Building Products in the AI & Cloud Era

← the whole book on one page

Chapter 2: Product Strategy — Choosing Where to Play

“The essence of strategy is choosing what not to do.” — Michael E. Porter

Every company that grows past a few teams discovers that it can build almost anything it chooses, and that this is the source of its trouble. A team of nine has no strategy problem worth the name, because its capacity decides for it: there is one product, one queue of work and one conversation about what comes next. A company of 400 engineers has capacity enough to pursue a dozen directions at once, and it will, unless someone decides which directions it will not pursue. The question of this chapter is how that decision is made well. What does a sound product strategy look like on the page, how do we tell it from the fluent documents that only resemble one, and how does it reach the 40 teams who must act on it without being flattened into a list of features?

The story we will use to answer it is a whiteboard. In 1997, newly returned to an Apple that was losing money at an alarming rate, Steve Jobs stopped a product review, drew two lines and wrote four words around them: consumer and professional, desktop and portable. Everything Apple made would fit in one of those four boxes, and everything that did not fit would go. The grid is famous because it is simple, but its simplicity was bought with a great deal of refusal, and it is the refusal that teaches. Section 2.1 tells it carefully, because the popular version blurs two accounts that teach different things.

Encore is about to write a strategy of its own. In Chapter 1 we left the company at about 400 engineers, with a proposal on the table called Verified Resale: fans who cannot attend a show would resell their tickets through authorized partners such as Rowmate, Encore would reissue each resold ticket under a new barcode, and organizers would set the rules and share the fee. The proposal carries an awkward tension. For years Encore’s brand has rested on fighting scalpers, on the promise that real fans get a fair chance at seats, and now it proposes to host resale. Some people inside the company hear that as a betrayal. Others hear it as the only honest response to a market that already exists. A strategy has to reconcile the two, and it can do so only by saying precisely what problem Encore faces and what it will do about it.

This chapter follows the writing of that strategy in the late winter of Encore’s ninth year, as the first page of the bet memo that Chapter 10 will return to. We begin with Richard Rumelt’s account of what a strategy must contain (Section 2.1), and then look at the people the strategy serves through the lens of the jobs they are trying to get done (Section 2.2). Verified Resale is a market with several sides, and Section 2.3 examines what that means for strategy. Section 2.4 maps the landscape to show where Encore’s advantage lies, and Section 2.5 turns the strategy into objectives that teams can own.

2.1 Good Strategy and Bad

The grid on the whiteboard

Apple bought NeXT in a deal announced on 20 December 1996 and completed in February 1997, and the purchase brought Steve Jobs back to the company he had co-founded. At first he came as an adviser. At Apple’s Worldwide Developers Conference in May 1997 he took questions from a hall full of developers, some of them angry at the projects Apple had cancelled, and in answering one hostile question he said something close to “focusing is about saying no”. In July the board removed Gil Amelio as chief executive. In August, at Macworld Boston, Jobs announced a $150 million investment by Microsoft, a rival’s money that told the market Apple would survive the year, and in September he became interim chief executive.

The grid comes to us from Walter Isaacson’s biography, Steve Jobs (2011). Isaacson describes weeks of product reviews of a Macintosh line of roughly a dozen models with confusing numbers. Then, at one large product strategy session, Jobs called a halt. In Isaacson’s telling, Jobs shouted “Stop!”, said “This is crazy”, and drew “a horizontal and vertical line to make a four-squared chart”. Atop the two columns he wrote “Consumer” and “Pro”, and he labeled the two rows “Desktop” and “Portable”. Their job, he told the room, was “to make four great products, one for each quadrant”. Isaacson quotes Phil Schiller, who was in the room: “The room was in dumb silence.”

Apple then took about two years to fill the grid, as Figure 2.1 shows.

Figure 2.1 — Apple’s four-quadrant grid as it was filled. The consumer portable box stayed empty until the iBook arrived in July 1999.

The empty box deserves a moment. When the technology newsletter TidBITS described the four-slot strategy in May 1998, the consumer portable slot had no product in it, and it would stay that way for more than a year. A company under pressure to show growth is tempted to put something in every slot, and Apple did not. The grid was a commitment about what Apple would make, and it was equally a commitment about how long Apple would wait. The results came quickly enough to be read as a verdict. Apple lost about $1.05 billion in fiscal 1997, and in fiscal 1998 it earned $309 million on $5.94 billion of revenue, its first profitable year since 1995. The iMac is generally credited with the turnaround.

Rumelt tells the same turnaround in the first chapter of Good Strategy Bad Strategy (2011), and his version is blunter. He does not mention the grid. He writes that by September 1997 Apple was “two months from bankruptcy”, and that Jobs “cut Apple back to a core that could survive”. Then comes the list: “Jobs cut all of the desktop models—there were fifteen—back to one. He cut all portable and handheld models back to one laptop. He completely cut out all the printers and other peripherals. He cut development engineers. He cut software development. He cut distributors and cut out five of the company’s six national retailers. He cut out virtually all manufacturing, moving it offshore to Taiwan.” Rumelt calls the response “obvious and, at the same time, unexpected”, because analysts had expected either a push into advanced products or a sale of the company.

