The Power of Rigorous Thinking

There are only two fields where it is legitimate to prove that something is true: law andmathematics. True scientific fields can legitimately prove that a categorical statement is not true, but should never attempt to prove a universal positive statement.

Nassim Nicholas Taleb discusses this at great length in his new book The Black Swan.

What is the point of science if it cannot be used to prove things? In The Structure of Scientific Revolutions, Thomas Kuhn argues that the entire concepts of proof and progress are problematic.

What is the point of thinking of things if we cannot prove that our ideas are true? Because ideas are useful. Science seeks not to prove things, but rather to build useful models.Models, such as the idea of the atom, are useful because they correctly predict observations. As we adopt new models and cast aside our old ones, the scope of observations we can predict increase. What matters is not the individual conclusions, but rather the method.

This is also true in the world of business. The received knowledge of market segments, product strategies, business models, etc can be limiting. If we apply some rigor to the problem, we may be able to tease out some insights that were not obvious before.

If we ignore our current assumptions and ask questions like:

  • Why do we group customers together the way we do currently?
  • Are there profitable segments hidden inside of submarkets or segment we have been serving more generically?
  • Could a particular product offering be split or combined with other offering to better address needs?
  • Is there a different distribution method that may be better suited to a submarket, promoting it to a full segment?
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Marketing Segmentation

A personal pet peeve of mine is that many people in the technology business do not have mastery of even the basics of marketing theory.

I still have not met a technology marketing person that could correctly tell me the difference between a segment and a submarket.

Here are my definitions of the two terms:

submarket: a distinct group of customers

market segment: a group of customers that may be addressed by the same marketing mix

marketing mix: an offering to the market composed of a product or service and its associated price, promotion methods, and method of distribution

Chart showing how to segment markets based on submarkets.

We start our market segmentation above by simply listing the different submarkets in columns. Any definition for submarkets are fine, as long as the members of each submarket are distinct from those in another. Next, we list the range of product or service attributes that we may want to offer. Then we populate the table by noting what attributes are applicable to each submarket. What we discover is that often certain product attributes are applicable to multiple submarkets! Submarkets that may be addressed in by the same product attributes are what we call segments. We can assign a name to a segment that encompasses each its submarkets.

Most often what happens is when I ask someone what a segment is, they recite a list of submarkets. When I ask them why those are segments versus submarkets, they say “everyone knows those are segments”. This can limit one’s thinking and prevent insights into the right marketing mix for the market.

I’ll discuss some ways to use segmentation to generate new ideas in later posts.

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Manifesto for Effective Communication

In the past few months I’ve adopted a radically different approach to communication than my peers in high tech marketing…

By definition, the approach most people take yields average results. The most popular techniques for doing things are those that yield some useful result with a minimum of effort. We all tend to sing or take snapshots or cook in a similar manner and achieve similar results. We can refine those techniques, but that just makes us better at being average. This makes us first tenor in the choir, helps us make eggs in the morning, or keeps us from crashing into things on our drive into work.

To go beyond the norm, you must take a radically different approach to the same problem.

That is why Ansel Adams prints are different from our summer snapshots, Mario Andretti drives differently from us, and why Whitney Houston isn’t in our church choir.

There are several drawbacks to taking the ‘differentiated approach’. The first is that by doing things very differently, we will achieve results that are either vastly better or vastly worse than the average person. Continue reading

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