The Fragility of Product Strategy
On innovation and ‘antifragility’
Nearly all product strategies fail, with good teams and bad. It has little to do with the people planning and executing. It has much more to do with the inherent randomness in the world, compared with our human ability to plan and manage. This is rooted in the limitation of our rational faculties to cope with anything but the simplest causalities. Lions try to eat you; therefore, lions should be avoided — this works on the savannah. But attributing causes to a change in something like gains or losses in the stock market is usually vastly more complex than anything our primitive ancestors, with the same sized brain, ever had to cope with, and prone to great unknowns. This leads us to commit the “narrative fallacy”: far from being in control of our fate, when we succeed, 80% of the time we’re really just being lucky, which we retrospectively interpret as foresight and skill.
A mental cloud of cognitive biases prevents us from seeing the terrifying randomness that besets us on all sides. Here are some examples of other cognitive bias that create a veil of statistical illusion about the predictability of the world and the efficacy of our role within it:
- Survivorship bias (generalizing the base rate of success from those that survived extinction rather than the whole population)
- Halo effect (attributing skill to an individual as a result of a lucky run)
- Availability bias (reasoning strongly influenced by what you have experienced and can remember)
- Consistency bias (ignoring facts or interpretations that don’t fit with your prior beliefs)
- Confirmation bias (ignoring false positives)
- Representativeness bias (inferring from superficial resemblances).
The human brain has evolved to work this way—to exaggerate the causal narrative of its existence as a form of adaptation, but we are still almost completely incapable of seeing how much randomness we are really exposed to in the post-primeval world of modern business. Instead, we experience the world as a backward-propagating exercise in post hoc rationalization.
What can be done about it? When we look at natural systems that survive and thrive, we find a celebration of failure that is the opposite of our rational instincts for order and predictability. The financier/statistician/philosopher Nassim Taleb calls this ‘antifragility’. Antifragility is that nonlinear quality that loves mistakes and responds to disorder with growth rather than decay.
Our corporate strategies are too fragile in the sense that the tide of our plans breaks too easily against the rocks of reality, while we ignore our failures and exaggerate our effectiveness. This generally leads us to expose ourselves to too much downside when our projects fail, incur too much ‘negative iatrogenics’ (the failure that comes from intervening too much) and not enough bricolage (ad hoc tinkering). We launch too many epics and engage in too few guerrilla actions. Even the anti-theoretical rely on too much theory (simplistic and unexamined ideas for understanding how the world should be), versus not enough phenomenology (understanding how the word really works but without necessarily explaining it). Managers require too many heroic promises, rather than encouraging “optionality” (small bets on outcomes with large positive upsides if they win but only small negative downsides if they lose). There is apotheosis of the Bell Curve, leading to too much focus on moving the Mean, which hides the risk in the tails while delivering mediocre value.
What would product innovation be like if it tried to be ‘antifragile’? The diagram below shows how we can apply this thinking to product innovation by using a bimodal strategy.
