Strategy in Praxis

Strategy in Praxis

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Strategy in Praxis
Strategy in Praxis
The first one about learning

The first one about learning

Not all foundations are alike

JP Castlin's avatar
JP Castlin
May 31, 2024
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Strategy in Praxis
Strategy in Praxis
The first one about learning
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Friends,

I hope that all is well with you and yours, and that this e-mail finds you on a boat with shoddy connection, in the tropics, three months after I sent it.


Now accepting keynotes for 24Q4-25Q2

Every year, I create three main presentation decks. For 2024, they are:

  • What to Do When You Don’t Know What to Do: How to turn uncertainty into a competitive advantage. (Based on my new book by the same name.)

  • Regression Toward the Meme: Why modern leadership falls into old traps - and how to avoid them.

  • The Efficiency Illusion: How to uncover the hidden costs of digital commerce and create profitable growth.

If you want to book me for your event, corporate speaking slot, or workshop, merely send me an email. To make sure I am available, please do so at your earliest convenience; my availability is limited and the schedule is filling up fast. More information may be found here.



A couple of updates before we go-go

  • So many claim, typically within the context of the current maelstrom of an AI debate, that technology is the only thing that has ever “eliminated poverty”. For one, I think the term “eliminated” is worthy of some challenge, but beyond that, the argument is immensely ignorant of history.

  • Clearly, technology has enabled massive leaps forward in progress and prosperity; I am not saying that it has not been revolutionary. But if you want to pinpoint the one thing that has consistently taken people out of poverty, and still does to this day, it is the liberation of women - including giving them the control over their own reproductive systems.

  • I mean, from a global perspective, it is not even that close.

  • I recently found myself briefly in a conversation about talent vs training (a.k.a. nature vs nurture) and must admit that I find it odd that everything these days supposedly is a matter of training. Does it matter? Absolutely. Is it everything? Absolutely not.

  • The implications of a purist nurture argument is that everyone can become LeBron James if they merely work hard enough and, by extension, that the reason why he remains unique is that nobody else in the NBA does. Surely that cannot be; talent and luck play immense parts too.

  • I suppose, given what I just wrote, I should also point out that I am simultaneously not particularly fond of the term the "war on talent". Partly because everything is a “war on” these days (surely we can come up with something a bit less silly), but also because the expression is revealed to be rather ironic when one considers how much time organizations spend shooting their best and brightest in the foot. Complaining about how hard it is to find skilled employees may sometimes be justified, but is habitually no more than a deflection made by unskilled managers. Get out of their way and let them do their job instead.

  • Moving on.



2024.4.a

The first one about learning

Not all foundations are alike

Few books, at least within the fields in which I have been and remain active, have turned the world on its head quite like Byron Sharp’s seminal How Brands Grow (2010). It unceremoniously tore asunder concepts that long since had become conventional wisdom, demonstrating that J. K. Galbraith was correct when he wrote, in The Affluent Society (1958), that ideas ideas may indeed become acceptable, comfortable, even normative, even if they are not necessarily true.

What further made HBG stand out was that Sharp shared the supporting evidence. Most business books, including the vast majority of those most well-read in executive offices and on university campuses alike, do not. Michael Porter, for example, never substantiated any of his claims - people merely took them to be true because, well, they sounded good. Sharp did better.

Of course, many still tried to stretch the theses that they already applied, or otherwise tinker with them, instead of undertaking a more radical shift. Soon, “exceptions” to the old rules were created, and theories were extended far beyond what they ever originally permitted. It is admittedly understandable; as Michael Mauboussin points out in Shift Happens: On a New Paradigm of the Markets as a Complex Adaptive System (1997), it is challenging to rapidly devalue a theory into which substantial time and resources have been invested. Inevitably, there will be both economic consequences of admitting relative ignorance and emotional stress involved in acknowledging sunk costs as irrelevant. But it is still unquestionably the only intellectually honest thing to do. If in doubt, Meriadoc, always follow the evidence.

The last sentence is more than a mere quip to amuse the Tolkien fans among you. If you are unsure of whether what you are reading is true - and that goes far beyond whether you merely like or dislike it - you must follow the evidence. What proof does the author provide? Do they substantiate their claims in any way? What would have to be true for them to hold?

Take a statement such as “advertising should make people nervous about what they buy”, which is popular among copywriters and agencies. It sounds exciting, enticing you, whoever is buying or producing the advertising in question, to be bold. But what would have to be true for it to be? Well, that almost everything that we know about human behavior would not be. Thus, the advice is best unheeded, at least if taken literally (which some inevitably will do).

Things become slightly harder when we encounter arguments such as “20% of buyers make up 80% of a firm’s revenue, hence one should focus exclusively on them”. It sounds convincing; there are statistics and models involved. But around 60 years of research demonstrates that Pareto splits (for the argument is centered around a Pareto distribution) rarely as are extreme as 80/20; more often, they are 60/40. Ignoring all but the best customers, in other words, leaves a rather sizable chunk of money on the table. To make matters worse, purchase patterns consistently demonstrate that customers move between groups over time; the best, logically, can therefore only decline. In technical terms, this is called the law of buyer moderation - the proof of which may be found in Sharp’s aforementioned book.

Now, where a lot of people go wrong is when they equate evidence with certainty or universality. In a complex environment, there may always be aberrations, either today or tomorrow. Things change. Evidence is merely the attempt to solidify a theory, and it should always be debated. The point is that a lack of evidence cannot be; it can only be dismissed.

Consequently, when agency managers look to play to their internal audience by claiming that How Brands Grow has “fanboys” in the same way that the work (and I use the term extremely loosely) of someone like Gary Vaynerchuk does, there may be a grain of truth to it, but also an implied conflation of the evidence-based with the evidence-less. It is thus a quip as tedious as it is nonsensical. Regardless whether you agree with the conclusions or not, more than half a century of serious academic research with shared data does not stand on equal footing with the uneducated guesswork of someone hoping to “sell content”.

If you are looking to learn, which the collection of new information equals, the most important factor is whether there is supporting evidence - and how strong said substantiation is. Science knows it does not know everything, otherwise it would stop. But just because it does not know everything, it does not mean that anyone can freely fill in the gaps with whatever fairytale most appeals to them. There must still be coherence with the available facts.

Now, admittedly, this is all a bit trickier in practice than it is in theory, even if it appears to be common sense (or perhaps precisely for that reason). The modern world is one of emotional headlines - and, as Carl Bergstrom and Kevin West demonstrated in Calling Bullshit: The Art of Skepticism in a Data-Driven World (2020), facts often cannot compete. Human beings seek to limit free energy by confirming their model of the world; emotion anchors that which does all that much deeper. But if we ever want to get anywhere, individually and as a species, we have to look beyond and beneath.

And so, over the next few weeks, we are going to dig into how we might set our feelings aside (at least metaphorically speaking) and learn how to learn - not merely from an individual standpoint, but too as an organization.

Until then, have the loveliest of weekends.

Onwards and ever upwards,
JP

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