliers. You’re on the path to understanding the root of the issue, and this, in turn, will inform the essential data you need, guide the specific analysis required, and focus your efforts on what matters most to your stakeholders, leading to faster, more confident decisions.

The aim is to create the IWIK Knowledge Matrix:

In conclusion, the authors write: “IWIK and the Knowledge Matrix are designed to prevent companies from the immense temptation to drown themselves in data. They won’t help you answer every single question that might possibly be related to solving a greater problem, but they will help you determine what the most important and salient questions are for framing the problem at hand.”

9

Rethinking

There are times when we will realise that a decision we have made has not gone as expected. We are having second thoughts. We need to rethink. In his book “Think Again”, Adam Grant asks us to “let go of knowledge and opinions that are no longer serving you well, and to anchor your sense of self in flexibility rather than consistency. If you can master the art of rethinking, I believe you’ll be better positioned for success at work and happiness in life. Thinking again can help you generate new solutions to old problems and revisit old solutions to new problems. It’s a path to learning more from the people around you and living with fewer regrets. A hallmark of wisdom is knowing when it’s time to abandon some of your most treasured tools—and some of the most cherished parts of your identity.”

He writes: “[Rethinking] starts with intellectual humility—knowing what we don’t know. We should all be able to make a long list of areas where we’re ignorant…Recognizing our shortcomings opens the door to doubt. As we question our current understanding, we become curious about what information we’re missing. That search leads us to new discoveries, which in turn maintain our humility by reinforcing how much we still have to learn. If knowledge is power, knowing what we don’t know is wisdom.”

I asked Bard to list out a few key ideas from Adam’s book:

• The first-instinct fallacy: We tend to believe that our first thought or idea is the best one. However, Grant argues that our first instincts are often wrong. We are more likely to be correct if we take the time to consider alternative perspectives and to gather more information.
• The desirability bias: We tend to see what we want to see. This can lead us to overlook evidence that contradicts our beliefs. In order to make better decisions, we need to be aware of our own biases and to actively seek out information that challenges our views.
• The confirmation bias: We tend to seek out information that confirms our existing beliefs. This can lead us to become entrenched in our own views and to be resistant to change. In order to be more open-minded, we need to be willing to consider evidence that contradicts our beliefs.
• The sunk cost fallacy: We tend to continue investing in a course of action even when it is no longer the best option. This is because we feel a sense of ownership over our past decisions. In order to make better decisions, we need to be willing to admit when we have made a mistake and to change course.
• The argumentation mindset: We tend to approach conversations with the goal of winning. This can lead us to become defensive and to close our minds to alternative perspectives. In order to have more productive conversations, we need to approach them with the goal of learning.

At the end of the book, Adam lists out takeaways for individual rethinking. A few among them:

• Think like a scientist. When you start forming an opinion, resist the temptation to preach, prosecute, or politick. Treat your emerging view as a hunch or a hypothesis and test it with data. Like the entrepreneurs who learned to approach their business strategies as experiments, you’ll maintain the agility to pivot.
• Beware of getting stranded at the summit of Mount Stupid. Don’t confuse confidence with competence. The Dunning-Kruger effect is a good reminder that the better you think you are, the greater the risk that you’re overestimating yourself—and the greater the odds that you’ll stop improving. To prevent overconfidence in your knowledge, reflect on how well you can explain a given subject.
• Harness the benefits of doubt. When you find yourself doubting your ability, reframe the situation as an opportunity for growth. You can have confidence in your capacity to learn while questioning your current solution to a problem. Knowing what you don’t know is often the first step toward developing expertise.
• Don’t shy away from constructive conflict. Disagreements don’t have to be disagreeable. Although relationship conflict is usually counterproductive, task conflict can help you think again. Try framing disagreement as a debate: people are more likely to approach it intellectually and less likely to take it personally.
• Practice the art of persuasive listening. When we’re trying to open other people’s minds, we can frequently accomplish more by listening than by talking. How can you show an interest in helping people crystallize their own views and uncover their own reasons for change? A good way to start is to increase your question-to-statement ratio.

10

More Frameworks

In this essay, I discussed the following decision-making frameworks:

• Decisions and Outcomes, by Annie Duke
• Zoom in, Zoom out (part of WRAP), by Chip and Dan Heath
• Consequential and Irreversible, by Shane Parrish
• First Principles Thinking, by Ozan Varol
• Second-level Thinking, by Howard Marks
• Rapid Response Teams, by Pawel Moetyl
• I Wish I Knew, from “Decisions over Decimals”
• Rethinking, by Adam Grant

Here are some more:

The Eisenhower Matrix: Developed from a quote by President Dwight D. Eisenhower, the matrix is a simple four-quadrant box that helps categorise tasks by urgency and importance. It helps differentiate between what’s urgent and what’s important, ensuring that time and resources are spent on tasks that align with larger goals.

A3 Thinking: Originated from Toyota’s lean management philosophy, A3 thinking focuses on problem-solving, proposing changes, and continuous improvement. The ‘A3’ references the international paper size used to document the process. By containing everything on a single page, it forces clarity, brevity, and disciplined thinking.

Six Thinking Hats: Proposed by Edward de Bono, the Six Thinking Hats method requires participants to adopt various ‘modes of thinking’ (symbolized by different coloured hats). Each hat represents a unique perspective, allowing groups to examine issues from multiple angles and reduce bias.

Cost-Benefit Analysis: A systematic process to weigh the total expected costs against the total expected benefits of one or more actions in order to choose the best or most profitable option. The fundamental principle behind the cost-benefit analysis is to ensure decisions are made based on objective data.

Pareto Analysis (80/20 rule): Focuses on identifying the 20% of causes that are responsible for 80% of the effects. Helps in prioritising tasks or identifying areas of maximum impact.

Intuitive Decision-Making: Rather than always relying on structured frameworks, intuitive decision-making emphasizes using one’s intuition or ‘gut feeling’. This mode of decision-making acknowledges that humans have an innate ability to recognize patterns and make decisions based on this subconscious understanding.

Decision Matrix: A tool used to evaluate and prioritise a list of options. The matrix helps in ranking options based on certain criteria, making it easier to choose the most suitable option.

Cynefin Framework: Developed by Dave Snowden, it is a tool that helps leaders categorise problems into five domains: Obvious, Complicated, Complex, Chaotic, and Confused. Each domain represents a different level of complexity and suggests an appropriate decision-making approach, from clear cause-and-effect in the Obvious domain to the unpredictable nature of the Chaotic domain.

OODA Loop: Formulated by U.S. Air Force Colonel John Boyd, it stands for Observe, Orient, Decide, and Act. The cycle begins with observation of the environment, followed by orientation based on gathered data and previous experiences. A decision is then made about the course of action, which is subsequently executed. The loop emphasizes continuous feedback and adaptability, allowing entities to respond quickly to evolving circumstances and outpace competitors.

Pre-mortem: It is a proactive strategy used to anticipate potential problems before they occur. Unlike a post-mortem, which analyses a project’s failures after completion, a pre-mortem imagines a future scenario where a project has failed and works backward to identify potential pitfalls and weaknesses. Conducted at the onset of a project, team members are encouraged to think negatively and envision worst-case outcomes. By foreseeing challenges, teams can devise preventative measures, enhancing the project’s chances of success.

Red Teaming: It is a decision-making support process wherein a group actively challenges an organisation’s plans, policies, systems, and assumptions, mimicking potential adversaries to expose vulnerabilities. Originating from military exercises, Red Teaming’s primary goal in business and security contexts is to improve decision-making by providing a candid, critical perspective. It helps organisations anticipate potential threats and weaknesses by simulating an external attacker’s mindset, ultimately refining and fortifying decisions and defences.

Incorporating these frameworks in decision-making processes can enhance the clarity, accuracy, and effectiveness of the decisions made. Each tool or method offers a unique perspective and is best suited to specific types of decisions or situations.

11

Mental Models – 1

In the final section of this series, I want to discuss about mental models and their importance in decision-making.

My first memory of the phrase “mental models” was in a book club meeting a couple decades ago. It was in the context of a book by Robert Hagstrom, “Investing: The Last Liberal Art.” The book is about how building a multidisciplinary mindset can help you become a better investor. The author writes about the inspiration for the book from Charlie Munger, from a talk Charlie gave to students:

Rather than discussing the stock market, he intended to talk about “stock picking as a subdivision of the art of worldly wisdom.” For the next hour and a half, he challenged the students to broaden their vision of the market, of finance, and of economics in general and to see them not as separate disciplines but as part of a larger body of knowledge, one that also incorporates physics, biology, social studies, psychology, philosophy, literature, and mathematics.

In this broader view, he suggested, each discipline entwines with, and in the process strengthens, every other. From each discipline the thoughtful person draws significant mental models, the key ideas that combine to produce cohesive understanding. Those who cultivate this broad view are well on their way to achieving worldly wisdom, that solid mental foundation without which success in the market—or anywhere else—is merely a short-lived fluke.

To drive his point home, Charlie used a memorable metaphor to describe this interlocking structure of ideas: a latticework of models. “You’ve got to have models in your head,” he explained, “and you’ve got to array your experiences—both vicarious and direct—on this latticework of models.” So immediate is this visual image that “latticework” has become something of a shorthand term in the investment world, a quick and easily recognized reference to Charlie’s approach.

