Are you familiar with “the travel guide”? Before the internet, maybe still – I don’t know, people bought books that acted as guides for the things they wanted to do. My shelves have/had: Italy, Disney, Disney, Orlando, and the Bahamas.
The guides gave a nice overview. Here’s what to know about the Sistine Chapel. It wasn’t a substitute for going and gawking, but the guides were a map, combining: geographic, informational, cultural, and other bits of information. That’s what I made, an idea map.
It’s like a travel guide. Each entry is short and to the point. Each entry also connects with other entries. A travel guide might say something like: “make sure you visit in the morning and stop at the nearby coffee shop after”. That’s a considerate connection, two attractions that are nearby in space and time (low crowds, tasty treat after standing). My guide does that too. Here’s two examples:
Alpha erosion is the idea that advantages erode as the market notices a success. When an organization balances the explore and exploit nature of work, it will land on opportunities to deliver value and earn profits. Competitors will notice and attempt to recreate this success. Sometimes competitors will succeed, even outperform, and sometimes they will not. The best way to avoid alpha erosion is to not be noticed. There are at least two ways. First is the path taken by Amazon, where the company was unprofitable but valuable and the desire to imitate was limited. For many competitors, unprofitability was a restricted action. The second is to create alpha in a business where the rewards are unappealing. There are many people who want to be movie producers or winemakers, but many less who want to operate a regional chain of construction dumpsters — even though the latter suffers less erosion.
Explore and exploit
Explore and exploit is the idea of a spectrum of work between exploratory work and exploitative work. At any given time there’s a better area on this spectrum to be for an organization as well as an individual. One way to view the explore and exploit spectrum is through two different businesses. One business is a streaming media technology firm. They have a direct relationship with their individual customers and bill them monthly. They also work with the providers of media to create content for the customers. Both the providers and the customers have a JTBD. The providers want freedom. The customers want choice, uptime, and lower bills. The competition meanwhile wants alpha erosion. This business must quickly move back and forth between the explore and exploit ends of the spectrum. They must innovate in delivery, technology, and marketing then implement each. A different business is the regional construction company. They too have customers who want a new kitchen or pool and they have suppliers who specialize, subcontract, or deliver supplies. But the regional construction company has to move back and forth at a different cadence. Someone’s system suggests their location on the spectrum. It is also rare for a situation at either extreme. Even the regional construction company must allocate resources to exploratory ends. The location between explore and exploit can guide a person or organization towards what type of work is best for the moment.