Technology Strategy - Do Your Experts Know What They Don't Know?

Knowing what is unknown sounds like a Zen koan, and perhaps it is. We admit that competitive technologies strategic blindness may be a difficult concept to grasp, but solving this riddle may mean the difference between success and failure for your company.

Blindness, in the sense of not knowing what we dont know, is a root cause of serious defects in the strategic competitive intelligence gathering process: defects such as not choosing a broad enough set of search strategies, not selecting the relevant cross-over subject areas, or missing the extreme ends.

The costs of under-sampling, overlooking or misinterpreting key competitive technological intelligence can be huge.

Consider the fact that only about 75 companies from the 1960s S&P 500 are still in existence. What happened to the other 425? Could competitive intelligence blindness have played a part?

One problem is that blindness costs are often hidden. It is difficult to measure revenues that are not earned because a product lacks certain competitive features, key features that might have been added had the technologies intelligence gathering phase been more wide ranging.

However, the competitive blindness costs of patent infringement penalty payments, and cease and desist orders are more visible. These can be measured as huge, often in hundreds of millions of dollars.

In many such IP infringement cases, the losing party will claim surprise that the competitor is bringing a claim. This may or may not be a courtroom tactic.

It has been our experience in working with many technologies companies that often the organizations technology landscape scenarios are too narrowly scoped, and they are truly dumbfounded to find that they were transgressing. This is particularly the case when the intellectual property in question was developed in an industry different from their own.

If we wanted to make it simple, we could say that the fixable causes of competitive technology strategy blindness might be due to lack of attention, or might result from time and money saving decisions made at some point.

But if we delve a little more deeply into the Zen-like nature of strategic technologies blindness, we learn that it can often be caused by too much knowing.

It turns out that blindness is largely built in to any expert scoping process -- due to inherent under-scoping biases of the human mind. In other words, the experts think they have a good sense of what sufficiently broad sampling boundaries are needed to draw conclusions with a 98% degree of confidence.

The experts are wrong, says Nassim Taleb in The Black Swan.

Taleb cites Philip Tetlocks study of twenty seven thousand predictions by experts, experts who believed their predictions were narrowly bounded. The results of the study didnt back them up; the error rates were many times what these experts had predicted. Interestingly, Tetlock found no differential advantage between those experts holding graduate degrees versus those with undergraduate degrees.

Taleb also offers studies by Albert and Raiffa to further open our minds to the blindness conundrum. The experts they studied said they had scoped their datasets to have 98% confidence of completeness, This means they their intended error rate to be bounded at 2%. However, it turned out they were off by 15-30%.

Albert and Raiffa then tested their Harvard MBA students. These non-experts under-estimated sufficient dataset scope by a whopping 45%. Taleb frames these percentages as
the difference between what people actually know and how much they think they know.

The belief that data scoping encompasses 98% of the relevant set, when it is more likely embraces only 70-85%, has a serious impact on the range of possibilities considered at the very beginning of the entire intelligence gathering process. It potentially leaves too many possibilities unconsidered and also confers a degree of confidence in the risk profile of the final product commercialization strategy that is unwarranted.

How big might this under-scoping error be in your organization? What are the implications of this blindness if your business strategy is centered around disruptive technologies or blue oceans or predicting revenues from the execution of open innovation technology transfer?

To formulate a winning technology innovation strategy, a sufficiently broad competitive intelligence scan of technology options is essential to illuminate potential breakthrough opportunities, as well as to expose potentially devastating hidden risks.

Leading companies have processes and visualization tools in place to mitigate this proven expert blindness problem.

They do this by increasing the scope of their global technologies landscape search process massively in the first instance, followed by including varied insights gained through cross-functional collaborative validation of the data. This collaborative vetting of broadly open options and possibilities happens at the very beginning, and continuously throughout, the product strategy development process.

Understanding the expert bias toward blindness is key to adequately scoping and validating competitive technologies intelligence, and questioning others assumptions. Going out of bounds to look for cross-over ideas that will surprise competitors is a worthwhile ongoing strategic business pursuit.

Knowing more of what is unknown is becoming a continuously improving core competency within organizations that are focused on sustaining significant competitive success in the marketplace.

Greg Narog, Oval Ideas, Inc.

Oval Ideas is a provider of software tools and methods to technologies products based companies, helping them visualize and validate global technology innovation and product strategies in a market context. http://www.ovalideas.com/rdtechstrategy.html

Knowing beats guessing.

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