Optionality Framework: A Brand Strategy Framework for a World in Flux.

Note: This article adapts NN Taleb’s idea about ‘optionality’ from his excellent book ‘ Antifragile: Things That Gain from Disorder‘; and uses research from Richard Bulliet’s book The Camel and the Wheel.

Camel or a car?

Can you imagine a day when everyone around you stops using automobiles and instead starts riding camel? It turns out there’s a precedence for such a shift.

If you were in the Middle East sometime between the 6th to 4th century BC you would have seen chariots in the army, seen long paved roads in major cities, seen traders using pack-animal carriages to haul goods.
The wheel moved the world around. Even then. Until it stopped.

If you were to time travel a few centuries ahead, anytime between the 3rd century AD to 18th century, you would have been surprised by the near-total disappearance of wheeled carriages from the region, in favour of camels.

Baffling isn’t it.

The fact that wheels, the epitome of ‘disruptive innovations’, fell out of favour in certain contexts, makes you wonder about the awesome forces that precipitated that shift.

Why did the wheel fall out of favour?

In comparison to camels, wheels were fragile (then) – prone to breaking down, couldn’t ford through shallow rivers, couldn’t traverse deserts, were slower (when attached to other pack animals.), were far less efficient (needed the deadweight of the wagon), needed special infrastructure of roads, and needed one person per carriage whereas a single person could shepherd up to six camels!

But camels existed in the 6th century BC too. Why then people preferred wheels before but not after? Clearly, efficiency was necessary but not a sufficient condition to instigate change.

The transformative agent was surprising – the invention of the North Arabian saddle.

This saddle turned the cargo-carrying ship of the desert, the camel, into a battleship. The more secure saddle allowed the camel rider to use swords and pikes and positioned the rider much higher up, which gave a great advantage in battle.

This ‘optionality’ of camel, its ability to turn into a dependable technology for the battleground, changed the balance of power.* Let me take a moment here to elaborate on the concept of optionality. Optionality is the freedom to readily take advantage of an emerging situation, afforded by the fact that you have multiple options. As against having no choice and being left to get squeezed by fate’s pincers. Functionally, a saddle is just a seat. But by being more secure, created the possibility for the rider to do something else besides sitting on it. That option was not available to them earlier.

A useful metaphor is that of platform and APIs. Here the camel is a platform, and the saddle is an application that fulfils the certain requirement. In this context, the ability of the platform to host APIs is critical. If a platform can’t host APIs, the platform is useless. Camel won because it could host the saddle.

Camel nomads gained control of caravan routes. This, in turn, allowed for more social and economic integration of camel nomads with the settled societies and so, camels proliferated.

What can we learn from this story?

  1. Robust wins against fragile.
    Camel was more robust compared to the wheel.
  2. Optionality that improves the ability to compete matters more.
    Consider wheel as a ‘platform’ – the base technology over which, you can build added functionality. Compared to the camel, the wheel is more versatile. One could create carriages with varying specifications, attach a varying number of animals and so on. In comparison, camel as a platform is potentially less versatile.
    A wheel then had more ‘optionality’. Yet, the camel’s ‘API’ of saddle won out because it enhanced the rider’s ability to swiftly attack or defend, more capably. Thus, optionality that improves performance matters more than optionality that improves versatility alone.
  3. Inversely, lack of optionality that improves ability to compete, is fatal.
    Optionality is the freedom of having choices when confronted with novel situations. Inversely, lack of it is servitude to fate, being caught completely unaware and unprepared to emergent situations.  
  4. Advantage is relative and temporary.
    Camel is not better than a Humvee or a drone. No advantage is absolute. As technology changes, so does the nature of competition and source of advantage. 
  5. A change that gives an asymmetric advantage, dominates.
    Camel with the saddle was markedly better than the wheel in battle. But it ended up replacing the wheel everywhere else too (except for pottery wheels). This is because of the phenomenon of a ‘positive feedback loop’.  As more people realised the advantage of a camel over a wheel, more adopted it. As such the adoption is not linear but accelerates with the expanding reach of the idea.
  6. The new default.
    Asymmetric scaling leads to new ‘default’ as other options recede to obsolescence.
  7. Change comes from the edges.
    Change comes from those who have less to lose, more to gain.
    In the fight for supremacy between Camel nomads and city traders, camel nomads had more to gain, less to lose. Vice versa for the traders trying to protect their goods in caravan.
  8. Power matters.
    The quest to gain power animates all changes.
  9. Distinctive awareness about what changes, what doesn’t is helpful.
    To win, one must be able to distinguish an advantageous choice from a disadvantageous one. That discernibility requires the understanding of the dynamics of economic and social power and a keen sense of its shift.
    In this case, the need for transportation did not change. However, trade dynamics were changing with the Arab conquest in the region.
    The rise in overland trade between southern and northern Arabia during the time was a major factor that increased the importance of camels.
    Wheel’s technological transformation was a millennium away, into the future. The saddle technology was transforming the present-day dynamics of then.
  10. Efficiency is necessary but not sufficient to precipitate shift.

