I Hated Blue Ocean Strategy -- I Blame Nicholas Nassim Taleb

Nicholas Nassim Taleb is the author of the book Antifragile, and he ruined the book Blue Ocean Strategy for me.? It’s really not fair.

Taleb can be equal parts pretentious, hilarious, and arrogant.? His writing seamlessly weaves the lessons he learned as a day trader, his philosophies on economics, life, and his love for wine and cheese.? There are parts of his book that I find very aggravating, like when he gives fitness advice.? I googled pictures of him.? He seems to be in fine shape, but I think if I want fitness advice, I’ll go to a fitness expert.

But some of his ideas are profound.? He explains them eloquently, even if it feels like he’s explaining them while staring down his nose at you.

And they might have totally ruined business books for me.? They ruined Blue Ocean Strategy.

This blog post is dedicated to explaining why I couldn’t get over it.? There might have been some good ideas in Blue Ocean Strategy.? But I had the same feeling as Indiana Jones in the “Temple of Doom” when he was served soup with eyeballs in them – once I saw the eyeball, I couldn’t get my appetite back.

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First – it starts with the preface

Taleb writes repeatedly about the tension between the practitioner and the professor.? He harkens to his experience as a trader.? A great many of them didn’t understand economics.? Some of them hardly understood what they were trading.? They acted with instinct.? Then, professors would follow them, study what they did, ascribe deep theories for how the traders had success and publish the research.? The professors would then declare themselves the thought leaders in the entire situation.? They were confused when future day traders didn’t learn their theories.

Taleb equates this phenomenon to a person standing on a ship with a compass.? Then when they call out which direction the ship is heading, they believe themselves to be guiding the ship.

I’ve heard this same idea formulated like this – how many autobiographies can you find from great entrepreneurs that were written while they were running their companies?? Not many.? They were busy running companies.

So how does Blue Ocean Strategy start?

“This is a book about friendship, about loyalty, about believing in one another…. We met twenty years ago in a classroom – one the professor, the other the student.”

This isn’t a book written by practitioners.? This is written by people that watched the practitioners.?

Another way to put this, Ray Dalio gives advice in his book Principles about which people you should listen to.? He says you should listen to the people that have done what you’re trying to do 3 times.

The authors of this book haven’t done it.

Second – They use bad examples.? Many of the businesses they cite are out of business, were disrupted, couldn’t roll out their product, or were just questionable.

The authors used examples that were supposed to be success stories.? I didn’t think they were successes.

They discussed a housing company.? Their model was perfect, except that it went out of business in 2008.

?A piece of technology that was beautiful.? Until the Iphone came out.

The F35 is a terrific piece of modelling, identifying needs between different armed forces agencies, that created a totally new and unique product.? The only problem is they didn’t execute on it well.?

And to me, the most egregious example, it cites Police Chief William Bratton of New York City as an example of innovation to reduce crime in New York City.? Police Chief Bratton is the individual responsible for “Stop and Frisk” policies in the city – questionable from a civil rights perspective.

If this strategy was so good, why aren’t these companies staying in business?? Why are the authors highlighting individuals with a debatable civil rights record and making no mention of it?

Taleb makes an observation in Antifragile – “if you want to know what will be in business 1,000 years from now, take a look at what has been in existence for 1,000 years.”

If these business models didn’t work in the past, it’s very likely they won’t work long into the future.? That’s not to say that we shouldn’t try to innovate.? But innovation is only interesting if the idea lasts over the long term.

Innovation that doesn’t work over the long term are pet rocks and Giga pets.? If you don’t know what a Giga pet is, look it up.

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Third – It glorifies corporate strategy over entrepreneurial intuition and action

Taleb explains a couple ideas in Antifragile regarding the fragility in economic systems.? He is particularly critical of large companies.?

First economic systems that reward people without accountability are inherently fragile.? For example, creating a system that rewards lawmakers, or corporate leaders with no economic connection to their action, will create a system that rewards people for taking unnecessary risks with other people’s money.? Those rewards should be given to the people that do the work and take the risks.

Secondly, he says corporate strategy is almost worthless because the future is unknowable.

Then I came across this phrase in Blue Ocean Strategy.

“Despite this appetite for change, however, scant work exists on building a viable alternative to existing strategic planning, which is the most essential management task in the sense that almost every company in the world not only does it but often takes several grueling months each year to complete the exercise.” P.141

It then occurs to me that the purpose of this book is to enable the leaders of large corporations with no skin in the game. These people probably have very little interaction with customers.? They are involved in this activity of telling other people to do without actually doing any work, and they are spending several months a year doing it.

My note in the book – “I think this would make Taleb spit up his wine and cheese.”

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Conclusion:

Take my words with a grain of salt.? I’m an insurance producer.? I eat what I kill.? The success of my days are built off of dealing with constant rejection.? But they are also built around small innovations.?

I identify a source of information that can help me improve my lead information by the tiniest bit.

I identify and use technology that will help me communicate with clients more effectively, and I save a couple minutes at a time.

I sense that there is less competition in a marketplace based on who I’m competing against.? The constant interaction with customers informs my intuition.

I’m biased because it’s what I do every day. ?And I also see it in the difference between great insurance producers and average ones.

The great ones take action every day.? They don’t draw pictures about it.? They do write their long-term plans, but it’s not an extended process.? They use their intuition to sense problems, and they work relentlessly to solve their customer’s problems.

Perhaps I would have always felt this way about Blue Ocean Strategy.? Maybe Taleb just helped me see the eyeballs in the soup.

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