The two accounts do not match exactly. By late 1998 Apple sold both the Power Macintosh G3 and the iMac, which is more than Rumelt’s “one desktop”, and it is wise not to merge them into one tidy legend. Read together, they describe two halves of a single act. Isaacson’s grid is the design of the focus, the frame that made most product decisions automatic, since anything outside the four boxes had no claim on the company’s attention. Rumelt’s list is the cuts that paid for it, and it reaches well beyond products, into retail, manufacturing and engineering headcount. The grid alone would have changed little without the cuts that enforced it.

Rumelt adds a coda that is easy to miss. In 1998 he asked Jobs about Apple’s long-term prospects, given that it held less than 4 percent of the personal computer market and faced the network effects of the Wintel standard. Jobs, Rumelt reports, “just smiled and said, ‘I am going to wait for the next big thing.’” The grid was never meant to beat Wintel. It was meant to keep Apple alive and coherent until a better opportunity appeared, and that modesty is part of why it worked. It is also the clearest picture we have of the epigraph’s lesson, Porter’s line from 1996, because nearly everything the grid decided was a decision about what Apple would stop making.

The kernel

Rumelt’s central contribution is a description of what any good strategy contains, whatever its subject. He calls it the kernel. The kernel of a strategy is three elements that work together: a diagnosis that defines the challenge, a guiding policy for dealing with it, and coherent action that carries the policy out. The diagnosis names what is really going on, and it simplifies a complicated situation by choosing which of its many facts matter. The guiding policy is an overall approach chosen to cope with the obstacles the diagnosis identified; it rules some actions in and many more out. The coherent action is a set of steps that reinforce one another, coordinated so that each makes the others more effective.

The kernel can be read against Apple’s year with little effort. The diagnosis was that the product line had become too complicated to explain, build or sell, and that the company was running out of cash while it tried. The guiding policy was the grid: four great products and nothing else. The coherent actions were the cuts and the products, from the closure of retail channels to the move of manufacturing to Taiwan, and they made sense only together. Cutting retailers without cutting products would have left inventory nobody could sell, and cutting products without fixing manufacturing would have left factories nobody could use.

What makes the kernel useful is that it is hard to fake. A document can hold ambitious goals, eloquent values and many initiatives and still have no diagnosis, and once we look for the three parts their absence is obvious. A strategy without a diagnosis is only a wish, however well it is written, because it never says what obstacle it means to overcome. The other two parts fail in the same way when they stand alone: a diagnosis with no guiding policy leaves everyone agreeing about the problem and doing what they did before, and a guiding policy with no coherent action changes the vocabulary of meetings and little else.

Four hallmarks of bad strategy

Rumelt is at least as interesting on what goes wrong. He names four hallmarks of bad strategy, by which he means a document that occupies the place of a strategy without doing a strategy’s work. The first is fluff: words that sound important and say little, such as superlatives and buzzwords, which give the appearance of insight. The second is failure to face the challenge, which means never naming the obstacle, so that nothing in the strategy can be checked against it. The third is mistaking goals for strategy, as when “grow revenue 20%” is presented as though announcing a goal were the same as finding a way to reach it. The fourth is bad strategic objectives, which Rumelt splits into two kinds: the “dog’s dinner”, a long list of things to do with no priority among them, and the “blue-sky” objective, which merely restates the wish in the form of a target.

Encore’s first draft of a resale strategy came out of a leadership offsite and fits on one line: become the most trusted resale destination in Europe. Figure 2.2 checks it against Rumelt’s four hallmarks.

Figure 2.2 — Encore’s first resale strategy against Rumelt’s hallmarks of bad strategy. Three clear failures, and a fourth test that cannot even be applied.

The draft was written by capable people who wanted to inspire, and a sentence like that can survive months of meetings, because it offends nobody and commits nobody. The repair has to start where the draft is silent, with the diagnosis.

Diagnosing Encore’s resale problem

The first fact in Encore’s diagnosis is that resale of Encore tickets already happens, and has for years. Some of it happens on unofficial marketplaces, where Encore sees nothing. Some of it happens through Partner Listings, the arrangement from Encore’s sixth year under which authorized partners could read Encore’s event listings and post resale offers, shown as “resale available at Rowmate” links on sold-out event pages. Under Partner Listings the ticket itself changed hands outside Encore: the seller forwarded the original pass, and Encore checked nothing beyond the partner’s word. That arrangement had four weaknesses, and the memo names each of them. A barcode could be duplicated and sold to several buyers. Organizers had no control over price or timing. Organizers received no share of the fee. And buyers went unscreened, so the bots that Encore stopped at the primary sale could buy freely in the resale.

The company had numbers to put behind those weaknesses, and the memo used them. In the twelve months before the memo, Encore’s Support team handled about 3,400 cases from fans who arrived at a door, or tried to, with a resold ticket that had already been used or had never existed. About 7% of tickets to sold-out shows were transferred between accounts or scanned on a device the buyer had never used, a rough measure of how much resale already flowed through Encore’s own tickets. And within a day of the Vesper Hale on-sale, Trust & Safety counted more than 9,000 tickets for the tour listed on unofficial sites, most of them well above face value. These are Encore’s own figures, measured from its scan and support data, and the memo says how each was measured.