Why is this story relevant now?

Humans think linearly. Reality is anything but. This story illustrates this. Did we ever imagine a millennia-long gap between wheel use in human history? It warns us to not take visions of progress/ growth for granted.
Secondly, this story is about change. It illustrates the principles of systemic change, ably. This is relevant now because we are now living in an age where change is only accelerating. Civilisational changes that happened over millennia, happen now in years.

Implicit in our strategic thinking is an assumption of stability, of linear change. That is why strategy often feels ‘theoretical’, a euphemism for being not useful or not true.

For a world in constant flux, we need a strategy that appreciates the dynamics of change.

Brand strategy framework made for a world in flux.

The surest way to fail in a rapidly changing world is to depend on strategies that assume stability & linear change. Brands that focus on efficiency and not on optionality, are bound to get blindsided with change and suffer ruin.

To survive, one must ensure of never getting cornered. To thrive, one must be able to identify and then seize an advantageous opportunity to its full potential. This simple principle is at the core of the optionality framework.

This perspective helps us separate noise from the signal. It enables us to see the big picture while being firmly grounded in the realities of here and now. It forces us to focus on activities that really matter – the ones that help gain asymmetric advantage and avoid ruin. The brand strategy framework informed with this perspective is firmly rooted in business realities and yet supercharges the brand with imagination and empathy.

Here are six questions that can guide brands towards growth, relevance, and resilience.

1. What is our ‘platform’? What APIs can we house on this platform?

2. What is changing? What is unchanging?  
Is the change transitory or systemic?

3. What optionality does our competitor have that can threaten our existence? Watch the edges for threats/ opportunities.

4. Which options can give us an asymmetric advantage?

5. How are power dynamics shifting in our category? How can we benefit from it?

6. How can we become the default options in the lives of our consumers?

Let’s explore each of these questions briefly to understand how to use this framework.

  1. Define our platform and APIs.
    a. Platform
    :
    For the purpose of this framework, I define platform as the core of the business – the organisational capabilities, properties, assets, offerings, its relationships – that define the scope of its present and potential future activities. For a firm’s existence to make sense, the whole must be bigger than its parts. It’s ability to host APIs is a measure of this ability. If it can enable new capabilities with emerging situations, it’s a platform worth building. For instance, for Maruti Suzuki, its factories, its dealerships, its online presence, its workforce, its history, its brand – all add up to a whole which enables mobility for millions, employs thousands and plays a pivotal role in nation-building.
    b. APIs:
    In this context, APIs are the synergistic added functionalities that the firm can deliver, given its core platform. An excellent example of this is Maruti Suzuki’s adaptation of their factories into ventilator production units during the Covid emergency.
    APIs are products of the optionality that the platform enables. Maruti Suzuki’s peculiar platform, which included its infrastructure and its culture, drove it to turn its factories into ventilator production units.
  2. Be aware of the changing and the unchanging.
    The unchanging: The need for mobility, the prestige associated with ownership.
    The changing: Rising concerns about pollution and overcrowding, increasing dependence and shortage of semiconductors, IoT & app-based gig economy, rise of subscription-based economies, Open-sourced Tesla’s patents, and so on.
    Climate change is systemic, hence the need for zero-emission mobility. App-based taxi services as threat to ownership of cars, might not be as big a risk, with profitability remaining elusive to aggregator apps even after a decade.
     
