MEDIOCRISTAN VS EXTREMISTAM 

The disruptive transistor

The makers of the big radios ignored this. They went on making what they’d always made. Sony wasn’t discouraged. It went on improving what it was making and, as the quality improved, so its sales grew. Billions of transistor radios were sold in the 1960s and 1970s. They changed the way people listened to the radio and left the established manufacturers wondering what had happened.

They were the very definition of a disruptive innovation: one that creates a new market and pushes established market leaders to the sidelines. And in the battle between the radios, Sony came from ‘Extremistan’, while the old established companies making big clunky machines inhabited ‘Mediocristan’.

Two worlds

Nassim Nicholas Taleb coined the names of these two worlds in his book, Black Swan. He sees Mediocristan representing ‘good operation’ in business. In Mediocristan, events are only mildly random, which means it isn't difficult to predict an outcome from what we see and know. And this in turn means we can plan and structure by building on our knowledge and experience. 

Extremistan is almost the opposite. There, there are no patterns. There is little structure. In Extremistan, predicting the future from past events is next to impossible because it is forever subject to the tyranny of the accident. 

Many companies are highly successful in Mediocristan (they are successful because they are good at what they do), but many of them struggle in Extremistan.

Enabling Extremistan

Writing about this, Taleb makes two observations. First, he says, a business should ‘seize any opportunity, or anything that looks like an opportunity'. The second is this: ‘Don’t be narrow-minded.’ 

He believes that businesses focused on Extremistan shouldn't expect to make small but steady progress every day, as they would with conventional operational activities. There will be no predictable Return on Investment. But, he also notes, such a focus doesn't mean working irregular, uneven hours. Without hard, concentrated work, there will be little to no chance of anyone making an unexpected discovery. 

Hard to handle

Taleb's Extremistan goes a long way to explaining why many companies find such a way of working so hard to handle. It doesn't follow the same rules as existing operations. It can't be measured and evaluated to ensure a good Return of Investment. Convincing potential shareholders – or even co-workers – to take part is next to impossible.

So, given all this, is there any way to ease the ‘pain’ such innovation can entail? Can we help and encourage companies to sustain an investment in Extremistan? I’d like to offer a few suggestions.

Enabling Extremistan

·       Consider a partnership. Dividing the work involved in researching a new product, standardizing a format, or nurturing a market will do two things. It will reduce your investment, and it will make use of the market reach of the other companies to increase the chances of success.

·       Be transparent. Provide detailed information about selection criteria and investment levels. This will clarify internal and external activities and encourage cooperation. 

·       Spread the word. Active communication with all media may result in direct, and indirect, financial benefits; for example, increased brand and share values. 

·       Step outside. Encourage work outside your current business framework. Looking at new possibilities will increase your chances of finding new business opportunities.

And you?

I consider activity in Extremistan a never-ending challenge for companies, and the   suggestions above are just four of my own ideas about how to respond to that challenge. I’m sure there are many, many more, which is why I’d very much like to hear from readers on this topic. How would you tackle Extremistan? Please write and let me know.