The harms fell on three parties. Fans were defrauded, and they blamed Encore, because Encore’s name was on the ticket. Organizers lost control of who sat in their seats and at what price, and earned nothing from the trade. And Encore’s brand absorbed complaints about transactions it had never seen. Reading those facts, the trio responsible for the proposal reached a diagnosis that changed the argument inside the company: the harm comes from resale that nobody controls, and the existence of resale is the lesser part of it. Fans who cannot attend will always pass on their tickets, by one route or another. The question is whether they do so through a channel where the rules can be enforced.

There is a well-documented reason why such a diagnosis meets suspicion, and the memo addressed it directly. On 2 February 2009, when Bruce Springsteen tickets went on sale, Ticketmaster’s site showed “No Tickets Found” to many fans and steered them to its own resale subsidiary, TicketsNow, where the same tickets were listed at prices often several times face value. The US Federal Trade Commission settled with Ticketmaster in February 2010; Ticketmaster agreed to refund the difference to affected buyers, without admitting wrongdoing, and in September 2010 the FTC reported sending claim forms to 1,174 consumers. The case is the standard example of a primary seller that owned a resale market with the wrong incentives, and it is exactly the suspicion Encore’s fans and organizers would bring to Verified Resale. (The later action by the UK’s Competition and Markets Authority against Viagogo, which Section 5.5 tells, shows the same market from the other side.) A diagnosis that ignored this history would have failed Rumelt’s second hallmark all over again.

A guiding policy and coherent actions

From that diagnosis the guiding policy follows almost directly: bring resale inside Encore, where every rule can be enforced at the barcode. Encore’s position on resale is control, not prohibition. The policy settles in one sentence the argument between “we fight scalpers” and “we will now host resale”, because it reframes the fight against scalpers as a fight against resale nobody controls, and the barcode is the one place where Encore can enforce rules that nobody else can.

The coherent actions then follow from the policy, and each reinforces the others. Every resold ticket is reissued under a new ticket identity, and the seller’s old barcode is revoked at every gate, so a ticket cannot be sold twice or used by the seller after the sale. The price is capped at face value, and organizers may only tighten the rules: disable resale, shorten the window or lower the per-fan limits. Only tickets bought through the Sale Gate, within the event’s per-fan limit, may be listed. Every resale buyer passes the same Bot Screening as a primary buyer. Only certified partners may list, and the buyer’s fee is shared with the partner and the organizer. Remove any one of these and the others weaken. Reissue without screening would hand clean tickets to bots; screening without the cap would let speculators in through a polite door; the cap without reissue could not be enforced, because a ticket sold outside the system would carry no record of its price.

The policy is not untested in the world. In August 2018 Ticketmaster announced that it would close its European secondary sites, Seatwave and GetMeIn. New listings stopped on 13 August, the sites closed in the United Kingdom and Ireland that October, and the rest of Europe followed. In their place fans got an exchange inside Ticketmaster, where tickets resell at face value or less. Ticketmaster’s UK managing director, Andrew Parsons, said the move “had always been the long-term plan”, and contemporary coverage connected it with the CMA’s investigation and with Irish legislation. Whatever the motive, it is a large primary ticketer carrying out the same guiding policy that Encore’s memo proposes: resale brought inside, where the seller of record can enforce its rules.

A. G. Lafley and Roger Martin, in Playing to Win (2013), gave us the phrase in this chapter’s title, “where to play”, together with its partner, “how to win”, and their account of strategy at Procter & Gamble is a well-documented example of choices made as a connected set. One of their questions is especially useful at this point: what would have to be true for this choice to be a good one? For Verified Resale, several things would have to be true. Fans would have to trust a reissued ticket. Partners would have to accept a face-value cap that cuts their usual take. Organizers would have to want control enough to switch resale on. Each of those is an assumption, and Chapter 3 tests them one by one, beginning with the riskiest. The question turns a strategy into a list of claims that can be checked, which is the bridge from this chapter to the next.

The memo’s first page records the kernel in a form short enough to be read in a minute and specific enough to be argued with.

VERIFIED RESALE: STRATEGY KERNEL (bet memo, page 1, month 0)
Diagnosis       Encore tickets are already resold, off Encore and through Partner
                Listings, with no reissue, no organizer control or fee, and no
                screening. Fans are defrauded and blame Encore. The harm comes
                from resale nobody controls.
Guiding policy  Bring resale inside Encore, where every rule is enforced at the barcode.
Coherent        1. Reissue every resold ticket; the old barcode dies at every gate.
actions         2. Cap at face value; organizers may only tighten the rules.
                3. List only tickets bought through the Sale Gate, within limits.
                4. Screen every resale buyer as a primary buyer is screened.
                5. Certified partners only; the 10% buyer fee is split 4/3/3.
Not doing       Resale above face value. Professional resellers. Price tests on fans.
Proximate       One organizer, one partner (Rowmate), one market, end to end.

Leverage, focus and proximate objectives

Rumelt’s later chapters explain why some strategies gain force and others dissipate. He writes of leverage, the concentration of effort on a pivotal point where a modest action produces a large effect, and of focus, which is the refusal to spread effort across every opportunity at once. For Encore the pivotal point is the barcode. Encore issues it, Encore’s door scanners check it, and no partner or unofficial marketplace can change that. A rule enforced at the barcode holds everywhere a ticket is used, which is why the guiding policy puts its weight there.

