#6 Niche? Not For Me
Riches Are In The Niches. Maybe.
I went on a mini-crusade earlier this month throwing stones. Mostly at experts and specialists. I made an article comprised of two emails I sent two days in a row. I also added a few great questions that come in as replies and responses.
Niching down is often a faster path to cash. Below is the excerpt about niching and why I prefer not to.
EMAIL 1: THE EXPERT AND THEIR DOWNFALL
Remember when the heart was the center of heat? Or when the sun revolved around the earth. At one point Dr. Semmelweis was kicked out of the medical community for suggesting that surgeons should wash their hands before delivering babies. We’ve been (tragically) laughing at our past institutions for centuries.
Maybe we shouldn't be so quick to enshrine the present ones.
Yes, science has come a long way. It’s not “science” that’s flawed, it’s the fact that it must be performed by scientists - which are still all too human. Thus, another email examining the idea of reliance on “experts”.
Far too often markets collapse, ad campaigns lose money, funnels flop, and in many cases, people die and the “experts” say: “This is a once a ten million event. Ten-sigma. Black Swan. Etc etc”
Think about this for a moment. Someone saying something like “this is once in a ten million or ten-sigma event” implies one of two things. Either:
a) They know exactly what they are talking about with near perfection and complete understanding of every single detail and dynamic complexity/moving piece. Meaning that before it happened he was aware that this exact scenario was a one in several million probability of happening and knew exactly what would happen…
Or
b) Doesn’t know what he is talking about or understand probabilities very well and that the probability of this event is actually pretty likely in the grand scheme of things.
Think about the “experts” that don’t deliver what they promise and decide which of these two explanations is more plausible.
Experts know a lot of stuff, but tend to be terrible learners. Why?
Because “experts” have been trained to be smart - to be right - and to defend, not question, their position. The most important trait necessary to learn is often beaten out of them:
Intellectual security.
When an expert makes a mistake you would think they would develop a new reasoning method that incorporates what has been learned so they can be more effective next time around.
But humans gonna human.
Because they don’t have the intellectual security to be okay with being wrong, they spend their energy and use their intellect (which is high) defending their position and their decision. It’s difficult for their ego to make changes, or get better. They’d probably be helping more people making more moolah if they were okay being wrong.
The reason I will NEVER identify as an expert is because I know that I am fallible. We all are. But only in having the intellectual security to acknowledge it does it become an advantage. So why is it so hard for experts to see this fallibility in themselves?
Enter the attribution bias.
When we are told that our value is in being right and defending our right-ness then we default to crediting all the good things that happen to our superior skill and all failure to randomness.
Oh, the handicap of needing to be right.
This is nothing new. The first account I was able to find is Meehl’s study in 1954 - comparing perceived abilities to objective record. Although I’m sure if I dug deeper this would pop up FAR earlier in history.
Here’s the problem. If everything good that happens is confirmation of our genius and everything bad that happens is luck or randomness, not only have we stopped learning....
But we also become VERY dangerous when coaching, consulting or prescribing stuff to others.
Science is good. Rigor is good. Expertise (being highly skilled) is good.
Scientists and experts are sketchy, because they are still human.
As long as defending a position and proving “smartness” is more important than discovering the truth…
As long as all successes are attributed to genius and all failures to randomness (like the fb algorithm, platform change, mindset or whatever)…
And as long as being “right” is more important than being helpful...
We must not leave our lives in the hands of “experts”. That is to say: we need them, most of them are brilliant. We must also develop the ability to discern when they are blinded by their own expertise and lack of intellectual security.
This is not an argument against hiring experts. It’s an argument to NOT abdicate responsibility to them.
Nic
EMAIL 2: TO NICHE OR NOT TO NICHE? FINAL VERDICT
If I’ve heard it once, I’ve heard it a million times: “The riches are in the niches”. And while it’s not wrong, it’s incomplete and misleading.
Coaches want you to niche down because you will likely find success much faster if you do. Remember the “teacher” problem? They want you to have quick wins because they get credit for being good coaches. Here’s what they don’t tell you (mostly because they don’t know better):
Niching down early is one of the biggest handicaps to long-term success.
Why? Because when people niche down they think in domains instead of causal structures.
For example, let’s look at some real-world phenomena**:
The act of sweating
the steps necessary for neurotransmission (the brain sending signals)
Melting polar ice caps
Economic bubbles
Actions of the federal reserve
Increased gas prices lead to an increase in grocery prices
Etc, etc
Less effective problem solvers will group them by domain like this:
Biology Problems:
The act of sweating
The steps necessary for neurotransmission (the brain sending signals)
Economic Problems:
Actions of the federal reserve
Economic bubbles
Increased gas prices led to an increase in grocery prices
This is “niched down” thinking. It's the byproduct of labeling real-world phenomena with superficial features like the domain.
