Weekly Learning: Growth Strategy, Design Quality, and Don Norman

Blitzscaling

In The fundamental problem with Silicon Valley’s favorite growth strategy, Tim O’Reilly sharply points out:

Blitzscaling isn’t really a recipe for success but rather survivorship bias masquerading as a strategy.

Specifically:

…investors, awash in cheap capital, anointed the winners rather than letting the market decide who should succeed and who should fail.

But:

…for every company like Paypal that pulled off that feat of hypergrowth without knowing where the money would come from, there is a dotcom graveyard of hundreds or thousands of companies that never figured it out.

Sure, not everything about it is bad:

The strategic use of blitzscaling isn’t limited to startups. It can also apply to large companies, governments, and even nonprofits.

And sometimes the end is rather confused:

…why is blitzscaling relevant to us? It’s not about making millions and snuffing out the competition—as in many of the most compelling cases for blitzscaling, it’s about building enough momentum to break through the stone walls of an old established order.

The author’s own business is exemplary of a different way of looking:

Emulating the tortoise, not the hare, has been our goal. We’ve always preferred opportunities where time is an ally, not an enemy.

The survivorship bias gives us the wrong impression about blitzscaling:

Venture-backed blitzscaling was far less important to their success than product and business-model innovation, brilliant execution, and relentless strategic focus. Hypergrowth was the result rather than the cause of these companies’ success.

The trend is worrying:

…what is happening today is that the market has almost entirely turned into a betting machine. Not only that, it’s a machine for betting on a horse race in which it’s possible to cash your winning ticket long before the race has actually finished.

The mentality is the issue here:

Too many of the companies likely to follow [the blitzscaling] advice are actually financial instruments instead of businesses, designed by and for speculators. The monetization of the company is sought not via the traditional means of accumulated earnings and the value of a continuing business projecting those earnings into the future, but via the exit, that holy grail of today’s Silicon Valley.

Specifically:

The horse-race investment mentality has a terrible side effect: Companies that are not contenders to win, place, or show are starved of investment. Funding dries up, and companies that could have built a sustainable niche if they’d grown organically go out of business instead. “Go big or go home” results in many companies that once would have been members of a thriving business ecosystem indeed going home.

And there are greater risks:

The losses from the blitzscaling mentality are felt not just by entrepreneurs but by society more broadly. When the traditional venture-capital wisdom is to shutter companies that aren’t achieving hypergrowth, businesses that would once have made meaningful contributions to our economy are not funded, or are starved of further investment once it is clear that they no longer have a hope of becoming a home run.

The fundamental problem:

The problem with the blitzscaling mentality is that a corporate DNA of perpetual, rivalrous, winner-takes-all growth is fundamentally incompatible with the responsibilities of a platform. Too often, once its hyper-growth period slows, the platform begins to compete with its suppliers and its customers.

Hopefully, there is a different way:

Winners-take-all is an investment philosophy perfectly suited for our age of inequality and economic fragility, where a few get enormously rich, and the rest get nothing. In a balanced economy, there are opportunities for success at all scales, from the very small, through successful mid-size companies, to the great platforms.

Quality of Design in Organizations

What is “good design,” anyway? It’s crucial for design orgs to define quality. introduces eight components for establishing design quality in organizations:

  • Usability heuristics
  • Brand personality characteristics
  • Experience principles
  • Design guidelines / design system
  • Inclusive design and accessibility practices
  • Measures of success
  • Explained exemplars of quality work
  • Mature and inclusive critique practices

Bookmark it for your own good.

The Future of Design Education

If you have any interest in knowing more about the topic, it’s better to hear it from Don Norman.

The Design of Future Things

I always feel that Don Norman’s The Design of Future Things is an underrated book.

Maybe you don’t have to read it, but at least hear him out.

Living with Complexity

Perhaps Don Norman is mostly associated with his legendary book The Design of Everyday Things.

But my favourite Don Norman book is Living with Complexity:

If only today’s technology were simpler! It’s the universal lament, but it’s wrong. We don’t want simplicity. Simple tools are not up to the task. The world is complex; our tools need to match that complexity. Simplicity turns out to be more complex than we thought. In this provocative and informative book, Don Norman writes that the complexity of our technology must mirror the complexity and richness of our lives. It’s not complexity that’s the problem, it’s bad design. Bad design complicates things unnecessarily and confuses us. Good design can tame complexity.

And critically:

Complexity is good. Simplicity is misleading. The good life is complex, rich, and rewarding—but only if it is understandable, sensible, and meaningful.

I highly recommend you read the book, or at least hear him talking about it.

Anatomy of an AI System

If this is not pure awesomeness, then I don’t know what is.

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