What Works: The Economics of Good Enough

goodenough

It’s been a while since I wrote one of my Om Says newsletters. The fact is that I got hit by a massive writer’s block — the first one in a long time, brought on by various things I have been juggling on the non-writing front. Last week, for example, we raised new money to keep expanding our business, especially our rapidly-growing GigaOM Pro research service. . Anyway, it is good to be focusing on writing again.

Last week, when sifting through my daily readings, I found myself reading a post by Adam Singolda, the founder and CEO of a New York-based video recommendation company, Taboola. Singolda had started the company after spending seven years in the Israeli Army. In his article (and a presentation he gave to students at MIT’s Sloan School of Business) he talks about The Economics of Good Enough as a business mantra and the lessons he learned from taking that approach. Those lessons boil down to this:

  • Succeed with what you have.
  • Failing is a part of the process, not the end of it
  • Golden moments don’t exist. “Just do it”
  • Creativity. New world requires new tools
  • Networking. Not as rolodex but to create opportunities.

What many don’t realize is that today’s always-on economy has an entirely new dynamic that involves an always-on, anywhere customer, unpredictable demand, and — most importantly — the limited attention span of customers. Add fierce competition to the mix, and what you have is an unpredictable and highly chaotic marketplace. And what that means is that today’s company – regardless of their business focus — has to have a much higher metabolic rate. It grows faster, and fails even faster. Against such a backdrop, one needs to break down one’s business into many small chunks.

“I constantly manage challenges and crises on an 80/20 rule [also known as the Pareto Principle], asking people to get to something, and then to make it work rather than analyze the entire task and then get going, (i.e. the economy of good enough) if it makes sense,” Singolda explained to me in an email later. Now, none of this is that new — except that these guiding principles dovetail nicely with today’s network-driven economic realities.

As an entrepreneur, I can totally relate to Adam’s lessons. In five years of building GigaOM, one of the biggest lessons has been embracing the idea that sometimes things don’t work out as planned and it is okay to move forward. Adam, in his MediaPost column, writes:

Most of us by nature are tuned to plan “the win,” how to behave when winning, how to defend our business when we are there, market size analysis to make sure it’s a billion dollar market, etc. However, in the “economy of good enough,” we are likely to have many little failures and unknowns as an organization and it’s much more important to get ready to the next failure instead of the next win. Statistically it will happen much more. By doing that, you’re building a culture that embraces trying, data collecting, and optimizing.

As I often say, start-ups are a marathon interspersed with 100-meter dashes. One of my fatal character flaws is that I only believe in running at full speed. I don’t know how to pace myself, moving always in the top gear. Well, that kind of drive can sometimes be fatal, especially if you are out of shape and have a whole score of bad habits. I think we as founders of companies sometimes forget that running full tilt can basically get in the way of differentiating things of minor consequence and those that are vital to the future of company.

Even today, despite learning and adapting, it remains a constant challenge. Another personal challenge has been becoming more decisive and learning to live with decisions. So when Adam says there are no golden moments, I kinda know what he means — startups don’t have the luxury to procrastinate over decisions for too long. The faster the decision-making process, the faster you move. And even if you make a bad choice, one needs to be able to quickly modify.

PS: If you want to share the lessons you have learned as an entrepreneur, drop me a note at omsays at gigaom dot com.

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