  3. Prepare against optionality that threatens our existence.
    Perhaps Tesla and other e-vehicle brands’ entry in India and the government’s regulatory push for electric vehicles poses an existential threat to Maruti Suzuki.
    Another source of danger is improving public transport infrastructure.
    To counter this threat, it should explore options to produce e-vehicles which are as good if not better than the best available today in the world. Secondly, it may also explore the choice of producing mass transit vehicles.
  4. Define and leverage options that give us an asymmetric advantage.
    This is the key question. Having a solid thesis here can unlock a strategic shift in a brand’s fortunes.
    Here’s my attempt at it. Maruti Suzuki enjoys a strong brand perception as being an Indian family’s trusted car. For the brand, Indianness and familial bonds are quite important. So, here’s an idea.
    We know that most families are now nucleated – separated by distance but united by traditions and bonds. Families share things & experiences.
    What if we create a family-centric car subscription service that all family members can use through a single subscription. Wherever the family members might be, Maruti Suzuki can personalise their mobility, ensure safety and connectedness and economize travel. A proposition like this can be immensely valuable and unlock new revenue streams for the company.
  5. Align with power dynamics.
    In the realm of brands, real power is in building coalition with customers, partners, and employees. Maruti Suzuki needs allies among the eco-conscious & value-conscious consumer base. It needs to strategically build passionate communities that would champion the brand’s cause.
  6. Become the default.
    In a world flooded with attention-leaching distractions, being the default choice for a sizeable chunk of the consumer set is essential for a brand to survive. In this case, as Maruti Suzuki enters the e-vehicle space, it has the advantage of being a market leader with the widest network in the country. It can use this to supply superior services/ provide proprietary charging tech etc., to lock in consumers. (Though, it would be better for the world for it to adopt open standards.)
    What brand APIs, experiences, propositions can help build a strong relationship and ensure that the consumer consistently chooses the brand? What possibility are we uniquely unlocking for our consumers? For Maruti Suzuki, it could mean campaigns and features about family safety, or it could mean subscription services or integrated online journeys.

This framework allows us to imagine and ideate for a wide enough range of activities while focusing on the big picture. Used intelligently, it helps align corporate, brand, and communications strategy seamlessly. It is simple and concise enough to be understood by a wide-ranging set of stakeholders. Yet, it is robust and aware of the actual complexities of business, so the exercise doesn’t devolve into an esoteric ritual that doesn’t inform actual actions.          

I hope it helps you unlock disruptive growth for your brand. Feel free to critique and suggest improvements to it. I will keep improving on the idea.

TL; DR

Concepts to know:

1. Optionality – Optionality is the freedom to readily take advantage of an emerging situation, afforded by the fact that you have multiple options. As against having no choice and being left to get squeezed by fate’s pincers.

2. Feedback loop – In most natural systems, the output of the system affects the functioning of the system itself. There are two kinds of feedback loops – reinforcing and balancing. Reinforcing loops amplify and fuel change. (e.g., viral content online) Balancing loops, in contrast, keep equilibrium. (e.g., temperature of tea reverts to room temperature.)

3. Platform – Core organisational capabilities, priorities, properties that define their purpose and activities.

4. APIs – APIs are the synergistic added functionalities that the firm’s platform enables.

Principles for a world in flux:

  1. Robust wins against fragile.
  2. Optionality that improves the ability to compete matters more.
  3. Inversely, lack of optionality to improve the ability to compete, is fatal.
  4. A change that gives an asymmetric advantage, dominates.
  5. Ergo, the existence of defaults. Be the default.
  6. Advantage is relative and temporary.
  7. Change comes from the edges.
  8. Power matters.
  9. Distinctive awareness about what changes, what doesn’t is necessary.
  10. Efficiency is necessary but not sufficient.

The framework:

  1. Define our platform & APIs.
  2. Be aware of the changing and the unchanging. Is the change transitory or systemic?
  3. Prepare against optionality that threatens our existence.
  4. Define and leverage options that give us an asymmetric advantage.
  5. Align with power dynamics.
  6. Become the default.

[1] Bulliet, R. W. (1990). The Camel and the Wheel. Columbia University Press.

* I owe this article to NN Taleb. His excellent book, ‘Antifragile: Things That Gain from Disorder’, changed the way I see the world. It was only a matter of time before I applied his concepts to brand strategy. While I will explain the concept of optionality soon enough, I highly recommend reading his book to understand it better.

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