He goes on:

John H. Holland, a professor in two fields at the University of Michigan—psychology, and engineering and computer science—is a frequent visitor to the Santa Fe Institute, where he has lectured extensively on innovative thinking. According to Holland, innovative thinking requires us to master two important steps. First, we must understand the basic disciplines from which we are going to draw knowledge; second, we need to be aware of the use and benefit of metaphors.

…The ability to link mental models together and then benefit from the connections assumes that you have a basic understanding of each model in the latticework. There is no benefit to stringing mental models together if you have no idea how each model works and what phenomena it describes. Remember, though, it is not necessary to become an expert in each model but merely to understand the fundamentals.

… Holland argues [that] metaphors are much more than merely a colorful form of speech, even more than representations of thoughts. They can also help us translate ideas into models. And that, he says, represents the basis of innovative thinking. In the same way that a metaphor helps communicate one concept by comparing it to another concept that is widely understood, using a simple model to describe one idea can help us grasp the complexities of a similar idea. In both cases we are using one concept (the source) to better understand another (the target). Used this way, metaphors not only express existing ideas, they stimulate new ones.

A diverse set of mental models across various disciplines improves decision-making and problem-solving. By integrating knowledge from diverse fields, one can form a “latticework” of interconnected ideas to approach challenges holistically. This multidisciplinary approach ensures a broader and deeper understanding of complex situations, preventing over-reliance on a single perspective.

12

Mental Models – 2

In the vast spectrum of human cognition, decision-making stands as one of the most intricate processes. Every day, we are faced with an array of choices, ranging from mundane selections like what to eat for breakfast to more profound dilemmas, such as career shifts or ethical quandaries. Underpinning these decisions is an arsenal of cognitive tools known as mental models.

Defined as the representations people build to make sense of the world, mental models consist of our underlying assumptions, concepts, principles, and ideas about how things work. Just as a scientist uses models to explain and predict phenomena, our minds employ mental models to interpret and navigate the world around us. From Wikipedia: “The term was coined by Kenneth Craik in 1943 who suggested that the mind constructs “small-scale models” of reality that it uses to anticipate events. Mental models can help shape behaviour and set an approach to solving problems (similar to a personal algorithm) and doing tasks.”

James Clear adds: “A mental model is an explanation of how something works. The phrase “mental model” is an overarching term for any sort of concept, framework, or worldview that you carry around in your mind. Mental models help you understand life. For example, supply and demand is a mental model that helps you understand how the economy works. Game theory is a mental model that helps you understand how relationships and trust work. Entropy is a mental model that helps you understand how disorder and decay work. Mental models also guide your perception and behavior. They are the thinking tools that you use to understand life, make decisions, and solve problems. Learning a new mental model gives you a new way to see the world.”

Shane Parrish has written three books on mental models. “The quality of your thinking depends on the models that are in your head…When you learn to see the world as it is, and not as you want it to be, everything changes. The solution to any problem becomes more apparent when you can view it through more than one lens. You’ll be able to spot opportunities you couldn’t see before, avoid costly mistakes that may be holding you back, and begin to make meaningful progress in your life. That’s the power of mental models.”

He adds: “In order to see a problem for what it is, we must first break it down into its substantive parts so the interconnections can reveal themselves. This bottom-up perspective allows us to expose what we believe to be the causal relationships and how they will govern the situation both now and in the future. Being able to accurately describe the full scope of a situation is the first step to understanding it. Using the lenses of our mental models helps us illuminate these interconnections. The more lenses used on a given problem, the more of reality reveals itself. The more of reality we see, the more we understand. The more we understand, the more we know what to do… Most problems are multidimensional, and thus having more lenses often offers significant help with the problems we are facing… The key here is variety. Most of us study something specific and don’t get exposure to the big ideas of other disciplines. We don’t develop the multidisciplinary mindset that we need to accurately see a problem. And because we don’t have the right models to understand the situation, we overuse the models we do have and use them even when they don’t belong.”

Consider a business leader deciding whether to launch a new product. If she were to rely solely on financial models, her decision might be purely based on projected profitability. However, by integrating mental models from psychology, she could anticipate consumer behaviour. Incorporating models from sociology might allow her to predict societal trends or shifts that could influence the product’s reception. By weaving these models together, her decision becomes multifaceted, incorporating a range of factors that might have been overlooked in a unidimensional approach.

Moreover, mental models play a pivotal role in countering cognitive biases, the systematic patterns of deviation from norm or rationality in judgment, which can cloud decision-making. For instance, the ‘confirmation bias’ pushes individuals to seek out information that aligns with their existing beliefs. A robust latticework of mental models can act as a safeguard against such biases, offering multiple perspectives and challenging pre-existing notions. When faced with a decision, consulting various mental models can serve as a mental checklist, ensuring that biases don’t unduly influence the outcome.

Mental models are thus invaluable assets in the realm of decision-making. They offer structured frameworks for understanding complexities, drawing connections, and predicting outcomes. By cultivating a diverse and interconnected latticework of these models, one can navigate decisions with increased clarity, depth, and foresight.

13

Checklist

If there is one book I had to recommend, it would be “Seeking Wisdom: From Darwin to Munger” by Peter Bevelin. It dives deep into the mental models used by brilliant minds. Drawing from multiple disciplines, it explores the psychology of misjudgements and biases, emphasising the importance of understanding human behaviour and its influences on decision-making. The book is a treasure trove of insights on how to think rationally, avoid common cognitive pitfalls, and make better decisions. Regarded as a masterpiece in the decision-making genre, “Seeking Wisdom” equips readers with tools to navigate complex challenges, making it an indispensable read for anyone looking to enhance their judgment.

There is a very good collection of checklists towards the end of the book. Here is a sample of questions for determining what the issue is:

• What’s the question? What is this really about?
• What’s the essence or nub of the issue? What is then the key question?
• Relevant? Solvable? Important? Knowable? Utility- applicability?
• Do I understand what the subject is all about? In order to have an opinion on a subject I need some relevant data and basic knowledge about the subject, otherwise just say: “I don’t know”.
• Is my judgment here better than others?
• What must I predict here and is it predictable?
• Is a decision needed? What happens if I don’t deal with this? Is this something I can do anything about? Should “I” do this?
• Over what period of time am I considering this issue? Where am I at present? From whose point of view?
• Simplify by deciding big “no-brainer questions” first and begin from where I am.

**

I asked Claude to prepare a 10-point checklist for managers and leaders based on this series.

1. Identify the decision’s level of consequence and reversibility. Some choices are inconsequential or easily reversed while others have lasting impacts. Assess where this decision lies on the spectrum.
2. Widen options through divergent thinking. Avoid narrow framing. Brainstorm as many alternative paths forward as possible.
3. Test assumptions against reality. Ask probing questions to check assumptions. Seek objective data and feedback.
4. Attain distance before deciding. “Zoom out” for perspective. “Zoom in” for granular analysis.
5. Weigh costs, benefits, and likelihoods. Use expected value calculations. List pros/cons and assess probabilities.
6. Leverage mental models. Consult different lenses like psychology, systems thinking and game theory.
7. Prepare to be wrong. Simulate worst-case scenarios. Have contingency plans to course correct.
8. Debate respectfully. Seek constructive criticism. Arguments can refine decisions.
9. Decide sequentially. Break down complex choices into smaller steps. Pause and validate.
10. Continuously re-evaluate. Be ready to think again if new data emerges. Stay flexible.

**

In the intricate tapestry of life, decisions serve as the threads that shape our path, influencing not just our immediate actions but also the broader contours of our journey. The art of decision-making, while seemingly innate, is a skill that benefits greatly from conscious cultivation, practice, and refinement. As we traverse the labyrinth of choices, it’s empowering to remember that we can hone this skill, drawing from diverse mental models and frameworks. Equipped with this knowledge and understanding, we can navigate the myriad choices with greater clarity, making decisions that resonate with our values and aspirations. In this continuing journey, every choice we make is a step towards mastering the art of decision-making, an endeavour that holds the promise of a more intentional and enriched life.

Published December 25, 2023

1

Samachar and Choices

During my IndiaWorld days in 1997, I had to decide on how we could create the news content that our audience (primarily non-resident Indians) wanted. One path taken by other portals was to hire journalists. I decided that I wasn’t going to go down that path – a newsroom would be an expensive recurring cost, and I did not have that kind of money. So, I chose to use technology to solve the problem: software would crawl the home pages of news sites every 30 minutes, extract the headlines by reverse engineering the HTML, and then put the top five headlines from multiple news sources on a single page. This site I called “Samachar”.

As it turned out, Samachar.com became the most popular Indian news portal. Many visitors made it their home page, visiting multiple times daily. It became the gateway to popularising the other sites in the IndiaWorld portfolio. It created a differentiator that no other Indian portal could match. Advertisers (mainly telecom companies selling calling cards and banks) flocked to Samachar.com. The ‘Samachar Strategy’ was a big reason behind IndiaWorld’s success. Rather than becoming a money sink, it became a money spinner.

The word ‘strategy’ is perhaps the most used and abused word in business conversations. Everything becomes a ‘strategy’, importing to an idea or action gravitas and making everyone in the room pay attention. Over time, the meaning has been diluted and expanded. So, what really is strategy? At its core, strategy is about making choices. It’s about deciding where to play and how to win. In the case of Samachar, I made the decision to use automation as an alternative to journalists.

From a previous post in my Proficorn series: “Ramesh Mangaleswaran explained strategy very well. He described it as a set of choices that a business needs to make, and then decide on the resources (human, capital). Strategy needs a combination of big bets and not so big bets (options). The big bets need to be counterbalanced with a safety net if things go wrong. Strategy also needs to be thought at two levels – like looking through a telescopic (long-term, directional) and microscope (near-term, specific actions).”

