How does Skin in the Game change in Wardley Domains?


#1

I’ve been thinking about how Talebs idea of Skin in the Game looks at different areas of the Wardley Maps.
Taleb suggests (for example in https://www.youtube.com/watch?v=uv6KLbkvua8) that young people "start a business’ where SITG is clearly the ability to make money with a Product, without rent seeking.

What might SITG look like in Genesis when there isn’t a product yet?

thanks
Mike


#2

The latest breaking smart newsletter is about this I think. How when inventing new things, if we make something that looks obvious, and it take a long time, you only get respect for the obvious path in hindsight - even though it never works this way.

In this sense you take the full effect of not inventing, but only the partial effects of inventing.

see https://us1.campaign-archive.com/?u=78cbbb7f2882629a5157fa593&id=078277e456


#3

I’m a young person (28) and the co-owner of a product startup. Our Genesis, or pre-product stage, definitely required SITG, but not in the way most people think.

We started in an auto body shop, and customers came in with rusty vehicles all the time. They couldn’t afford “proper” repairs, so they would ask for something cheaper I.E. inferior. The risk with offering a service like this is two-fold:
1: Risk damaging your reputation if people find out that you are performing substandard repairs
2: Risk damaging your bottom line if the customer comes back in a few years because the rust came back

The first one was the big one. Simply having the willingness to consider offering a non-standard repair was a risk, and the gateway to innovation.

So to answer your question, before the product comes to fruition, I think the risk (in some cases, maybe most) is in loss of reputation; the risk of being wrong or looking foolish.

People that want to sell their ideas (and avoid the hard part of prototyping and product/market fit) are side-stepping the risk of being wrong. They can just blame it on someone else if their idea isn’t successful. ( Side note: They’re also skirting the risk of lost time, which is another huge red flag. I’ve learned that ideas without action are worth very, very little. Someone that wants to outsource everything from day one is not someone I’d bet on).

This ties well with the Breaking Smart essay referenced in Mike’s comment. If our product had failed (it still could) we would have looked like hacks, but since it has kind of taken off you wouldn’t believe how many people have come to me and said “I thought of making that product years ago, I just never acted on it”.

The moral of the Breaking Smart essay, and the SITG tie-in, is this: While we should put ourselves in the position to get the full effects of our failures we must accept that we will never receive full credit for our successes, but this also means that others never fully understand our domain. What we fail to collect in social credits we retain in insight acumen which allows us to build a platform for future successes.


#4

In maps, there is no such thing as Skin in the Game. It is always the risk that you are willing to take in a particular initiative.

  1. In the Genesis phase, when you experiment, you assume you will loose everything. You have no customers and a foggy notion of a product. Potential benefits might come in a distant future. If you cannot afford that, you should not risk. Period.
  2. In the custom built phase - you have to find a large niche to have potential returns cover the risk.

In all those cases (and those more mature, too) you do not make an investment unless you can afford losing it. What is, however, quite rational, in Taleb story, is the fact that young people can afford spending more time doing risky projects.


#5

Hi,
Thanks for the example, and yes the risk to reputation seems very strong. I’m about to post maps of the University sector. Doing research, they are primarily in the genesis phase and their reputation can be quite poor in ‘real business’ because of this. And like Breaking Smart, the non linear paths to the discovery are not appreciated.

I hadn’t appreciated the amount that failure here could affect a businesses reputation as shown in your example.
thanks
Mike


#6

Hi Chris,
I can see how point 1. works from a economics point of view, and you need to protect against losing everything, but once you have a product that is on the path to industrialisation there is a timeframe before eventual entropic death. You may not need to innovate yourself if can can buy/licence innovation, but if that isn’t happening surely the future is (eventually) bleak?
ta
Mike