Whether to Ignore an SME — A Lesson from the Private Sector

“When one of our SME’s tells me not to invest because it’s never going to work, it makes it more likely that I will invest”

This philosophy from a friend of mine, who used to run a well know corporate venture capital fund, changed the way I engage with subject matter experts (SMEs).

SMEs are tremendously valuable in pressuring testing new strategies, diligencing investments or acquisitions, and in determining R&D priorities. But ultimately, they are still just people and subject to the same hubris and blind spots as the rest of us. Being an expert means you know what to expect and that easy to dismiss the unexpected.

When I think about the future, ‘disruption’, and black swan events, I’ve found it useful to keep a standard distribution curve in my mind. Events and outcomes on the left and right of the curve might be equally unlikely but the impact when the do occur vary wildly.

This is what SME’s frequently miss — When someone who is an expert says, “it’ll never happen” they are saying “it’s on the left or the right, so it doesn’t matter.”

But if your job is to invest in the future, then your job is to embrace the risky outliers.

Your job is to figure out whether it is on the left or on the right.

The worst reason to make an investment, if you’re supposed to be investing in the long term, is because an SME says, “yeah that’s right in the middle of what everyone expects.” Because the middle isn’t where the change happens, the middle is expected, and your job is to find the unexpected.

FOR THE MILITARY:

In the 1920’s the world’s militaries knew that it’s navies had little to fear from the air power demonstrated during the First World War. SME’s from around the Navy scoffed at the claims that air power could destroy an armored battleship. If you were to examine the claim made by the upstart air services — like those of Billy Mitchell — then you would quickly and definitively dismiss it as unworthy of investigation or investment.

Right up until the former German World War I battleship, Ostfriesland was sunk on July 20, 1921, by airplane attacks.

Similarly, the entire history of Special Operations is a story of men and women who dared to do things that every expert has said was impossible.

So, listen to your SME’s, take their advice and expertise seriously. But also listen for their blind spots and use them as early warning indicators for what the future holds.

The opinions expressed in this paper are solely that of the author