In that post, I also had a couple more quotes on strategy, both from Michael Porter.

Business World: “[Michael] Porter also warned about the overuse of the word strategy. He simplified the definition in business as a set of choices that are long term and articulate the competitive advantage that companies will seek to create, in order to win. The strategy also should not be confused for goal and aspirations. It is more than just particular actions – it is holistic. At the same time, it is not a mission statement or values. It is not vague, it is specific.”

Farnam Street: “Really, strategy is about making specific choices to win in the marketplace. According to Mike Porter, author of “Competitive Strategy”, perhaps the most widely respected book on strategy ever written, a firm creates a sustainable competitive advantage over its rivals by “deliberately choosing a different set of activities to deliver unique value.” Strategy therefore requires making explicit choices— to do some things and not others— and building a business around those choices. In short, strategy is choice. More specifically, strategy is an integrated set of choices that uniquely positions the firm in its industry so as to create sustainable advantage and superior value relative to the competition.”

In this series, I will discuss strategy in more depth, and connect it to my profipoly idea – how can strategy help businesses build a “profits monopoly”?

2

Wikipedia and Michael Porter

Let’s begin our strategy journey by reviewing some of the writings.

Wikipedia offers history and an overview:

Strategy (from Greek στρατηγία stratēgia, “art of troop leader; office of general, command, generalship”) is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty. In the sense of the “art of the general”, which included several subsets of skills including military tactics, siegecraft, logistics etc., the term came into use in the 6th century C.E. in Eastern Roman terminology, and was translated into Western vernacular languages only in the 18th century. From then until the 20th century, the word “strategy” came to denote “a comprehensive way to try to pursue political ends, including the threat or actual use of force, in a dialectic of wills” in a military conflict, in which both adversaries interact.

Strategy is important because the resources available to achieve goals are usually limited. Strategy generally involves setting goals and priorities, determining actions to achieve the goals, and mobilizing resources to execute the actions. A strategy describes how the ends (goals) will be achieved by the means (resources). Strategy can be intended or can emerge as a pattern of activity as the organization adapts to its environment or competes. It involves activities such as strategic planning and strategic thinking.

Henry Mintzberg from McGill University defined strategy as a pattern in a stream of decisions to contrast with a view of strategy as planning, while Henrik von Scheel defines the essence of strategy as the activities to deliver a unique mix of value – choosing to perform activities differently or to perform different activities than rivals. Max McKeown argues that “strategy is about shaping the future” and is the human attempt to get to “desirable ends with available means”. Vladimir Kvint defines strategy as “a system of finding, formulating, and developing a doctrine that will ensure long-term success if followed faithfully.”

Michael Porter wrote about strategy in a 1996 article in Harvard Business Review:

Operational effectiveness and strategy are both essential to superior performance, which, after all, is the primary goal of any enterprise. But they work in very different ways.

A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or do both. The arithmetic of superior profitability then follows: delivering greater value allows a company to charge higher average unit prices; greater efficiency results in lower average unit costs.

…Strategy is the creation of a unique and valuable position, involving a different set of activities. If there were only one ideal position, there would be no need for strategy. Companies would face a simple imperative—win the race to discover and preempt it. The essence of strategic positioning is to choose activities that are different from rivals’. If the same set of activities were best to produce all varieties, meet all needs, and access all customers, companies could easily shift among them and operational effectiveness would determine performance.

…Strategy is making trade-offs in competing. The essence of strategy is choosing what not to do. Without trade-offs, there would be no need for choice and thus no need for strategy.

…Strategy is creating fit among a company’s activities. The success of a strategy depends on doing many things well—not just a few—and integrating among them. If there is no fit among activities, there is no distinctive strategy and little sustainability. Management reverts to the simpler task of overseeing independent functions, and operational effectiveness determines an organization’s relative performance.

3

Richard Rumelt

The best definition of strategy comes from Richard Rumelt in his book, “Good Strategy Bad Strategy”. He writes:

Good strategy is coherent action backed up by an argument, an effective mixture of thought and action with a basic underlying structure I call the kernel. A good strategy may consist of more than the kernel, but if the kernel is absent or misshapen, then there is a serious problem. Once you apprehend this kernel, it is much easier to create, describe, and evaluate a strategy. The kernel is not based on any one concept of advantage. It does not require one to sort through legalistic gibberish about the differences between visions, missions, goals, strategies, objectives, and tactics. It does not split strategies into corporate, business, and product levels. It is very straightforward.

The kernel of a strategy contains three elements:

• A diagnosis that defines or explains the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical.

• A guiding policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.

• A set of coherent actions that are designed to carry out the guiding policy. These are steps that are coordinated with one another to work together in accomplishing the guiding policy.

Rumelt adds: “In business, the challenge is usually dealing with change and competition. The first step toward effective strategy is diagnosing the specific structure of the challenge rather than simply naming performance goals. The second step is choosing an overall guiding policy for dealing with the situation that builds on or creates some type of leverage or advantage. The third step is the design of a configuration of actions and resource allocations that implement the chosen guiding policy.”

Rumelt’s second book is “The Crux.” He writes: “[T]he term crux … denote[s] the outcome of a three-part strategic skill. The first part is judgment about which issues are truly important and which are secondary. The second part is judgment about the difficulties of dealing with these issues. And the third part is the ability to focus, to avoid spreading resources too thinly, not trying to do everything at once. The combination of these three parts lead to a focus on the crux—the most important part of a set of challenges that is addressable, having a good chance of being solved by coherent action.”

He adds: “The art of strategy is not finding your one true goal and passionately pursuing it with all your heart and soul in everything you do—that is a type of mental illness called monomania. The art of strategy is not setting higher and higher performance goals for people and using charisma, carrots, and sticks to push them toward attaining those goals—that presumes that someone somewhere knows how to find a way through the thicket of problems the organization actually faces.”

I have discussed more on Rumelt’s writings in Parts 4-8 of my essay, Hotline: The Crux of the Brand-Customer Relationship.

4

Quotes

“A goal without a plan is just a wish.” — Antoine de Saint-Exupéry.

“A vision without a strategy remains an illusion.” Lee Bolman

“Vision without action is a daydream. Action without vision is a nightmare.” -Japanese proverb

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” – Sun Tzu

“Objectives can be compared to a compass bearing by which a ship navigates. A compass bearing is firm, but in actual navigation, a ship may veer off its course for many miles. Without a compass bearing, a ship would neither find its port nor be able to estimate the time required to get there.”  – Peter Drucker

“What business strategy is all about-what distinguishes it from all other kinds of business planning-is, in a word, competitive advantage. Without competitors there would be no need for strategy, for the sole purpose of strategic planning is to enable the company to gain, as efficiently as possible, a sustainable edge over its competitors.” – Kenichi Ohmae

“There is only one winning strategy. It is to define the target market carefully and direct a superior offering to that target market.”— Philip Kotler

“Focusing solely on what you can potentially do better than any other organization is the only path to greatness.” – Jim Collins

“To be strategic is to concentrate on what is important, on those few objectives that can give us a comparative advantage, on what is important to us rather than others, and to plan and execute the resulting plan with determination and steadfastness.” – Richard Koch

“Designing a winning strategy is the art of asking questions, experimenting and then constantly renewing the thinking process by questioning the answers.  No matter how good today’s strategy is, you must always keep reinventing it.” – Constantinos Markides

“The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption.” — Clayton Christensen

“Without a strategy, execution is aimless. Without execution, strategy is useless.” — Morris Chang

“If a strategy is to be achieved, it must be publicly tracked, measured, and monitored. If you are trying to lose weight, you must get on the scales regularly.” -David Maister

“What we need to do is always lean into the future; when the world changes around you and when it changes against you – what used to be a tail wind is now a head wind – you have to lean into that and figure out what to do because complaining isn’t a strategy.” – Jeff Bezos

“Famous pivot stories are often failures but you don’t need to fail before you pivot. All a pivot is is a change is strategy without a change in vision. Whenever entrepreneurs see a new way to achieve their vision – a way to be more successful – they have to remain nimble enough to take it.” – a  Eric Ries

“Companies that grow for the sake of growth or that expand into areas outside their core business strategy often stumble. On the other hand, companies that build scale for the benefit of their customers and shareholders more often succeed over time.” – Jamie Dimon

“Unless structure follows strategy, inefficiency results.” – Alfed Chandler

“In marketing I’ve seen only one strategy that can’t miss – and that is to market to your best customers first, your best prospects second and the rest of the world last.” – John Romero

5

7 Powers – 1

A good book on business strategy is “7 Powers” by Hamilton Helmer. He writes: “The arc of any celebrated business is underpinned by decisive strategy choices that are few and typically made amidst the profound uncertainty of rapid change. Get these crux choices wrong and you face a future of persistent pain, or even outright failure.”

He provides three definitions:

• Strategy: the study of the fundamental determinants of potential business value
• Power: the set of conditions creating the potential for persistent differential returns
• Mantra (or company strategy): a route to continuing Power in significant markets

He adds: Potential Value = [Market Scale] * [Power]

I asked ChatGPT to summarise the seven powers discussed in the book.

