Published in the San Diego Union-Tribune, March 7, 2022
by Neil Senturia
The Innovator’s Dilemma is a well-known problem. It is the classic work of Harvard professor Clay Christensen. He describes how large incumbent companies lose market share by “listening to their customers and providing what appears to be highest-value products for them.”
But what happens is that new companies come along to serve the “low-value” customers, the ones being ignored by the incumbent, and then over time, the little guy moves up market, improves the technology and the product and finally eats the big guy’s lunch by providing a better product at a lower cost.
At a recent lunch, I was challenged by a young woman with what I will call The Entrepreneur’s Dilemma. Ms. Jones (not her real name) has a startup, and she is active in a variety of incubators and entrepreneur programs. Each program has mentors and advisers. She says to me, “I get conflicting advice from various advisers and I don’t know whom to listen to.”
This problem is interesting because it is widespread. How do you know who is giving you the “right” advice? I do not have a simple answer. Nor do I think Siri or Alexa do either. It is a complicated problem.
Think about health care. Whether it is a cardiologist or a spine surgeon or a psychiatrist, it appears that you are basically left with the luck of the draw. A story in the Wall Street Journal, by Emily Bobrow, quotes Dr. Thomas Insel, National Institutes of Health: “Given that there are no official standards for treatment (referring to mental health), the care you get depends on the door you knock on.” Doctors are not held accountable for their results. The payment model is set so that providers are paid when patients are in treatment, not when they get well.
One guy operates on your back and in six weeks you go out and run a marathon, while a different surgeon does a treatment, and you end up in a wheelchair.
A new client comes to see me recently, he has a problem. By the way, no one comes to see me unless they have a problem. My clients are in search of a black hat, a fixer, a la Ray Donovan, without a gun. In this case the puzzle involves some high-interest debt that is coming due shortly, the kind that comes with a break-your-kneecaps clause.
He needs some advice. And in situations like that, you don’t have time to get three bids. How does he know what the best outcome is? In other words, how does he know whether the advice I am giving is any good? Every incubator program tells the entrepreneur to get a mentor, but the vetting process for a mentor is not well documented. Think of your board of directors or your board of advisers. How did you pick them? Did they add substantive value, do you still need each of them, and how will you politely tell them when their services are no longer needed?
If you watch the evening news, when the advertisements come on for some drug, the voice-over tells you that it might work for you, but it could also kill you, it has 29 side effects, but “call your doctor,” and then the final image is a couple walking in a field of flowers.
Whoa, OK, first, what are the chances your doctor calls you back? Second, if he does, are you planning to tell him about this drug that you saw on television, and it is perfect for your disease, except that the warnings are so draconian, you might die if you open the bottle, and then you “ask your doctor,” as if perhaps you assume the fellow never went to medical school?
Do you really think the doctor needs a recommendation from the patient? Maybe you’re thinking he doesn’t have a television? Still, the ads must work, because they are pervasive every evening.
Who do you listen to, what can you believe, where do you find trust? Is the world upside down and totally random? Are we left with nothing more than the luck of the draw?
And as to the high-interest debt problem. Well, I know a guy who knows a guy. (And he’s not a doctor).
Rule No. 703:
You can’t tell the players without a scorecard.