More effective problem solvers do not solve problems by domain or niche. Instead, they reason from core concepts and causal structures like this:
Positive Feedback Loops:
Melting polar ice caps. When ice caps melt they reflect less sunlight back into space, which warms the planet causing more ice to melt.
Economic Bubbles. Investors buy more believing the value will increase. As a result the value increases which leads to more buying.
Negative Feedback Loops:
The act of sweating. Sweating cools the body so sweating is no longer necessary.
Actions of the federal reserve. The Fed lowers interest rates to stimulate the economy. If the economy grows too quickly it raises rates to slow down growth.
Causal Chains:
Gas prices leading to grocery price changes
The steps necessary for effective neurotransmission
**Example from the book Range by David Epstein
Successful problem solvers are more able to determine the deep structure.
In other words:
Niched-down thinkers are poorer problem solvers.
World-class problem solvers have a much broader understanding of many domains. More importantly, they recognize and understand the core concepts that drive them.
If you want to get ahead in the short term and fall behind later: niche down hard.
If you want to get ahead later and are willing to go a little slower now, do not niche down.
The world is changing. The ability to solve the problems of tomorrow is the ultimate hedge. I am not a fan of niching down because I bias problem-solving ability over expedient wins. That's my personal preference. If you feel differently, that's okay. I still hope you win, win big and it's sustainable.
Nic
Email series/FAQ That Followed:
Q: I've got a question formulating in my head, but not exactly sure how to ask it... It's roughly along the lines of... When do you focus on going 'deeper,' and when do you focus on going 'wider?'
A: It depends. (You had to know that was going to be my answer). I’ll do my best to lay out my personal thought process here. Imagine dozens of parallel trenches. In quest of innovation, everyone is digging deeper into their own trench - failing to stand up and look at or visit the next trench over, even though the solutions to many of their problems probably reside there.
If the solution does not exist in your current domain and it’s not obvious with your current paradigm, it would be wise, to stand up and look over at other domains that have similar causal structures.
Here’s an example: At the last Certainty Summit, Dan Nicholson broke down how he has been able to solve the problem midsize firms and consultancies like his haven’t been able to solve:
How To Scale A Consulting Practice.
He found the solution in construction. More specifically, construction of new homes. Architects and engineers have developed a model that allows the architects to draw up a plan with the client, pass the blueprints on to the engineers and allow for the ongoing adjustments that the client or engineer may make in the middle of the construction process.
By peeking over at someone else’s “trench,” Dan was able to immediately identify and implement a solution to an industry problem.
Q: Is there a situation where you get diminished returns after a certain point? Going either direction? [Deeper or Wider]
A: Great question. And yet again: it depends. Remember, I am operating under the assumption that you are purpose driven; there is something that you are trying to achieve, your version of your ideal life.
If that assumption is true, then the underlying question is, as Randy Massengale would say, “What effect are you trying to cause?”
Could I go deeper into fitness? Sure. But there is nothing more I could know that I would be able to apply to get me closer to what I want. So, if every decision is supposed to get us closer to what we want, then going deeper into fitness, nutrition or biology would produce diminishing returns for me.
I cannot name every muscle in the body, but if I could, would it close the gap between where I am in life and where I want to be? For me, the answer is no.
Again, if the measurement is, “closing the gap between where I am and where I want to be,” the returns on going deeper become diminished as the ability to practically apply the knowledge diminishes. If the measurement is something other than “closing the gap,” the answer would be different.
Q. I think of it in terms of "practical application.” The less you can actually apply to your life to get closer to what you want, the more diminished the returns (in real life).......wanted to understand this better or how it applies to me of course.......so if you aren't applying to close the gap in your personal life......your returns are diminished?
That is what I am suggesting. But, just to be extra clear: I am operating with the underlying assumption that the “returns” are being measured by closing the gap between your current position and desired destination.
Keep in mind, diminished returns are still returns. We just have to keep the trade-off top of mind. There is a difference, in my opinion, between doing things that yield “big returns” and doing things that yield returns that matter to you.
This is why the “Profit Priorities” piece of the Certainty process is so important. We don’t know whether to go wider, go deeper or how to measure returns properly if we don’t have clarity on the current destination or the desired location.
To be clear, I do believe niching down has benefits and it great for many.
I bias learning, and I learn more by playing in multiple domains and looking for casual patterns. It is my belief that being able to solve problems is the ultimate hedge in a rapidly changing world.
If you are niched down, I hope you CRUSH it and stay receptive to new ideas and information. It will give you an advantage over the rest of your industry.
Onward.
Nic