One of the more interesting books I’ve read in the past couple of years is No One Makes You Shop At Wal-Mart. One of the take-aways from the book is the unmistakable conclusion that the idea of “revealed preferences” is simply wrong. You see this kind of short cut thinking all the time in that people basically believe that the choices that someone has made reveals their preferences. So, if you see that USA Today is the best selling newspaper, the theory of revealed preferences tells us that what this means is that news consumers really, really do prefer USA Today.
What you learn from the work of Tom Slee is that this thinking is simply bullshit. As anyone with a pulse can tell you, life is filled situations that amount to versions of the Prisoner’s Dilemma where in your best strategy is often counter to your best interests. The long and short of the argument is that, inevitably, you’re choices suck and interpretations based on the results of your decisions hardly reflect the trade offs that are involved in the process of making that decision.
A good book and not all that long. Definitely recommended, if you’re interested in that sort of thing.
One of the reasons that Slee’s book interests me is its application to my chosen domain of software. One way to look at the Slee’s thesis is through the lens of the Innovator’s Dilemma. In the software industry, one sees this reflected in the idea that what a customer wants is more of what they’ve been buying in the past, only “better” – e.g. cheaper, faster, whatever… A decent way to understand this is the transition that took place in the transportation when the automobile came into fore. If you were had asked the customers of the horse drawn transportation (i.e. the “legacy” industry) what they wanted, the customers would have stated “faster horses”.
And so it goes in this industry we love so much. What do customers want? More Of The Same! Faster Horses™!
Given that I work in the legacy industry, I’m certainly understand that there’s a lot of stuff out there that is way over hyped and fizzles faster than it became fashionable. But this notion of basing your strategy on the revealed preferences of your customers, rather than understanding what their actual problems are, is something that definitely keeps me up at night. The idea that someone’s current investment reveals their preferences for the “way things are done” seems to be one that’s based on manifestly shaky ground.
And unlike – say – the auto industry, where the dinosaurs of the automotive industry were caught flat footed after years of ignoring all the warning signs, it’s fairly clear that changes in the more ephemeral industries such as ours – industries where changes can happen far more rapidly than the buying cycle of durable goods – can happen in a moment’s notice and fundamental changes in technology – such as the rise of the internet, for example – can completely catch dominate players flat footed and they find themselves in the “me, too” category of innovation. Playing catch up in the also ran category.
Or selling Horse Drawn Carriages in the age of Henry Ford.