1. Scale Economies: This refers to the advantage large-scale operations have. When a company grows, it can spread its fixed costs over a larger number of units, leading to a lower cost per unit. Companies that achieve scale economies can under-price competitors and achieve higher profit margins.
2. Network Economies: This is about the value that increases with the number of users or participants. Think of platforms like Facebook or Twitter; the more users they have, the more valuable (and entrenched) they become. A company that taps into network economies can fend off competition because the value proposition strengthens as more users join.
3. Counter-Positioning: This involves a newcomer adopting a new, unique business model which incumbents cannot replicate without damaging their existing business. It’s a way for newer entrants to challenge established companies by making the old ways of doing business obsolete.
4. Switching Costs: This is when it’s hard or costly for customers to switch from one product to another. Software platforms or services that require significant time or resources to change (e.g., enterprise software, subscription services) benefit from this power.
5. Branding: A strong brand serves as a powerful competitive advantage. When customers trust and prefer one brand over others, that company can command premium pricing and ensure customer loyalty.
6. Cornered Resource: This is about having exclusive access to a valuable asset or resource that others can’t easily duplicate. It could be a talented team, a unique technology, or even a prime location.
7. Process Power: Over time, some companies develop unique ways of doing things that are hard for others to replicate. These efficient and effective processes can become a source of competitive advantage.

Here are 2 graphics from the book.

In the book, Helmer answers the question, “How to get there?”

• Scale Economies. With this first Power type, you must simultaneously pursue a business model that promises Scale Economies (industry economics), while at the same time offering up a product differentially attractive enough to pull in customers and gain relative share (competitive position).
• Network Economies. Here the needs are similar to Scale Economies, except that installed base, rather than sales share, is the goal.
• Cornered Resource. You must secure the rights to a valuable resource on attractive terms. This often comes from having developed that resource in the first place and then gaining ownership of it, the most common avenue being a patent award for research developments.
• Over an extensive period of time, you make consistent creative choices which foster in the customer’s mind an affinity that goes beyond the product’s objective attributes.
• Counter-Positioning. You pioneer a new, superior business model that promises collateral damage for incumbents if mimicked.
• Switching Costs. With Switching Costs, you must first attain a customer base, meaning the same new-product requirements demanded of Scale and Network Economies factor in here as well.
• Process Power. You evolve a new complex process which renders itself inimitable within a reasonable period and yet offers significant advantages over a longer period of time.

He adds: “The first cause of every Power type is invention, be it the invention of a product, process, business model or brand, The adage ‘Me too’ won’t do” guides the creation of Power… You must create something new that produces substantial economic gain in the value chain.”

This is captured below:

6

7 Powers – 2

Helmer in an interview with Colossus: “If you start a business, you put something in, your time and investments and all this stuff, and you do it maybe for love, but you also get something back, and that something back has to hopefully be more than what you put in in the first place. You might question whether it was really worthwhile. And so the notion of Power is that when you figure out something about a business, you figure out something that’s better than what is currently offered. And so that might be a better business model, or it might be an interesting grant, or it might be a new product or something like that. But then the spectre of competitive arbitrage comes in. If you do something better, the question then is: okay, but for that to be durable – because what you want is durable success in business – for that to be durable, there has to be something that prevents others from taking all of that away from you. And so the something better is a benefit and that something that keeps others from getting it is a barrier. And so you need both those conditions… It’s very important to realize that often when you start a business, you just don’t know whether you’re going to have Power or not. You just don’t know. And yet, it may be a very reasonable bet to proceed knowing that an opportunity may arise… The technology frontier is constantly moving forward. And that is the most important driver of opportunity influx… The starting place for strategy and the starting place for Power is creativity…It involves invention, not discovery.”

Reed Hastings writes in the book’s introduction: “Hamilton is so much more than an able synthesizer and communicator, as 7 Powers demonstrates. Any strategy framework, to be broadly useful to a business person, must address all the key strategy issues facing an organization. Hamilton has long been aware of the deficiencies in existing frameworks. His solution? To forge ahead with entirely novel conceptual advances, and then to bind these together into a unified whole…7 Powers tightly integrates the numerous insights he has developed in his several decades of consulting, active equity investing and teaching. It is a uniquely clear and comprehensive distillation of strategy. It will change how you think about business and pull into focus your critical strategy challenges, not to mention their solutions.”

Abi Tyas Tunggal writes: “What are the secrets to making a company enduringly valuable? If we are to believe Hamilton Helmer, the answer is strategy and execution. Every celebrated business is underpinned by decisive strategy choices and operational excellence, in the midst of uncertainty, which leads to some form of competitive advantage… The crux of 7 Powers is that a business can try to improve its strengths, mitigate its weaknesses, eliminate competitor risk, better serve its customers, maximize shareholder value, or take advantage of its pricing power.”

Chris Stoneman writes: “The business strategy (small s) is a route to continuing power in significant markets. Being there (statics) is one thing, but getting there (dynamics) is quite another. Not only should businesses know which of the 7 Powers will be their static strategy, but also how and when to build and execute on them. Timing is key. Me too won’t do. Invent new things and create compelling value. Only then will businesses have the opportunity to gain continued power in a significant market.”

Dan Shuart writes: “I find Helmer’s framework a useful tool when asking the question “why”. Why does a company consistently earn superior returns on capital? Why might a company enjoy superior growth rates for many years? How long might these superior returns last? Identifying potential sources of Power among businesses and stocks you are studying is a useful exercise and helps build comfort with different competitive positions (or lack thereof). No one always gets it right, but just attempting to understand if a business has an enduring competitive moat is half the battle. If an investor’s aim is to buy good businesses it’s tough to think of a better checklist than Helmer’s 7 Powers as a starting point. Studying businesses that meet some of the above criteria amounts to fishing in a stocked pond. This isn’t the way to invest successfully but it certainly is a way.”

Sachin Rekhi writes: “Hamilton narrowly defines a successful strategy as creating a route to persistent differential returns for your business. Accomplishing this requires each strategy to have two critical components: a benefit and a barrier. The benefit materially augments your business’s cash flows by enabling you to increase prices, reduce costs, and/or reduce investment needs. The most important part of a strategy, though, is establishing a barrier, which prevents existing and potential competitors from arbitraging away the benefit. This is necessary to ensure your benefit persists, otherwise competitors could quickly catch up and remove your advantage. This is often described as developing an economic moat for your business. Hamilton then goes on to define 7 strategies, which he refers to as the 7 powers, that accomplish both of these goals. Hamilton asserts that these 7 strategies encompass every possible strategy for creating a successful moat and suggests every business must leverage one or more of these strategies to build a significant and enduring business.”

Helmer’s mantra – a route to continuing Power in significant markets – is the essence of what I call a “Profipoly” (profits monopoly, or a path to exponential forever profitable growth).

7

Playing To Win

Another very good book on strategy is “Playing To Win” by AG Lafley and Roger Martin. They define strategy as “a coordinated and integrated set of five choices: a winning aspiration, where to play, how to win, core capabilities, and management systems.” In their framework, strategy is about answering five interrelated questions:

1. What is your winning aspiration? The purpose of your enterprise, its motivating aspiration.
2. Where will you play? A playing field where you can achieve that aspiration.
3. How will you win? The way you will win on the chosen playing field.
4. What capabilities must be in place? The set and configuration of capabilities required to win in the chosen way.
5. What management systems are required? The systems and measures that enable the capabilities and support the choices.

Here are short descriptions from the book on each of these five questions:

The first question—what is our winning aspiration?—sets the frame for all the other choices. A company must seek to win in a particular place and in a particular way. If it doesn’t seek to win, it is wasting the time of its people and the investments of its capital providers. But to be most helpful, the abstract concept of winning should be translated into defined aspirations. Aspirations are statements about the ideal future. At a later stage in the process, a company ties to those aspirations some specific benchmarks that measure progress toward them.

Where to play represents the set of choices that narrow the competitive field. The questions to be asked focus on where the company will compete—in which markets, with which customers and consumers, in which channels, in which product categories, and at which vertical stage or stages of the industry in question. This set of questions is vital; no company can be all things to all people and still win, so it is important to understand which where-to-play choices will best enable the company to win.

Where to play selects the playing field; how to win defines the choices for winning on that field. It is the recipe for success in the chosen segments, categories, channels, geographies, and so on. The how-to-win choice is intimately tied to the where-to-play choice. Remember, it is not how to win generally, but how to win within the chosen where-to-play domains.

Two questions flow from and support the heart of strategy: (1) what capabilities must be in place to win, and (2) what management systems are required to support the strategic choices? The first of these questions, the capabilities choice, relates to the range and quality of activities that will enable a company to win where it chooses to play. Capabilities are the map of activities and competencies that critically underpin specific where-to-play and how-to-win choices.

The final strategic choice in the cascade focuses on management systems. These are the systems that foster, support, and measure the strategy. To be truly effective, they must be purposefully designed to support the choices and capabilities. The types of systems and measures will vary from choice to choice, capability to capability, and company to company.

The book emphasizes that effective strategy is about making clear-cut choices on where to play and how to win in those chosen markets. Success requires both a deliberate approach to designing a winning game plan and the executional discipline to implement that plan consistently.

8

Strategy That Works

The book by ,”Strategy that Works”, Paul Leinwand and Cesare Mainardi connects strategy to execution. Two tables capture the essence of the authors’ ideas.