He also writes of proximate objectives. A proximate objective is a target close enough that the organization can see how to reach it, so that reaching it is a matter of execution rather than of hope. His example is President Kennedy’s 1961 goal of landing a man on the Moon, which sounds like the most distant of objectives. Rumelt argues it was proximate, because the engineering it required was already largely understood, and what remained was a program of work the nation knew how to organize. The more uncertain the situation, Rumelt advises, the closer the objective should be. Encore’s situation is very uncertain: it does not yet know whether organizers will switch resale on, or whether fans will trust a reissued ticket. So its proximate objective is small: one organizer, one partner and face-value resale working end to end, in one market, which the launch plan of Chapter 10 later widens to three organizers. “European resale” would have been a blue-sky objective in Rumelt’s sense, a wish dressed as a target.

The proximate objective also gives the grid’s lesson its sharpest form at Encore. Michael Porter’s 1996 article “What Is Strategy?” argued that strategy requires trade-offs: activities that are incompatible, so that choosing one position means giving up another. The kernel’s last lines are Encore’s trade-offs, written down. There will be no resale above face value, even though partners would earn more from it. There will be no professional resellers who own inventory. There will be no individual price experiments on fans, ever. Each refusal gives up something real, revenue or volume or the freedom to test, and that cost is what makes it a trade-off in Porter’s sense.

Strategy as deployment

A strategy that exists on page one of a memo has not yet changed anything. It must reach the people who will act on it, and Stephen Bungay’s The Art of Action (2011), which Melissa Perri builds on in Escaping the Build Trap, is useful here. Bungay describes three gaps that open between plans and results. The knowledge gap is the difference between what we would like to know and what we actually know. The alignment gap is the difference between what we want people to do and what they actually do. The effects gap is the difference between what we expect our actions to achieve and what they actually achieve. His remedy draws on Helmuth von Moltke’s practice of mission command in the Prussian army: tell people the intent and the reason for it, and let them decide how to act when circumstances change. The Software book’s Sections 9.3 and 10.1 take up what that means for forty teams. Perri turns the idea into a cascade, from a company’s vision through strategic intents and product initiatives down to the options teams explore. Marty Cagan and Chris Jones, in Empowered (2020), describe product strategy in four parts (focus, insights, actions and management) that cover much the same ground. Both are frames drawn from practice. Neither has evidence beyond the record of the companies that use them, and we use them as frames.

Both frames treat strategy as intent to be deployed. The memo tells the Inventory and Partner APIs teams what problem the company is solving and why, and leaves the how to them. Section 2.5 shows how that intent becomes objectives teams can own. Rumelt also insists that a strategy is a hypothesis, and so Encore reviews the kernel twice a year against what the proximate objective has taught it. A diagnosis that was right in late winter can be wrong by autumn.

Recap. A good strategy has a kernel: a diagnosis that names the challenge, a guiding policy that rules most actions out, and coherent actions that reinforce one another. Apple’s grid was the design of a focus, and the cuts Rumelt lists were what paid for it. Encore’s diagnosis is that harm comes from resale nobody controls, so its policy is to bring resale inside and enforce the rules at the barcode, starting with a proximate objective small enough to reach.

Exercise 2.1. Take one strategy document from your own organization and rewrite it into Rumelt’s three parts. Mark which part was missing or weakest in the original, and write down two things the strategy now rules out that the original did not.

2.2 Jobs to Be Done

Progress in a circumstance

A strategy decides where to play. It cannot decide well without a clear picture of the people it will serve, and the picture an analytics dashboard draws is a poor one for this purpose. Dashboards describe customers by their attributes: age, city, device, how often they buy. Clayton Christensen and his co-authors, in Competing Against Luck (2016), argue that attributes correlate with what people buy but do not cause it. People buy a product because something in their life calls for it. They define a job as the progress a person is trying to make in a particular circumstance. The circumstance is part of the definition, because the same person has different jobs at different moments, and the product that suits one moment can be useless at another.

The book’s most famous story is the milkshake, from field work by Bob Moesta that Christensen reports. A fast-food chain trying to sell more milkshakes found that many were bought early in the morning by commuters, who wanted something to make a long, dull drive more bearable and to keep them full until lunch. In that circumstance, as Harvard Business School’s account of the work puts it, the milkshake was hired in place of a bagel or a doughnut, because it was tidy to eat at the wheel and kept hunger away, and a thick drink through a thin straw gave the driver something to do. None of those rivals appeared in the chain’s research about milkshakes, which compared its shake only with other shakes. The job has three dimensions, and Christensen insists on all three. There is the functional dimension (stay full until noon), the social dimension (how the choice looks to others), and the emotional dimension (how it feels). A product designed for the functional dimension alone can win the first purchase and still lose the habit.

A better-documented case, also from the book, is Southern New Hampshire University’s online program. The university found that adult learners were hiring it to do a very different job from the one eighteen-year-olds hired a campus for: to improve their careers, with as little friction as possible, around jobs and families. Its leaders mapped the admissions process from a prospective student’s first inquiry onward and rebuilt it around that job, removing the delays and paperwork that had stopped working adults before, and its online program grew rapidly, as the book recounts. The lesson for us is the integration. Once the job is understood, every part of the operation is arranged around it, including parts that no product team owns.

