The nine principles for making better decisions regarding our choice of opportunities.
Art of War Quote:
"Your numbers determine your calculations.
Your calculations determine your decisions.
Your decisions determine your victory."
Sun Tzu's The Art of War 4:4:12-14
Perspective:
"Probability is expectation founded upon partial knowledge." George Boole
General Principle:
We must choose the least expensive opportunities that lead to the most rewarding positions.
Situation:
An opportunity is any opening that we have the resources to pursue, but it is a mistake to pursue every possible opportunity. Most openings are unlikely to offer real rewards. Sun Tzu's science is exploration, designed to increase our probability of success over time. We cannot be successful if we chase after every opening, going in one direction then in another. Our resources are limited. We can only do one thing at a time. Openings must lead to positions. We cannot afford to pursue positions that we are not likely to win. We also must not choose positions that are not likely to take us where we want to go.
Opportunity:
The key is identifying high-probability opportunities. These are opportunities that lead to positions that pay for themselves. This is the topic of all of the articles in this section of our Play Book. We have limited time and resources (3.1.1 Resource Limitations). We want to devote those resources to pursuing opportunities. Those opportunities must lead to positions that we can win. Those positions must be those that are the most likely to pay, both in the short term and long term (3.1.2 Strategic Profitability). While nothing can tell us the true potential of an opportunity before we explore it, we can compare opportunities by characteristics that have, in the past, proven to make a big difference in identifying those opportunities that lead to great positions.
Key Methods:
These ten keys define how we leverage probability to our advantage.
- To leverage probability, we must think both of opportunities and positions as stepping stones. Opportunities are openings to a position. Positions move us toward our goals. We must consider where each step leads before we take it. Pursuing any opportunities has costs. Only positions can return rewards. Using high probability opportunities determines how easily and inexpensively new, valuable positions are won, defended, and advanced (1.1 Position Paths).
- To leverage probability, we need only the ability to compare the general odds. Success doesn't require that we make perfect choices about our moves, but choosing the probabilities makes our success more certain over time. We can never know exactly where a specific opportunity will lead so we compare opportunities based upon how we see the probabilities involved. Only from these comparisons can we get a quick idea of the future potential profitability of exploring an opportunity (1.3.1 Competitive Comparison).
- Our probability of a successful move depends both on our starting point and destination. Successful moves improve our position. Our current position only makes certain opportunities available. Our choices in pursuing opportunities can either open or close doors for us. Both our current position and desired future position have different limitations that we must consider in making our moves. We want to move in directions that open us to more and better opportunities over time. (4.1 Limitations and Potential).
- To leverage probability, we must choose non-action when high-probability opportunities are unavailable. Though we talk in terms of choosing among opportunities, we always have the opportunity to choose not to pursue any current opening. When we choose non-action, we are conserving resources so we have them to pursue future opportunities (4.2 Choosing Non-Action).
- To leverage probability, we must work with rather than against the forces in our environment. We increase our chances of success if we leverage the forces in our current position and future positions. We must consider how these forces can work for or against us before we make our move (4.3 Ground Forms).
- To leverage probability, we must choose close opportunities instead of distant ones. Proximity is one of the primary keys in determining probability. How close we are to openings, both physically and psychologically, largely determines whether or not we are likely to succeed using a given opportunity to move forward. The closer a future opportunity is to our current position, the easier it is to win. Proximity is measured both in physical space and mental knowledge. In moving forward, we must as much as possible stick to what we know and understand (4.4 Strategic Distance).
- To leverage probability, we must judge opportunities based upon their appearances. We cannot know opportunities before we explore them but we can see certain surface conditions. Before we explore a position, we must consider its size, its barriers to entry, and how "sticky" it is. Size must match capability. Barriers of entry can be expensive to surmount, but they can also provide protection once they are surmounted. "Stickiness" is more complicated to judge, but it determines how easy it will be to move forward from a position (4.5 Opportunity Surfaces).
- To leverage probability, we must consider our internal weaknesses before moving to a new position. Internal weaknesses are weaknesses of command and methods. No judgments about future position can be made without also considering the capabilities of the person or organization seeking to fill that position. The characteristics of organizations and their leaders make them better suited for some positions than others (4.7 Competitive Weaknesses).
- To leverage probability, we must consider the long-term trends in selecting opportunities. Some directions are supported by long-term climate changes, others are not. We choose to pursue opportunities based not only upon their immediate rewards, but upon their future potential. Ideally, we want to move in directions that open us to more and better opportunities over time. Opportunities that we are likely to have pay off, both in the short term and long term (4.8 Climate Support).
Illustration:
Let us illustrate these principles by thinking about the challenges faced by salespeople in picking which prospects to pursue.
- To leverage probability, we must think both of opportunities and positions as stepping stones. We pursue the prospects that we are most likely to close and which lead us to move prospects and better prospects in the future.
- To leverage probability, we need only the ability to compare the general odds. As a salesperson, we cannot expect every prospect to buy, but we want to pursue only the prospects that are the most likely to buy. We can only know the most general characteristics about prospects before pursuing them so we have to compare them generally or as general groups to decide how to act.
- Our probability of a successful move depends both on our starting point and destination. Our most probable future customers are determined by who our current customers are. Our choice of the prospects we pursue determines both the size and quality of the customer base we work ourselves into. For example, if a car salesperson has sold some expensive luxury cars in the past, he can increase his focus on those customers in the future.
- To leverage probability, we must choose non-action when high-probability opportunities are unavailable. A salesperson cannot afford to choose every customer. Every low-probability, low-profit customer he wastes time on means less time for pursuing high-probability, high-profit customers.
- To leverage probability, we must work with rather than against the forces in our environment. If we go after customers who have high-turnover, we must work against the environment.
- To leverage probability, we must choose close opportunities instead of distant ones. We need to go after customers who are both physically and psychologically close to us.
- To leverage probability, we must judge opportunities based upon their appearances. A salesperson must consider the size of the prospect base, its ability to pay, and how likely it is to produce repeat customers.
- To leverage probability, we must consider our internal weaknesses before moving to a new position. A salesperson cannot pursue prospects who don't fit with either his temperament or his company's processes.
- To leverage probability, we must consider the long-term trends in selecting opportunities. A salesperson should sell to customers and markets that are growing rather than shrinking.