Here is a short summary of each of the five ideas, as summarised by ChatGPT:

1. Commit to an Identity: Successful companies understand their unique value proposition and stay true to their ‘way to play’. They avoid the trap of chasing multiple directions and instead focus on what they do best.
2. Translate the Strategic into the Everyday: Instead of having high-level strategies that remain on paper, successful companies embed their strategic objectives into daily operations, ensuring that there’s alignment from the boardroom to the frontline.
3. Put Culture to Work: Recognising culture as a significant asset, these companies leverage their cultural strengths to drive their strategy and ensure that behaviours, mindsets, and company values are in sync with strategic goals.
4. Cut Costs to Grow Stronger: Rather than indiscriminate cost-cutting, top companies approach cost management strategically. They invest in areas that align with their identity and core strengths, and cut costs in areas that don’t fit this mould.
5. Shape the Future: Successful companies are proactive. They don’t merely react to changes in the market; they shape these changes by influencing trends, making forward-looking investments, and sometimes even creating entirely new markets.

One of the key elements of this framework is the ability to shape the future. As companies grow and age, there is a tendency to become complacent. That is when agile supercompetitors can nibble away at market share. The authors write: “The ultimate payoff for becoming and staying coherent is a position of market leadership. Companies that close the strategy-to-execution gap can become the centers of their own ecosystems, changing the structure of the industries around them to advance their own position. When companies accomplish this, they become what we call supercompetitors.” They provide a framework for incumbent leaders to guard against this.

9

Blue Ocean Strategy – 1

It is rare that a conversation on strategy will not include the phrase “blue ocean.” (I myself talk about the need to find a “blue ocean in a red ocean.”) The book “Blue Ocean Strategy” by Chan Kim & Renée Mauborgne became an instant classic when it was published. Here is the contrast between red and blue oceans as defined by the Blue Ocean website:

Red Oceans are all the industries in existence today – the known market space. In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here, companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, profits and growth are reduced. Products become commodities, leading to cutthroat or ‘bloody’ competition. Hence the term red oceans.

Blue Oceans, in contrast, denote all the industries not in existence today – the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. A blue ocean is an analogy to describe the wider, deeper potential to be found in unexplored market space. A blue ocean is vast, deep, and powerful in terms of profitable growth.

In short, blue oceans are uncontested spaces.

The chart below from the website puts the differences in perspective:

A cornerstone of blue ocean strategy is value innovation.

The authors list eight principles of blue ocean strategy:

A helpful tool is the “strategy canvas”. It is best understood through an example. The authors provide this canvas for Southwest Airlines.

For thinking through the blue ocean strategy, the authors suggest using the “four actions framework.”

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Blue Ocean Strategy – 2

Here are a few examples of companies that have successfully applied blue ocean strategies:

Cirque du Soleil: It created a new market space by combining circus and theater to appeal to adult audiences, moving away from traditional circuses targeted at children.

Netflix: Netflix transitioned from its initial model of mail-in DVDs to an online streaming platform, effectively creating a new market space. Instead of competing with traditional cable or satellite TV, it tapped into the demand for on-demand, diverse content with a subscription model.

Tesla: While many automakers focused on incremental improvements in fuel efficiency or hybrid technologies, Tesla made a bold move into electric vehicles with superior range and performance. They targeted not just environmentally-conscious consumers, but also luxury car enthusiasts and tech-savvy buyers, thereby carving a unique niche.

Airbnb: Airbnb created an online marketplace for homestays, offering an alternative to hotels. It connected travellers looking for cheaper or more local stays.

Warby Parker: The eyewear industry was long dominated by a few big players. Warby Parker disrupted the scene by offering designer eyewear at affordable prices through a direct-to-consumer online model. They also employed a “Home Try-On” program, allowing customers to choose five frames to be shipped to their home for free, to try them out and send back the ones they didn’t want. [Lenskart did something similar in India.]

Peloton: Peloton created a new market for home fitness by offering interactive classes led by live instructors. Peloton’s bikes and treadmills are also connected to a community of users, which helps to motivate people to work out.

Shopify: Shopify created a new market for e-commerce platforms by making it easy for people to start their own online stores without any technical knowledge. Shopify offers a variety of features and tools that make it easy to set up and manage an online store, including payment processing, shipping, and inventory management.

Aravind Eye Hospital: It created a new market for affordable eye care in India by developing a high-volume, low-cost model. Aravind Eye Hospital has performed over 7 million cataract surgeries, making it the largest provider of eye care in the world.

Zerodha: In the stock brokerage industry in India, Zerodha introduced a disruptive pricing model with significantly lower brokerage fees (often zero for delivery trades). This attracted a vast number of retail investors to the stock market, especially younger, tech-savvy traders.

Paper Boat: It created a new market for branded ethnic drinks like aam panna, jaljeera, etc. that provided a refreshing natural alternative to colas and sodas.

I asked ChatGPT and Claude for examples from B2B SaaS. Here are some success stories.

Slack: While the market had numerous communication tools, Slack revolutionised workplace communication by offering an intuitive, real-time messaging platform, integrating various third-party applications. Instead of just being another communication tool, Slack positioned itself as a collaboration hub for work.

Zoom: Before the pandemic, there were already established players like Skype and WebEx in the video conferencing domain. Zoom identified and rectified common pain points such as difficult set-ups and dropped calls. With its easy-to-use interface, seamless integration, and high-quality video, it soon became the preferred choice for businesses worldwide. It avoided competing with enterprise software like Microsoft’s SharePoint (in the early days).

Canva: Canva created a new market for graphic design by making it easy for people to create professional-looking designs without any design skills. Canva offers a variety of templates, fonts, and images that users can drag and drop to create their own designs.

DocuSign: It digitised the document signing process to make it accessible anytime, anywhere while improving security. Created an alternative to in-person signing.

HubSpot: Instead of focusing solely on one aspect of customer relationship management, HubSpot introduced an all-in-one inbound marketing, sales, and service platform. By combining multiple tools into one integrated platform and promoting inbound marketing, they created a niche in a market dominated by giants like Salesforce.

11

More Strategy Frameworks

“Five Forces” by Michael Porter: It offers a holistic approach to understanding competition within an industry and formulating strategies accordingly. The five forces encompass: (1) The threat of new entrants, which assesses how easy or difficult it is for competitors to join the industry; (2) The bargaining power of buyers, gauging the ability of customers to influence prices; (3) The bargaining power of suppliers, determining the influence suppliers can have on price and quality; (4) The threat of substitute products or services, considering the potential for other products or services to capture a company’s customer base; and (5) Rivalry among existing competitors, which analyses the intensity of current competitive relationships within the industry.

“The Innovator’s Dilemma” by Clayton Christensen: It focuses on why large companies can fail despite good management due to disruptive technologies. Introduces the concept of disruptive innovation. A related idea from Christensen is to think of “Jobs to Be Done”, which focuses on understanding customer needs based on the jobs they’re trying to accomplish.

“Crossing the Chasm” by Geoffrey Moore: A marketing theory that describes the lifecycle of high-tech products, emphasising the challenges faced during the early stages of introduction.

“Three Horizons Model” by McKinsey: This helps allocate resources across Horizon 1 (current business), Horizon 2 (emerging business) and Horizon 3 (future business) for strategic growth. [I have written about this.]

SWOT Analysis: A framework used to evaluate an organization’s strengths, weaknesses, opportunities, and threats.

“Growth-Share Matrix” by BCG: It helps companies analyse their product lines or business units in terms of their market growth rate and relative market share. The matrix classifies products into four categories: Stars (high growth, high market share), which are leaders in flourishing markets and typically require investment to maintain their dominant position; Cash Cows (low growth, high market share), established and successful products that generate consistent cash flow; Question Marks (high growth, low market share), potential future stars with uncertain prospects and often necessitating significant investments to boost market share; and Dogs (low growth, low market share), which neither generate nor consume large amounts of cash and may be divested.

“Ansoff Matrix” by Igor Ansoff: It is a strategic planning tool that provides a framework to help executives and other senior managers devise strategies for future growth. The matrix categorises growth strategies along two dimensions: products (existing vs. new) and markets (existing vs. new). This results in four primary growth strategies: (1) Market Penetration, which focuses on increasing sales of existing products in existing markets; (2) Product Development, where new products are introduced into existing markets; (3) Market Development, which involves introducing existing products into new markets; and (4) Diversification, a strategy that seeks growth through introducing new products into new markets.

“Balanced Scorecard” by Robert Kaplan and David Norton: It is a strategic performance management tool that allows organisations to translate their vision and strategy into actionable objectives and performance metrics. It evaluates performance from four interconnected perspectives: (1) Financial, which measures fiscal performance and profitability; (2) Customer, emphasizing customer satisfaction and retention; (3) Internal Processes, evaluating the efficiency and effectiveness of operations; and (4) Learning and Growth, which gauges the organisation’s ability to innovate, improve, and develop its human capital.

**

In exploring the essence of strategy across various seminal books and frameworks, some consistent themes emerge – strategy is centred on making clear choices to establish competitive advantage, it requires both strategic thinking and disciplined execution, it entails understanding customers and the market landscape, and it involves creating a differentiated value proposition difficult for rivals to replicate. While there are many lenses to analyse strategy, at its core it is about defining where to play, how to win, and what capabilities and systems are needed to outperform competitors. Crafting and implementing a coherent strategy remains vital for companies to carve out a sustainable niche, though the quest for an enduring “profipoly” in today’s dynamic markets necessitates constant creativity, invention and strategic renewal.

