'Local Maxima' - A key concept behind missed opportunity

Last year I had the opportunity to spend time at the CKO of 'Great Question', a UX research workflow solution, where I was reintroduced to 'local maxima' as a concept. The CEO was reminding everyone not to get constrained by this troublesome phenomena and neither should you.

I was first introduced to this concept in the 90's in relation to strategic thinking (and learned it was borrowed from mathematics) - It encapsulates the danger of settling for what seems to be the optimal solution within a familiar context, while inadvertently overlooking superior alternatives. Some examples to illustrate:

In sales: If a quota was $1.5M last year, which came from selling a few $300K deals, then a reasonable expectation for this year might be $1.5-$1.8. This seems reasonable because we are assuming that the history of selling $300K deals into the territory is some sort of limit (local maxima). I remember that when I joined Salesforce back in the day, very few people would sell the 'Premium support' offering (20% $ uplift) because they thought that SaaS should be easy/breezy and customers would balk at the price.... Enter Gavin from Oracle/Avaya who started selling it on day 1 because he didn't know any better.

It was Gavin who also started selling $20M deals rather than $300K deals because he was immune to the local maxima mindset.

In product: The U.S. Department of Defense (DOD) provides a compelling case study with its 'Cost Plus' contracting mandate. This model, which reimburses contractors for all legitimate costs incurred plus a guaranteed profit, inadvertently fosters a local maxima problem. It creates a financial incentive for contractors to prioritize cost accrual over efficiency and innovation. Contrast this with SpaceX's approach, highlighted by the development of reusable rockets. SpaceX's success underscores the limitations of the 'Cost Plus' model, as the company's focus on technological innovation and efficiency has drastically reduced the cost of space travel, challenging the traditional cost structures and practices upheld by NASA and its contractors.

Don't let local maxima hold you back

Whether you are a job-seeker who doesn't try for a role because you have never earned that much before or a salesperson who is considering how to maximize the value of an account, local maxima is your enemy. Here are some things that can help you have a 'Space-X' outcome this year:

• Seek out and value diverse opinions and backgrounds. Different perspectives can challenge entrenched thinking and provide insights that lead to breakthrough innovations.
• Pay attention to the fact that unless we are talking about the natural laws of physics, boundaries and rules are arbitrary.
• Questioning the status quo and being willing to look at problems from new angles can uncover opportunities previously unseen (Inviting the diverse perspectives above is helpful here). I like to ask, "Why is it done that way and who decided it is 'the way'."

My first deal at Salesforce was for a contract of 2 years, annual in advance payments, when the norm was 1-year contracts on quarterly payment terms. I just didn't know the local maxima! Make 2024 the year that you break out!