In 2018 I gave a talk at Stanford to a class of MBA students on data science. I posited then that doing data science well — extracting meaningful insight to lever business benefit — hinged primarily on one thing: asking the right questions.
I still believe this.
Asking the right questions is also the heart of business strategy — and how a business wins. For most Tech companies its often vastly overcomplicated.
Learn to ask of all actions, “Why are they doing that?” Starting with your own. — X.37
At the core of business strategy are two simple questions:
How can I create more customer value and raise willingness to pay (“WTP”)?
How can I create more employee and supplier value and reduce willingness to sell (“WTS”)?
These questions are represented as the “value stick”1 and the goal is to maximize the middle. In either case, it’s a price to value equation.
But of course the Strategy you’re familiar with probably feels a whole lot more complicated. And when confronted with extraordinary growth goals or in the case of lost momentum it often becomes:
If only we had a better marketing strategy to appeal to emerging preferences and exploit social?
If only we had a better talent strategy to attract those with extraordinary skills?
If only we had a deeper innovation pipeline to maximize future optionality?
If only we had a … etc?
A profusion of ideas, pursued initiatives and frenetic activity. Our collective illusion.
Name a Tech company who does not profess to be customer centric in their product activities. Now think about those who wish to absolutely delight2?
The gap is large.
The difference between focusing on the product and a customer’s WTP is subtle.
A product centric organization asks: “How can we sell more”?
A delight centric organizations asks: “How will our customers clap and cheer?”
Think about Apple under Steve Jobs: the definition of divine discontent3. The products that we love were created in our image. Every detail and aesthetic down to the packaging questioned, designed and built to delight. And still, often, they were improved. Apple went on to become the first $3T company4
On Conquering
When was the last time you had a “question storming” session with your team? The questions that often endanger us are those that we fail to ask. Leadership in Tech and elsewhere is drawing attention to neglected spheres of inquiry.
Collective illusion is acting against our own best interests because we misunderstand what others believe.
Questioning is the answer.
Like our review of different reading levels in my meditation, personal intellectual leverage, so are there modes for questioning:
Investigative Questioning: Drawing out what’s known to clarify purpose. Frameworks like the 5 whys help. Go deep.
Speculative Questioning: How can you consider what’s identified more broadly? Start with “How might we…” And build your new world of scenarios.
Productive Questioning: Now what you say? How can you evaluate the availability of talent, capability, time and other resource to execute.
Interpretive Questioning: As a complement to the above three, you must draw out the implications of an idea. For example, after an investigative question you might ask yourself — “what happens if this trend continues?”
Subjective Questioning: Different from the above — it’s less about the substance of the opportunity and more about the emotion and reservation often held back. What’s left unsaid? And how could that backfire?
Beyond just knowing these modes, understanding the right mix and use cases is critical. One of my favorite mental models that Charlie Munger long espoused is the power of inversion — a type of speculative questioning.
For example, let’s say your goal was to increase innovation in your organization. Inversion would suggest you think through, instead, all of the ways you could discourage innovation and then not do those things.
Final Thoughts
Making better strategic decisions and simplifying complexity rests on not blundering. Asking the right questions enables us to build the right products, build them right and ensure that we can keep on doing so. As is said, avoiding stupidity is often easier than seeking brilliance. Fend off pluralistic ignorance and build more delight on each side of the value stick.
Source: The pioneering article from Adam M. Brandenburger and Harborne W. Stuart, “Value-based Business Strategy,” Journal of Economics & Management Strategy, March 1996.
Dropbox was penned as being unusual for having a “smiling cupcake” as a core value. In my experience it was imbued in everything the organization did and a critical element in the success of that magic folder on your desktop.
A restless dissatisfaction with what is versus what could be.
Vertical integration, it’s app store, services and network effects didn’t hurt. Even in spite of its dongle fascination and faulty butterfly keyboards.