Published December 24, 2023

1

Why

A couple years ago, I was on a panel at a marketing conference. When called upon to introduce Netcore, I explained what we do. “Netcore helps B2C/D2C companies build better digital experiences. Our martech stack helps with communications, marketing automation, and search and product discovery.” A little later in the day, I listened to a competitor introduce his company. “We touch your lives in many ways. Those messages you get from ABC Bank? We power them. Those relevant recommendations on XYZ eCommerce site? We help with those.” He went on to give a few examples of the outcomes that end customers saw because of their product. He humanised their products in a way that it resonated and connected with everyone in the room. I thought to myself, “Why did I not tell our story like this?”

I had written in “Worldbuilding, Storytelling and Entrepreneurship”: “Entrepreneurs live in and build tomorrow’s world. For this, they must persuade those around them – co-founders, first employees, investors, and first customers. They have to bring to life a tomorrow which seems like fiction to many and yet is just around the corner. Entrepreneurs need to set and sell stories in this new world, just like how some writers have been doing. Worldbuilding and storytelling are the tools entrepreneurs use to make their breakthrough ideas and products succeed.”

I added, “A good entrepreneurial story is not just about what the product does, but why it matters. It paints a picture of a better future and positions the product or service as a means to that end. It humanises the company, making it easier for people to connect with its mission… the most effective stories are often the ones that tap into universal human experiences and emotions. They present the company’s mission as a shared journey, where every stakeholder is a crucial participant. This narrative strategy is powerful because it makes people feel a part of something bigger than themselves…Entrepreneurs thus need to become storytellers – imagining and even living in the future. They are building for a world a few years ahead because that is what it takes to go from an idea to customers. That world must be alive in their mind all through this time. Entrepreneurs compete for different visions of the future. Battles are first won by the stories because that is what the early adopters buy into.”

Storytelling has been at the heart of human culture since time immemorial. It’s an intrinsic part of our history and evolution, bridging the gap between generations, cultures, and geographies. The power of a story lies in its ability to leave a lasting imprint; it is through our tales that the essence of our lives and businesses come alive. They resonate with emotions, inspire action, and create memories. And yet, we don’t do enough of it. In this series, I will delve deeper into storytelling and why it matters – not just for entrepreneurs, but every one of us.

2

Wisdom – 1

Here is a collection of wisdom on storytelling.

Wikipedia: “Storytelling is the social and cultural activity of sharing stories, sometimes with improvisation, theatrics or embellishment. Every culture has its own stories or narratives, which are shared as a means of entertainment, education, cultural preservation or instilling moral values. Crucial elements of stories and storytelling include plot, characters and narrative point of view. The term “storytelling” can refer specifically to oral storytelling but also broadly to techniques used in other media to unfold or disclose the narrative of a story.”

National Storytelling Network: “Storytelling is the interactive art of using words and actions to reveal the elements and images of a story while encouraging the listener’s imagination.”

Hubspot: “Understanding new ideas can be confusing; stories can offer a way around that. Think about times when stories have helped you better understand a concept. Maybe a teacher used a real-life example to explain a math problem, or a speaker used a case study to convey complex data. Stories help solidify abstract concepts and simplify complex messages. Taking a lofty, non-tangible concept and making it relatable using concrete ideas is one of the biggest strengths of business storytelling… Stories are a universal language; they can bring people together and create a sense of community. Despite any barriers and differences, stories connect us through feelings and how we respond to them. We all understand the story of the hero, the underdog, or heartbreak. We all process emotions and can share feelings of elation, hope, despair, and anger. Sharing a story gives even the most diverse people a sense of commonality and community.”

Robert McKee (In Harvard Business Review in 2003): “A story expresses how and why life changes. It begins with a situation in which life is relatively in balance: You come to work day after day, week after week, and everything’s fine. You expect it will go on that way. But then there’s an event–in screenwriting, we call it the “inciting incident” – that throws life out of balance. You get a new job, or the boss dies of a heart attack, or a big customer threatens to leave. The story goes on to describe how, in an effort to restore balance, the protagonist’s subjective expectations crash into an uncooperative objective reality. A good storyteller describes what it’s like to deal with these opposing forces, calling on the protagonist to dig deeper, work with scarce resources, make difficult decisions, take action despite risks, and ultimately discover the truth. All great storytellers since the dawn of time – from the ancient Greeks through Shakespeare and up to the present day–have dealt with this fundamental conflict between subjective expectation and cruel reality.”

He adds: “A storyteller creates all characters from the self by asking the question, “If I were this character in these circumstances, what would I do?” The more you understand your own humanity, the more you can appreciate the humanity of others in all their good-versus-evil struggles. I would argue that the great leaders Jim Collins describes are people with enormous self-knowledge. They have self-insight and self-respect balanced by skepticism. Great storytellers – and, I suspect, great leaders – are skeptics who understand their own masks as well as the masks of life, and this understanding makes them humble. They see the humanity in others and deal with them in a compassionate yet realistic way. That duality makes for a wonderful leader.”

3

Wisdom – 2

Paul Zak: “My research has also shown that stories are useful inside organizations. We know that people are substantially more motivated by their organization’s transcendent purpose (how it improves lives) than by its transactional purpose (how it sells goods and services).  Transcendent purpose is effectively communicated through stories – for example, by describing the pitiable situations of actual, named customers and how their problems were solved by your efforts. Make your people empathize with the pain the customer experienced and they will also feel the pleasure of its resolution – all the more if some heroics went into reducing suffering or struggle, or producing joy.”

Vanessa Boris: “Good stories do more than create a sense of connection. They build familiarity and trust, and allow the listener to enter the story where they are, making them more open to learning. Good stories can contain multiple meanings so they’re surprisingly economical in conveying complex ideas in graspable ways. And stories are more engaging than a dry recitation of data points or a discussion of abstract ideas. Take the example of a company meeting. At Company A, the leader presents the financial results for the quarter. At Company B, the leader tells a rich story about what went into the “win” that put the quarter over the top. Company A employees come away from the meeting knowing that they made their numbers. Company B employees learned about an effective strategy in which sales, marketing, and product development came together to secure a major deal. Employees now have new knowledge, new thinking, to draw on. They’ve been influenced. They’ve learned.”

Shalini Lal: “Stories are particularly powerful in times of great change. They help us make sense of what is happening around us and what we should focus on. They help us reinterpret our place in the world and understand what action we need to take. As we enter a time of great change across our worlds, people will search for stories that help them make sense of these shifts. There is so much that is changing, and following all such shifts is beyond the capacity of most. Even if they managed to track change, they would need to give meaning to all that they were seeing and how these trends were connected. This is where powerful stories that focus attention will be compelling.”

Marie Hattar: “One of the biggest challenges facing the modern marketing team is how to break through rather than be drowned out by the content tsunami. Instead of pinning your hopes on the next magical adtech tool or some other marketing tactic in your arsenal, you should reorient everything around storytelling. This is because I’ve found that people don’t remember data or speeds and feeds; it’s stories that transcend time, people and cultures.”

Yoast: “To tell a good story, you usually have to include four elements: a character, a problem, an action, and a solution.”

Masterclass has 7 tips on how to tell a good story:

1. Choose a clear central message.
2. Embrace conflict.
3. Have a clear structure.
4. Mine your personal experiences.
5. Engage your audience.
6. Observe good storytellers.
7. Narrow the scope of your story.

On structure, it explains: “There are many different ways to structure a story, but the three ingredients a story must have are a beginning, middle, and end. On a more granular level, a successful story will start with an inciting incident, lead into rising action, build to a climax and ultimately settle into a satisfying resolution.”

Marshall Ganz talks about the story of self, us, and now as part of a public narrative for building movements, as distinct from marketing: “[It goes] back to the questions of Rabbi Hillel, the first-century sage, which I’d learned about as a child: “If I am not for myself, who will be for me? If I am for myself alone, what am I? If not now, when?” It adds: “Public narrative is a process and not a script. It’s not something to tell over and over. It incorporates the stories of others as well as your own. It’s learned and practiced by telling, listening, reflecting, and telling again. Public narrative’s aim is building grassroots power by activating people through storytelling and connecting those stories to clear policy and campaign goals.”

4

Wisdom – 3

Peter Guber in “Tell To Win”: “The building blocks of all compelling stories, whether they’re told in person, in the pages of a book, or via actors on a screen or monitor, are challenge, struggle, and resolution. First … get your listeners’ attention with an unexpected challenge or question.  Next … give your listeners an emotional experience by narrating the struggle to overcome that challenge or to find the answer to the opening question.  Finally … galvanize your listeners’ response with an eye-opening resolution that calls them to action…The best stories lead from the heart, not the mind…Stories that “work” transport audiences emotionally. They move us to laugh, cry, gasp, sigh, or yell in sympathetic rage, and every listener intuitively demands this emotional propulsion.”

Jonah Sachs in “Winning the Story Wars”: “Stories are a particular type of human communication designed to persuade an audience of a storyteller’s worldview. The storyteller does this by placing characters, real or fictional, onto a stage and showing what happens to these characters over a period of time. Each character pursues some type of goal in accordance with his or her values, facing difficulty along the way and either succeeds or fails according to the storyteller’s view of how the world works.” He writes about the five qualities that make stories success:

• TANGIBLE: Stories present information that makes concepts visible and human scale. They make people feel that they can “touch” and “see” an idea.
• RELATABLE: Stories matter to us because their characters carry values that we want to see either rewarded or punished.
• IMMERSIVE: Stories allow people to feel that they have experienced things that they have only seen or heard.
• MEMORABLE: Stories use rich scenes and metaphors that help us to remember their messages without conscious effort.
• EMOTIONAL: Stories elevate emotional engagement to the level of, and often beyond, intellectual understanding.