Jobs to be done is a lens, and an honest account should say so. Its evidence is a strong record of practitioner case studies, with no controlled studies behind it, and there are rival schools. Tony Ulwick’s Outcome-Driven Innovation (What Customers Want, 2005) turns jobs into quantified outcome statements, and Alan Klement’s When Coffee and Kale Compete (2016) frames a job around the change a customer wants in themselves. The schools disagree about method and agree on the central claim: we should study the progress people seek, and treat their attributes as clues.

A box-office clerk understands this without the vocabulary. A fan who comes to the window saying “I need to return these” might want money back, or might want the seats to go to someone who will enjoy them, or might simply want not to feel foolish about a purchase they cannot use. The clerk who hears which job is meant can help; one who hears only “refund request” can only apply the policy. The analogy holds until scale enters. A clerk hears one fan at a time and adjusts, while a product serves millions with one design, so the jobs it serves must be chosen in advance and written down, with the risk that the choice is wrong for many.

The four parties and their jobs

Verified Resale serves four parties, and the trio wrote a job statement for each before the memo. They wrote them as hypotheses, to be tested by the discovery work of Chapter 3, and the memo labels them that way.

The first is the fan who cannot go. Their functional job is to get their money back, safely and quickly. They also have a social job that the trio heard in nearly every early conversation: not to let down the friends who bought the seats next to theirs, which means the seat should go to someone decent and the group should not be left beside an empty chair or a stranger who paid three times the price. Today this fan’s competition is an unofficial marketplace, a ticket passed to a friend of a friend, or, most often, doing nothing at all.

The second is the fan who wants in: someone who missed the on-sale and wants a real ticket to a show that sold out, at a price that does not feel like extortion. The functional job is simple. What Encore’s interviews found, as the next subsection describes, is that the emotional side of this job weighs more heavily for these fans: the fear of being turned away at the door with a ticket that does not scan.

The third and fourth parties are businesses, and their jobs partly conflict. The partner, a marketplace such as Rowmate, wants listings it can trust, a share of the fee and no chargebacks from buyers who were sold a dead ticket. The organizer wants control over resale price and timing, a share of the upside, and real fans in the seats, since an arena full of people who paid triple is an arena full of people who will remember it. A partner earns more when more tickets are resold, and an organizer often wants fewer resold tickets, on stricter terms. That conflict is the reason the product’s rules matter so much: the rules are where Encore decides, in advance and in public, how the conflict is settled. Figure 2.3 summarizes the four jobs.

Figure 2.3 — The four parties of Verified Resale and the jobs the trio wrote for them. The last column states what each party would never forgive.

The forces behind a switch

A job statement says what people want. It does not say why they keep doing what they do now, which is usually the harder question. Bob Moesta and Chris Spiek, of the Re-Wired Group, developed the switch interview to answer it. A switch interview reconstructs the timeline of a real purchase, the moment a person stopped using one solution and started using another, from the first thought to the final decision. Christensen popularized their method in Competing Against Luck, and Moesta set it out himself, with Greg Engle, in Demand-Side Sales 101 (2020). Their model has four forces. Two pull a person toward a new solution: the push of the current situation, which has become intolerable, and the pull of the new solution, which promises something better. Two hold the person back: the anxiety of the new, the fear that it will not work, and the habit of the present, the comfort of the familiar even when it is bad. A switch happens only when push and pull together outweigh anxiety and habit.

In the six weeks before the memo, the trio interviewed 18 fans who had bought or sold a ticket off Encore in the previous six months. Thirteen of them named, in one form or another, the same anxiety: being turned away at the door with a ticket that did not scan. The trio drew a conclusion that shaped the product. For the fan who wants in, the strongest force is anxiety, so the product’s most important promise is certainty at the door, ahead of price or choice. The memo labels this a small-sample Encore result. It is consistent with what Moesta reports more generally, that anxiety about the new solution is the force that most often blocks a switch.

The forces are taught here. The craft of the interview itself, how to ask about the last time something happened and how to avoid asking people to predict their own behavior, belongs to Chapter 3, where Section 3.1 makes such interviews a weekly habit.

Non-consumption

The most instructive line in Figure 2.3 is the one that says “doing nothing”. Christensen and Michael Raynor, in The Innovator’s Solution (2003), called this non-consumption: the situation in which people who have a job to be done hire no product at all, because every available option is too expensive, too difficult or too risky. It is easy to miss, because it leaves no transactions to count, and it is often the largest market there is.

Encore had a way to see it. Its scan data shows which tickets are used and which are not. About 4% of tickets to sold-out shows are never scanned, and almost none of those tickets had been offered for resale anywhere Encore could see. Each one is a seat that a fan paid for and could not use, beside a fan who wanted it and could not get it, at a show the organizer had sold out. The memo used that figure, rather than any industry estimate, to size the opportunity. The fans who already resell are the market Verified Resale would take from unofficial sites. The fans who absorb the loss are the market it could create, provided it removes the anxiety and effort that keep them doing nothing.

Recap. A job is the progress a person seeks in a particular circumstance, with functional, social and emotional dimensions, and it is a lens with a strong practitioner record. Encore wrote jobs for the four parties of Verified Resale as hypotheses, found in its switch interviews that anxiety at the door was the dominant force for buying fans, and sized the bet from the fans who resell nothing at all.

Exercise 2.2. Write the job statement for your product’s most important customer, including its social and emotional dimensions. Then name the real competitor in the customer’s circumstance, and if it is “nothing”, estimate from your own data how many people choose it.

