Making your own luck

The conclusion reached in the last section is somewhat perturbing. It's not only that the obvious first step in creating a business strategy has been eliminated, the even greater problem is that it leaves us with a bottomless pit of all the other less probable approaches to investigate. It is this kind of quandary that brings to an abrupt halt any progress towards creating a business. This problem is illustrated by the following dialogue:

I would like to set up my own business and make money for myself.

You'll need to have the right mental approach.

I have the right approach. I have spent quite a bit of time working in various business offices making money for other people. In fact I am quite experienced.

It doesn't matter how experienced you are at working in an office. People who work for someone else cannot conceptualise the world in the same way as people who work for themselves.

I don't see why?

If you work for someone else, employed to make money for them, there are always implied or specific goals.

I'm quite good at setting my own goals.

Ah! But when you work for yourself you are fully in control of your own life. This means quite literally that you can do absolutely anything you like.

How is that a problem?

It is very hard for people who don't have this problem to realise what a problem it is. The brain cannot cope with overchoice and simply refuses to perform rationally when there are too many options available. Just think, if you could do anything, have unlimited choice be able to choose from amongst an infinite number of possibilities, what would you choose to do?

But I am perfectly capable of deciding what to do and what not to do and also working out what I want and what I do not want.

Then why not just go out and start your own business then?

This dialogue encapsulates the crux of the problem most people have in trying to choose an appropriate niche in the world of e-business. There is so much choice, there are so many possible ways to set up in business. How do you choose between the vast number of possibilities and how do you allow for the fact that there are many other possibilities that might be ideal for you but of which you are completely unaware ?

Game Theory suggests you don't try to solve for this problem. You leave the problem to solve itself: through random events and luck. However, the kind of luck used in Game Theory is the luck you make for yourself by employing a suitable strategy. This can be explained with the aid of another dialogue:

How do you get into a money making business?

It just happens.

You mean it's luck?

In a way it is, but, luck is something that happens only in the present.

To make money, you have to be concerned about what the future is going to bring and arrange things so that luck is on your side.

Can you influence luck?

Of course you can.

How do you do that?

Simply by creating favourable odds for something good to happen.

How do you go about doing that?

Well, you have to go out and about to find out what is going on in the world, meeting different people so that you are exposed to as much information, chances and situations as possible.

This improves your luck?

Of course it does. You are arranging the conditions to allow many opportunities to occur. From a sea of information, waves of opportunity appear.

How do you take advantage of these waves of opportunity?

Try to think of yourself as a surfer. Surfers have to rely on catching the big waves that occur erratically and unpredictably in a sea full of little waves. Surfers don't rely on luck to catch the right waves: they go to the right beaches and wait at the right places on those beaches where they figure it most probable that big waves are likely to occur. In this way, a surfer uses a strategy to make it more likely to be in just the right place at the right time.

I see, in the same way that a big wave turns up for a surfer, the right situation can come along for me if I get out and about to expose myself to the right sort of people and take part in suitable events and activities?

That's right, you just have to be ready to seize the opportunity when it comes along.

But you cannot be certain of succeeding when an opportunity comes along.

You are missing the point. Events are happening all the time you don't have to rely on any particular opportunity. A surfer doesn't pack up and go home if he misses a wave, he simply waits for another to come along and tries that. You have to think of yourself as being like the surfer: when an opportunity comes along you can take it or leave it and if you take it and it does not work out you are not finished. You are still free to wait for another opportunity and take another chance; if necessary, you can wait for another and another and another until an opportunity turns into a profitable reality.

Is that what you mean by making your own luck?

Yes, because when a suitable opportunity does eventually come along and you do make money - perhaps after many failed efforts - someone is bound to tell you how lucky you were to have been in just the right place at just the right time.

This mental model describes a typical Game Theory approach to solving the kind of problem we have here in trying to find a suitable e-business niche (or a number of niches). A blind approach that waits for something to come long. The trick is to be able to continuously monitor and observe all the unfolding events so that you can measure each of them against a set of heuristic rules. These rules will eliminate the unsuitable and highlight the suitable. This process can be used to recognise a number of different possible solutions.

It is not an intuitive approach. It doesn't seem sensible to embark upon a blind venture into e-business without any clear idea in your mind as to what business you would like to be in. But, it is an inverse form of twenty questions, where you know what all the questions are and you measure all the objects you come across to see if they are a match for the questions. A suitably fuzzy set of questions will allow a range of solutions.

If business possibilities are found in this way, you can find several of them so that you are not dependent upon any particular one succeeding. This subtly changes the scenario of the man with six options in chapter 3. He doesn't start with six business plans or ideas: he puts himself in a position to recognise six possibilities as they emerge out of the information environment he places himself in.

With a little thought, it becomes obvious that this is a better strategy because any predetermined idea is going to take some time to investigate. Plans have to be made, market research has to be carried out; suitable skill sets have to be acquired or hired. All this uses up time and resources, greatly limiting the number of opportunities that can be investigated. Using the technique of recognising emerging ideas as they arise, much of this preparatory work will already have been done.

Game theory then, is about using a suitable strategy to be in the right place at the right time and to have an appropriate set of rules to apply to be able to recognise the right kind of opportunities when they rise. This removes the problem of how to choose from an an infinite number of possible alternatives.

Esoteric note:

Becoming part of a system

In chapter two we came to the conclusion that the best type of business to become involved in is one where efficiency is creating wealth. This makes sure that we will be playing in a non zero sum game where everybody involved can become a winner.

At first thoughts, this seems at odds with the conclusions we've just reached. Surely, to create a situation that is going to provide increased efficiency we would need preplanning? But, this is a very Industrial Age attitude and not applicable in e-commerce. In a continuously changing unpredictable environment such as the Internet, planning isn't possible and that includes planning for increased efficiency. However, this doesn't preclude waiting around for an opportunity to increase efficiency presenting itself.

The more practical Game Theory approach is to look at the world of e-business and see it as a self-organising, dynamic system that you have to fit into rather than view it as a static environment where you have to create some new invention or initiative. A self-organising system creates voids and needs as it writhes this way and that in chaotic attempts to reach states of equilibrium. It is the ability to slip into these openings as and when they arise that is the key to establishing a successful e-business niche.

The key to seeing how this helps to recognise business opportunities when they come along is in understanding that the elusive state of equilibrium - that a dynamic complex system is always searching for - is the state of minimum energy expenditure. In other words, a fundamental characteristic of all such systems (and this includes the Internet environment) is that they tend towards a state of maximum efficiency.

The trick then, is not to try to get the system to do something, but, to do something the system forces you to do. You go with the waves rather than be like King Canute and try to control them. (In fact, King Canute didn't try to control the waves, he used this as a demonstration that no mortal, even a king, can control natural forces).

Realising the game is about becoming part of a dynamic system, puts yet another different perspective on the conclusions reached in chapter 3. There, it was easy to visualise eliminating different possible business ideas to arrive at a short list to concentrate upon. It was quite easy to see how working away at several different ideas at the same time would give an opportunity for one of them to emerge as a clear favourite to become the one to concentrate all resources upon. But, what do we do when we start thinking in terms of system instabilities rather than ideas?

If we are contemplating a dynamic, self-organising system, which is constantly undergoing chaotic change, we will have to work with enigmatic and intangible entities rather than concrete business ideas (that might seem to have stability and substance). How do we even recognise a system instability, let alone arrive at a short list of them? How can we judge the relative merits of instabilities in a dynamic system to see which of them is emerging as the best opportunity? Clearly, working in an e-business environment will need quite a different mind set from that used in the conventional world of bricks and mortar.

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