Carmine Gallo writes in “The Storyteller’s Secret” about the five types of storytellers: those who ignite our inner fire, those who educate, those who simplify, those who motivate, and those who launch movements. He adds: “History’s most inspiring leaders were storytellers…Many of the storytellers featured in this book changed the course of history. Some are business heroes. Some inspired movements. Above all, they are all dream makers. They reach for the stars and inspire the rest of us to create our own moonshots. This book is about the visionaries and risk-takers who have mastered the art of telling stories and who inspire us to live better lives. Some make us laugh. Some make us think. Some make us change. Through artfully telling stories that inform and challenge, they build companies, drive the world forward, and make us feel like we, too, can achieve the impossible.”

Some of the secrets discussed in the book:

• Identify your brand’s core purpose.
• Dream in moonshots.
• Introduce a “hero”—person or product—who triumphs over adversity.
• Make stories at least 65 percent of your presentation.
• Deliver serious topics with a side of humor.
• Use pictures to illustrate your story.

John Walsh, in his book, “The Art of Storytelling”, lists 14 steps for telling stories:

• Step 1: Select a story
• Step 2: Push through the story
• Step 3: Envision the scene with present-day feelings and concerns
• Step 4: Tell the story from the view of someone at the scene
• Step 5: Establish the story’s central truth
• Step 6: Find a memory hook
• Step 7: Tell a story within a story
• Step 8: Plan your first words
• Step 9: Know how the story ends
• Step 10: Research the facts
• Step 11: Eliminate needless detail
• Step 12: Add description to the story
• Step 13: Include audience participation
• Step 14: Arrange practice audiences

5

Wisdom – 4

Kindra Hall writes in “Stories that Stick”: “The most obvious gap in business is the void between the customer and the company…But while the sales gap is important, there are other gaps everywhere in business. There are gaps between entrepreneurs and potential investors, between recruiters and prospective employees, between managers and employees, between leaders and executives. To make a business work, you need to bridge the gaps…You must master three main elements to have any hope of building a bridge strong enough to get your intended audience—potential customers, key team members, investors, etc.—across the great divide: attention, influence, and transformation. First and foremost, the best bridges must capture attention and captivate the audience, so they know the bridge is there in the first place. The second element, influence, is the means by which you’re able to compel the audience to take the action you desire. And third, if you don’t want to have to keep bridging the same gaps over and over again, the best bridges transform the audience, creating a lasting impact and leaving the audience changed, so they never even consider returning to the other side of the bridge, thereby closing the gap forever.”

Jerry Weismann writes in “Presenting to Win”: “The good presenter grabs their minds at the beginning of the presentation; navigates them through all the various parts, themes, and ideas, never letting go; and then deposits them at the call to action…The effective presenter makes it easy for the audience to grasp ideas without having to work. The effective presentation story leads the audience to an irrefutable conclusion. The journey gives the audience a psychological comfort level that makes it easy for them to say “yes” to whatever the presenter is proposing. Presenting, therefore, is essentially selling…In the end, the most subtle impact of a clear and compelling presentation is perhaps the most powerful effect of all: The person who is able to tell an effective business story is perceived as being in command, and deserves the confidence of others. When you are in command of your story, you are in command of the room. Your audience will follow where you lead, and so will money, influence, power, and success…Persuasion is the art of moving your audience from Point A, a place of ignorance, indifference, or even hostility, toward your goal . . . navigating them through an unbroken series of Aha!s . . . to Point B, a place where they will act as your investors, customers, partners, or advocates, ready to march to your drum.” He adds: “Constantly ask the key question: What’s in it for you?” He calls it WIIFY, with the “you” referring to the audience.

In “Everyday Business Storytelling”, Janine Kurnoff and Lee Lazarus write: “To the majority of us, it’s not obvious how to authentically incorporate storytelling into our daily work lives. Instead, we resort to what we do know. We leverage existing content for a “quick fix.” We grab our latest slide deck that we (or our co-worker) built as a starting point, and from there we cobble together slides. We load up on bulleted text. We pile in every chart we can find. We even add in some “pretty” slides that we found on the corporate portal from the marketing team. We have a very technical term for this type of incoherent, hodgepodge communication. We call it a Frankendeck.” They add: “Every story has four structural elements—or signposts. They are setting, characters, conflict, and resolution. These signposts create a pattern of ideas that feel familiar, feel human, feel satisfying, but most importantly, just feel. And if ideas make us feel, we remember them…The first three signposts of storytelling—setting, characters, and conflict—can be introduced in any order. In fact, many stories start with conflict before we have zeroed in on any characters or established setting… The resolution must always come last.”

Indranil Chakraborty writes in “Stories That Work”: “For Sale: Baby shoes. Never worn. When you read these six words, what feelings do they evoke? Don’t these six words immediately make us empathize with an unknown, grief-stricken woman? We can almost visualize the situation and our hearts go out to her. Ernest Hemingway wrote this story, calling it a six-word novel. It shows the almost visceral effect stories can have on us.”

6

Wisdom – 5

Janis Forman writes in “Storytelling in Business”: “If you are planning to use storytelling in your work, the place to begin is by putting together your signature story. Much like your signature, your “signature story” is unique to you and is probably the most personal of stories you’d share in business settings. It may reveal something about your character—what you value—and take the form of an autobiographical excerpt; that is, a personal story (and versions of that story) about a significant experience, relationship, accomplishment, or failure that has given you insights about who you are as a person and a professional.” Janis lists some questions to ask:

• What specific experiences have you had with a mentor, a family member, a teacher, friend, boss, colleague, or significant other who has had a substantial impact on who you are as a person and a professional?
• What major challenge have you faced in your personal or professional life? What choices did you make, and what insights did you gain from this experience?
• What stories told to you, read in a book, or seen in a film move you,—and what does this say about you as a person and a professional?

Matthew Luhn writes in “The Best Story Wins”: “There is a scientific reason why stories stick in our minds. Way back in our evolution, when humans developed the ability to speak, we communicated about life or death situations, like being chased by a tiger, successfully hunting a bison, or avoiding poisonous plants. We know that storytelling was important to our early ancestors because we have “storyboards” of those life lessons that date back thousands of years painted on cave walls. The ancient people that learned the lessons of those stories lived, and the ones that didn’t died…Along with being memorable, stories are impactful. Stories take us on a roller-coaster ride, a journey through high moments (happiness, anticipation, surprise) and low moments (sadness, fear, anger) that actually affect our bodies on a chemical level. Science has revealed that the chemicals in our tears produced by laughter are different than the chemicals in our tears produced by sadness. When we see or hear people—or even animated toys, robots, or rats—laughing, smiling, or sharing stories of suspense, dopamine and endorphins are released in our bodies; when we see or hear anything sad or somber, oxytocin is released. When we place these sad and happy moments next to each other in a story, we build an amusement park ride for people’s hearts and minds. Ups and downs, tension and release, you’ve created a story that keeps an audience sitting on the edge of their seats.”

Bernadette Jiwa writes in “Story-Driven”: “Every business is driven by one of two philosophies. A company is either competition-driven or story-driven. The competition-driven company is reactive to the marketplace and prioritises beating its competitors and racking up profits. It identifies with the capitalist ideal and is intent on keeping score. The people who lead competition-driven organisations seek to dominate the market and maximise shareholder value. They care about increasing market share, boosting the single bottom line and raising their status as ‘the leader’ in their category. Their goal is to win. In contrast, the story-driven company is responsive to customers and prioritises having a clear sense of purpose and identity. It makes little reference to the competition and is intent on creating an impact. The people who work there derive a deep sense of meaning from their work because they know their company exists to do more than simply make a profit. The leaders of story-driven companies (big and small) have clear visions for the future they want to see, and they inspire their teams to join them on the journey to creating that future. They often succeed by doing things that can’t be measured or are not immediately scalable. Story-driven companies have a positive impact on their customers and society. They thrive by making the connection between their purpose and prosperity. Their goal is to make a difference.”

7

Hero’s Journey

One of the most common templates for storytelling is the hero’s journey, or the monomyth. It involves a hero who goes on an adventure, faces challenges, is victorious, and comes home changed or transformed. Think Frodo Baggins in “Lord of the Rings” or Luke Skywalker in “Star Wars”. Here is an illustration from Wikipedia of the Hero’s Journey.

I asked ChatGPT to summarise the hero’s myth in the context of storytelling (with light editing).

The art of storytelling is ancient, predating written language and serving as the bedrock for human civilization’s cultural and moral structures. Among its varied formats, the ‘Hero’s Journey,’ as conceptualised by Joseph Campbell in his seminal work “The Hero with a Thousand Faces,” stands out as a particularly resonant and universal template. This narrative pattern has been employed in epics, films, novels, and even in modern business storytelling. The consistent appeal of the Hero’s Journey lies in its reflection of human experiences, challenges, growth, and transformation.

At its core, the Hero’s Journey comprises three fundamental stages: Departure, Initiation, and Return.

Departure: This is where our protagonist, often an ordinary individual in a familiar world, encounters a ‘Call to Adventure.’ The hero may be reluctant at first, often exhibiting resistance or refusal. However, with the guidance of a mentor, the hero musters the courage to cross the threshold into an unknown, often fantastical world.

Initiation: As the hero ventures into the unfamiliar territory, they face trials and tribulations, confronting enemies and uncovering allies. This stage is crucial for character development, as the hero learns, adapts, and grows stronger, both internally and externally. The climax of this phase is the ordeal, where the hero must confront their biggest fear or challenge, resulting in a transformation or rebirth.