2.3 Multi-Sided Markets

Pipelines and platforms

Most businesses that engineers have worked in are pipelines. A pipeline creates value in a line: it acquires inputs, transforms them and sells the result to customers at the end, and value flows in one direction. A multi-sided platform creates value differently, by enabling exchanges between two or more distinct groups who need one another, and its value lies largely in the matches it makes. The economics of such platforms were set out formally by Jean-Charles Rochet and Jean Tirole in “Platform Competition in Two-Sided Markets” (2003), work that the citation for Tirole’s 2014 Nobel Prize in economics names. Geoffrey Parker, Marshall Van Alstyne and Sangeet Paul Choudary, in Platform Revolution (2016), turned the economics into a practitioner’s account. They contrast the pipeline’s linear chain with the platform’s job of orchestrating interactions, and they describe that job as three functions: pulling participants in, facilitating their exchanges and matching them well.

Publishing offers the oldest familiar example. A newspaper that carried classified advertisements was two businesses in one building. As a pipeline, it gathered news, printed it and sold it to readers. As a platform, it connected people with things to sell to people who wanted to buy them, and readers and advertisers each came because the other did. The second business grew only as both sides grew together, and it collapsed quickly once buyers and sellers found a better place to meet online. The analogy breaks at the point that matters most for Encore. A newspaper never had to guarantee that the bicycle in the advertisement existed. Encore must guarantee that the ticket does.

Encore’s primary sale is mostly a pipeline. Encore takes an organizer’s event, sells its seats and delivers tickets, and the value flows in one direction, from organizer to fan, with Encore in the middle. A platform has always sat inside it, since organizers and fans need each other, but Encore never had to balance one side against the other. Verified Resale changes the shape of the business. It adds new sides, fans who sell and partners who list, and it makes Encore responsible for matching them: a listing tied to one real ticket at an allowed price, matched to a screened fan who wants it. A platform’s core interaction is the single exchange it exists to make happen, described by its participants, the unit of value they exchange and the filter that decides which of them meet. The sentence above is the core interaction of Encore’s new market. Its design, the participants, the unit of value and the filter as the system enforces them, belongs to the Software book’s Section 8.1. What matters for strategy is the recognition that Encore is becoming a different kind of business, one whose value depends on the health of several groups at once.

Network effects of both signs

A network effect exists when the value of a product to one participant depends on how many others use it. Parker and his co-authors, and David Evans and Richard Schmalensee in Matchmakers (2016), distinguish two kinds. Same-side effects act within one group, as when more fans in a fan club make the club more valuable to each fan. Cross-side effects act between groups, as when more listings make a resale market more valuable to buyers and more buyers make it more valuable to sellers. Both can be positive or negative, and the negative ones are the ones strategies forget.

In Verified Resale the main positive effect is cross-side and plain to see. More listings bring more choice for buyers, and more buyers make it more likely that a listing sells before the show. The main negative effect is cross-side too, and it is the reason Encore hesitated to build the product at all. More listings help buyers only until a growing share of them come from speculators: fans who buy in order to resell above cost, or buyers assisted by bots who acquire tickets the way scalpers do. Once speculators are a visible part of supply, genuine fans stop trusting the market and organizers switch resale off, and the market loses the participants it was built for. The TicketsNow episode of 2009 showed this negative effect on the fan side. When a primary seller and a resale market are mixed without rules, fans conclude that the game is rigged.

What keeps a negative network effect in check is curation. Encore curates through the coherent actions of Section 2.1: the face-value cap, which removes the profit that attracts speculators; per-fan limits on listing and buying; and Bot Screening for every resale buyer. Curation costs some volume, because it turns some participants away, and the strategy accepts that cost openly.

Which side is hard

Evans and Schmalensee observe that most matchmakers fail for one reason: they never reach critical mass on both sides at the same time. Buyers will not come until there are listings, and sellers will not list until there are buyers, and a platform that cannot break this circle in time simply fizzles. Parker and his co-authors catalog eight ways to break it, among them seeding one side, attracting a marquee participant, and piggybacking on an existing base of users.

The strategic question is which side is hard. For Encore it is not the buyers, because Encore already holds the primary market and the fans who use it. Every sold-out event page already draws fans who missed the on-sale, which is the piggyback in its purest form, and Rowmate brings buyers of its own who already shop for resale tickets there. Ticketmaster’s 2018 exchange worked the same way, by offering resale to the buyers it already had. The hard side is supply, and it is hard in two parts. The first is partner marketplaces willing to accept a face-value cap and reissue, which cuts their usual take and constrains how they run their storefronts. The second is enough fan supply on each event for a buyer to find something, since a resale market with three listings for a 20,000-seat show teaches buyers not to come back. The ignition tactics and the measures of liquidity, how many listings sell and how fast, are the Software book’s subject in its Section 8.2. The strategy’s contribution is to identify the hard side and to concentrate effort there.

Who pays

In a pipeline the customer pays. In a multi-sided market the question of who pays is open, and Rochet and Tirole’s central finding is that the price structure, how charges are divided between the sides, matters as much as the overall level. Platforms routinely subsidize one side to attract the other. Thomas Eisenmann, Parker and Van Alstyne made the point for practitioners in “Strategies for Two-Sided Markets” (2006): the side whose participation is most valuable to the other side, and most sensitive to price, is usually the one that pays least.

Encore’s answer follows that logic. The fan who sells pays nothing, because supply is the scarce side, and any fee on sellers would push them back toward doing nothing. The buyer pays a 10% service fee on top of the resale price, shown in the all-in price from the start. The fee is split three ways: 4 points to the partner through which the buyer purchased, 3 points to the organizer and 3 points to Encore, whose share carries the payment fees, fraud losses and support that the service costs. A €60 ticket resold at €60 costs the buyer €66; the partner receives €2.40, the organizer €1.80, Encore €1.80 and the seller the full €60. When the buyer purchases through Encore’s own app, no partner is involved and Encore keeps the partner’s 4 points as well. Each share pays for something the market needs. The partner’s share pays for supply and storefronts, and the organizer’s share pays for willingness to switch resale on, which is the permission without which no listing exists. Encore’s share pays for the guarantee.

Whether 10% is the right level, and how it compares with other fee models, is a pricing question, and Chapter 5 takes it up in Section 5.2. The strategic decision is the structure: the seller pays nothing, the buyer pays, and both business sides are paid for what they bring.

Rules are part of the product

Evans and Schmalensee devote a chapter to “fakesters and fraudsters”, the participants who exploit a platform at the expense of everyone else, and Parker and his co-authors devote one to governance. Both reach the same conclusion: in a multi-sided market, rules and their enforcement are part of what the platform sells. A buyer on a well-governed market is paying, in part, for the rules that keep fraud out. A buyer on a poorly governed one is paying for the risk.

For Encore this is the strategic heart of Verified Resale. Encore’s position on resale, control in place of prohibition, becomes a set of platform rules: face-value caps that organizers may tighten but never loosen, resale windows, per-fan limits, screening for every buyer, and reissue for every ticket. These rules are the product as much as any screen is. The Software book’s Section 1.3 states them as the five fairness invariants that Encore tests in every build, and its Section 8.1 turns them into the system’s design. Here the point is only the strategic one. A competitor can copy Encore’s screens in a quarter. It cannot copy rules enforced at a barcode it does not issue.

Recap. Verified Resale turns part of Encore’s pipeline into a multi-sided market, whose value depends on the health of several groups at once. Its main network effect is positive until speculators arrive, and curation keeps that negative effect in check at some cost in volume. The hard side is supply, the seller pays nothing because supply is scarce, and the rules that govern the market are part of what it sells.

Exercise 2.3. Draw the sides of a platform you use or build, and write its core interaction in one sentence. Name one negative network effect it must curate, what the curation costs, and which side pays for what.

2.4 Mapping the Landscape

A chain from a user need

The kernel says what Encore will do. It does not yet say which parts of the work give Encore its advantage and which could be done by anyone. Simon Wardley’s maps, published freely from 2016, are a widely used way to see that. A Wardley map is a diagram of the components needed to meet a user need, arranged on two axes: vertically by how visible each component is to the user, and horizontally by how far it has evolved, from novel to standardized. The Architecture book’s Section 13.2 introduced the horizontal axis, the evolution road from genesis through custom and product to commodity, together with the idea of posture lag, and its Figure 13.1 draws it. We use that road here as it stands. What this chapter adds is the rest of the map: the anchor in a user need, the chain of components beneath it, and the reading of the whole as a landscape on which a company has to move.

A map begins with an anchor, the need the whole chain exists to meet. For Verified Resale the anchor is a fan holds a guaranteed ticket. Beneath it sit the components that meet the need: a listing on a partner’s storefront or in Encore’s app, a purchase with the all-in price, payment and the payouts that follow, screening of the buyer, reissue under a new ticket identity, revocation of the old barcode at the gate, delivery to the buyer’s phone, and the organizer’s rules that govern every step. Each component depends on the ones below it, and the further down the chain we go, the less of it the fan ever sees.

A touring crew’s stage plot works in a similar way, starting from what the audience must hear and see and working down to the cables, power and rigging beneath. It shows what depends on what, which is half of what a map does. The analogy breaks on the second axis. A stage plot has no sense of time, while a Wardley map shows that every component on it is moving, and the movement is what makes the map strategic.

Wardley mapping is a thinking tool. Many practitioners use it, and parts of the UK government took it up early; in 2014 the chief information officer of High Speed Two described on a government technology blog how mapping shaped its technology strategy. There are, however, no empirical studies of its effect on outcomes, and its value lies in the conversation it forces: people who place the same component in different stages discover that they disagree about the business.

Reading the map

Figure 2.4 records where Encore’s trio placed each component. The placements are judgments, and the map’s purpose is to expose them to argument.

Figure 2.4 — The components of Verified Resale placed on the evolution road. Advantage lives in the custom middle of the chain, where Encore controls the barcode.

Read from top to bottom, the map tells Encore where its differentiation lives. The parts the fan sees most, the storefront and the checkout, are products that partners and Encore already run, and nothing about Verified Resale requires them to be special. The parts nobody sees, reissue and revocation at the gate, are custom, specific to Encore, and the reason any fan can trust a resold ticket. The organizer rules sit near genesis: nobody yet knows the right way to express them, and Encore will learn by building. (The organizer rule assistant, the AI feature of Verified Resale that Section 6.5 designs, sits on top of those rules and is newer still.) What Encore should build, adopt, buy or rent for each component is the Architecture book’s question in its Chapter 13, and the answer follows the posture that book attaches to each stage. Here the map’s job is to say where the advantage lies, so that effort goes there.