Return: With the ordeal overcome and the reward in hand, the hero commences the return journey to the ordinary world. However, this path is seldom smooth. The hero must reconcile the lessons and powers acquired during the initiation with their original environment, often facing resistance or final tests. Ultimately, the hero emerges triumphant, bringing boon or knowledge back to their community, resulting in the betterment of both the self and the society.

So, why does this template remain so universally appealing in storytelling? Firstly, the Hero’s Journey mirrors the human life cycle and our personal quests for meaning, purpose, and identity. Each of us, in different ways, embarks on journeys, faces challenges, grows, and aims to return transformed. The narrative template taps into this shared human experience, making the story both personal and universal.

Secondly, the Hero’s Journey showcases transformation. It highlights that challenges, no matter how insurmountable they seem, can lead to growth. This underlying message of hope and the possibility of metamorphosis resonates deeply with audiences, providing both escapism and inspiration.

Moreover, the cyclical nature of the Hero’s Journey, where the end often hints at a new beginning, reflects the cyclical nature of life itself. It emphasises the idea that learning and growth are continuous processes, and challenges will always lead to newer horizons.

In modern storytelling, variations of the Hero’s Journey have been employed in blockbuster films, bestselling novels, and even brand narratives. Think of classics like “Star Wars” or “Harry Potter” or brand stories where companies position their products as solutions to challenges, making the customer the hero of their own journey.

In conclusion, the Hero’s Journey, with its stages of departure, initiation, and return, offers a timeless narrative structure that resonates deeply with human psychology and experience. It serves as a mirror to our challenges, aspirations, and transformations, emphasizing the potential for growth inherent in every challenge. As storytellers continue to adapt this template to contemporary contexts, the Hero’s Journey will undoubtedly remain a cornerstone of compelling narratives, connecting us to our shared human essence.

8

My Stories

Over the past couple years, I have tried to bring more storytelling in my writing and presentations. My book, “Startup to Proficorn”, has many stories from my entrepreneurship journey. While I do not always follow the templates of good storytelling, I do try and bring in the problem-solution aspect. Within Netcore, when I need to talk about some of the changes we need to do, I try to begin with a customer story. Here are my stories that I have found resonate with the audience.

• IndiaWorld origin: the story of how I returned from the US, failed with my early entrepreneurial efforts, and then got the idea of creating India’s first Internet portal focused initially on the information needs of Indians outside India.
• Launching Samachar, Khoj, Khel, Bawarchi: the story of how I lost IndiaWorld.com (the primary domain) and then came up with sites with Hindi names that differentiated us and became memorable.
• IndiaWorld exit: this is by far the most exciting story I tell of how I sold IndiaWorld for 166 times revenue. There is some drama (failed efforts to raise venture capital), a bidding war, and excitement (how the valuation went from $40 million to $115 million in less than a couple weeks). There is also an epilogue – the dotcom crash and how the exit timing mattered.
• Replacing myself as CEO of Netcore: this is the one founders I speak to have the most questions on – how I made the decision to bring in a CEO to run the business in 2007. How did I decide? Who did I choose? What was it like after I made the decision?
• Netcore’s SaaS transition: this is the story about the time in 2019 when Kalpit (Netcore’s current CEO) and I attended SaaStr and realised we needed to change Netcore’s product, sales, and marketing model if we had to target markets like the US.

At a personal level, there are a few stories that connect well.

• The story of how I returned from the US: this was because of what my father had told me when I left – finish Masters in 9 months, work for 2 years, and then come back.
• The failures in the first 3 years after I returned: how I tried multiple ideas as an entrepreneur and each one of them failed
• My 30 failures over 30+ years as an entrepreneur: while I do spend time talking about my successes, I also discuss how the journey of experimentation has many flops and the pain of each idea that did not grow.
• The birth of Abhishek: how my wife and I went through 5 years of IVF treatment to have a baby.
• My political entrepreneurship with Niti Digital and Nayi Disha: why I embarked on that path, and the outcomes in 2014 (success) and 2019 (failure)

When I tell my personal stories, I tell it like it happened and with authenticity and humility. In the past few months since the publication of my book, I have done multiple interviews and presentations, and it is always the stories that people remember rather than the generic advice that I mention from my learnings. I am still learning the art of storytelling – and so should you.

9

Your Stories

We tell stories all the time – to our friends, to colleagues at work, to strangers we meet on flights or at events. From anecdotes shared over coffee to corporate presentations, the art of weaving a captivating tale is invaluable. By honing this skill, we can create deeper connections, leave lasting impressions, and truly make our messages resonate. Here are a few suggestions.

• Unearth life’s turning points: Reflect on the pivotal moments in your life. What are the crucible experiences that shaped you? Identifying these and understanding their impact can form the foundation of a compelling story. Articulate them in ways that evoke emotions and provoke thought.
• Maintain a story bank: Just as a writer keeps a journal, maintain a repository of stories tailored for various situations. Being vigilant about everyday observations can yield a treasure trove of gems. Because of my blog, I need a steady inflow of content and so I am extra alert for interesting observations and experiences. Some of them have found their way in my Life System writings.
• Transform experiences into narratives: Cherish life’s significant moments. Don’t forget them. They can come in useful when they can be connected to learnings. I was telling a colleague about a recent experience at a hotel where I was staying. Among the staff at the restaurant was this person who was so cheerful and greeted every guest individually. Just seeing her smile in a roomful of strangers gave a nice start to the day. When I was leaving on the third morning, she said she hoped I would be back the next morning. When I told her I would be leaving that night, she made a sign of tears – which converted into a smile when I said I would be back for a day the following week. I use this story on how each of us can become memorable – even in short meetings with people we don’t know and leave a mark.
• Reimagine presentations: I am very text-oriented when I make my slides. I use bullet points which I talk through. I have been thinking of how to change this and make it more story-oriented with imagery and a few words. Visuals, paired with concise text, can be powerful. Incorporate imagery, metaphors, or even short anecdotes to make your points memorable.
• Be an avid learner: Engage with diverse storytelling mediums – books, movies, or YouTube videos. Analyse what captivates you. Is it the pacing, the character development, or perhaps the plot twists? Gleaning insights from these sources can significantly elevate your storytelling prowess.
• Understand your audience: Tailor your story to your listeners. Consider their background, interests, and values. A story that resonates with one group might not resonate with another.
• Embrace vulnerability: Authentic stories often come from a place of vulnerability. Sharing personal challenges or lessons learned humanises you and builds trust with your audience.
• Conclude with a message: Every good story has a moral or message. Ensure your listeners walk away with a clear understanding of the core idea or lesson you intended to convey.
• Practice makes perfect: Seize every opportunity to share your stories. Through repetition, refine your narrative. Stories become better as we tell them. Pay attention to your audience’s reactions; tweak phrases or sequences based on what resonates best.

Storytelling is an intricate blend of art and science, imagination and structure, emotion and logic. By continually refining this craft, we can touch hearts, inspire action, and leave an indelible mark on our listeners.

 10

Storytelling in Business

Netcore operates in a crowded and competitive market. The question I have been thinking of is: how can we tell a better story to set ourselves apart from the competition? Can we go beyond comparing features and showing dashboards of data? Can we talk about a future which Netcore is uniquely positioned to bring to life? Can our storytelling give us a competitive advantage – creating a blue ocean in a red ocean? How can we stand out in a sea of sameness? Here are a few themes I have been working on.

• I start with a new and memorable phrase to describe the problem. In Netcore’s case, the word I have been using is “profipoly” (profits monopoly). I tell a story about how companies like Google, Apple and Microsoft have created a profits monopoly which delivers exponential forever profitable growth for them – and keeps competitors at bay. Every business needs to aspire to become a profipoly. And I plan to show them how to do it.
• I discuss how marketing has made a wrong turn by not focusing on profitable A focus on branding, acquisition, and retention has meant that growth comes at the cost of profits. I show the state of brand P&Ls (profit and loss statement), and how marketing is one of the biggest contributors to profitless (profitless or less profits) outcomes.
• I then bring in the agents of change – the breakthrough ideas and innovations. This is the exciting part of the story – where the troubled past can give way to a happy future.
• I finally show the outcomes – happier customers with memorable experiences, and better P&Ls. All this can lead to sustainable profitable growth.
• I end with a roadmap and a hero – the 90-day plan (call-to-action) which needs a “Chief Profipoly Officer” to implement it. This also shows CMOs a possible future to the corner office, something they can rarely aspire to in their current roles.

As I have been telling this story, I also feel an inner excitement – of talking about something new, of linking it to a brighter future, of showing the big picture of how becoming a profipoly is marketing’s fourth wave and final frontier. I used to do this a lot in the early days of IndiaWorld – evangelising the infinite potential of the Internet, and how the business could benefit by becoming an early adopter. For the past years, my writings have focused on a new world of marketing, and I now need to tell the story of how digital businesses can finally bring in the one thing that’s missing – profits.

**

Stories are what we grow up with. When we as babies cannot read, we listen to stories told to us by our parents. They help us understand and interpret the world. Like the lost art of asking beautiful questions, somewhere down the line as we grow up, we forget about how important stories are to every form of communication and interaction. It is time for each of us to learn and practice storytelling – in our personal and business lives. As Steve Jobs said when he was CEO of Pixar: “The most powerful person in the world is the storyteller. The storyteller sets the vision, values, and agenda of an entire generation that is to come.”