The climate

Wardley calls the forces that move a map, whatever any one player does, climatic patterns. His published list has about thirty of them, and three bear directly on Encore. The first is that everything evolves through supply and demand competition. Reissue with revocation at the gate is custom today, but Ticketmaster’s SafeTix, introduced in 2019 with rotating barcodes bound to the ticket holder, shows that the capability is known and is moving toward product. Encore’s advantage in reissue is real and temporary, and the memo says so.

The second pattern is that success breeds inertia. Encore’s anti-scalper brand is a genuine success, and it is the reason hosting resale feels like betrayal to many inside the company. It comes from people protecting something that worked, and a map shows it for what it is: a force resisting a move the landscape has made necessary.

The third is that competitors’ actions change the game. When a large primary ticketer moved resale inside its own walls, as Ticketmaster did in Europe in 2018, it changed what fans and organizers expect of every primary seller. The open question for Encore became one of timing.

Regulation is not one of Wardley’s patterns, but it is a feature of this landscape that Encore must anticipate. Several EU countries already restrict resale above face value, Ireland among them. A face-value cap built in from the start means that a new law of that kind asks little of the product. Section 5.5 sets out the laws and what they demand of the product.

Partners who compete

Rowmate is Encore’s launch partner, and it also runs its own resale marketplace, where it sells tickets for other ticketing companies on its own terms. That makes it a partner and a competitor at once, and the map clarifies how to live with both. Encore must own the components that make the guarantee: reissue, revocation at the gate and the rules. It can leave open the components where partners add value and where competition among them helps fans: listing, storefront and the way each partner presents and sells. Parker and his co-authors treat openness as a deliberate lever, and Encore pulls it carefully: certified partners only, and on their side of the line, freedom to compete for buyers.

Ticketmaster’s 2018 exchange illustrates why this division holds. Because the primary seller owns reissue and entry, no partner can undercut the guarantee: a partner that broke the rules would be selling tickets that do not scan. How Encore runs its partner program, what partners may see and how it handles a partner that competes, is the Software book’s material in its Sections 8.1 and 8.3. The strategic reading is enough here: own what makes the ticket trustworthy, and open what makes it easy to find.

Doctrine and methods

Wardley also writes of doctrine, principles that apply whatever the landscape, and one of them speaks directly to how Encore should organize the work: use methods appropriate to each stage of evolution. A component near genesis needs exploration, quick experiments and tolerance for being wrong. A component near commodity needs efficiency, standards and caution. Wardley developed this into a model of pioneers, settlers and town planners, drawing on Robert X. Cringely’s “commandos, infantry and police” in Accidental Empires (1992). The model has Wardley’s own account behind it and few published adoptions, so we take it as a lens. Read that way, it explains why the people building the organizer rules and the people changing Seat Inventory’s barcode issuance should not be asked to work the same way, even inside the same program. The first are exploring, and the second are changing eight-year-old code that every ticket depends on. How Encore designs the teams themselves is the Software book’s subject in its Section 9.2.

Recap. A Wardley map anchors the chain of components in a user need and places each on the evolution road, and its value is the disagreement it exposes. For Verified Resale, the advantage lies in the custom middle of the chain, in reissue, revocation and rules, and Encore owns those while leaving listing open to partners who may also compete. The climate moves the map: reissue is evolving toward product, Encore’s own success breeds inertia, and competitors’ moves have already changed what fans expect.

Exercise 2.4. Map one user need of your product to at least six components, and place each on the evolution road. Circle the one component you would never outsource, and write one sentence on how long your advantage in it is likely to last.

2.5 From Strategy to Objectives

Problems down, results up

A strategy reaches teams in one of two ways. In the familiar way, leaders turn the strategy into a roadmap of features and hand each team its share. In the way Cagan and Jones describe in Empowered, leaders give each team a problem to solve, the team proposes the results it believes it can achieve, and the two negotiate until the team’s ambition and the company’s needs meet. Leaders keep the right to say that a proposed result is not ambitious enough, and teams keep the right to say how they will reach it. This is a practitioner model, from the Silicon Valley Product Group’s work with many companies, with no studies behind it. It fits the case for empowered teams that Chapter 1 made, and it is the model Encore follows.

When the Resale team formed in the fourth month of the bet, three teams received the problem. The Resale team was asked to make face-value resale work end to end for fans, organizers and Rowmate. The Inventory team, which owns the Seat Inventory & Ticketing service and the barcode issuance inside it, was asked to make reissue safe and atomic. The Partner APIs team was asked to let a certified partner list and sell through Encore with no access to anything else. None was given a feature list. Each came back with key results, and two of the three were sent back once to sharpen them.

OKRs as Doerr wrote them

The form those results took has a history. Andy Grove ran Intel with a system of objectives and key results, and he described it in High Output Management (1983). John Doerr learned it at Intel in the 1970s, and in 1999, after Kleiner Perkins invested $12.5 million in Google, he introduced it to Google’s founders. His book Measure What Matters (2018) is the standard account. An objective is a qualitative statement of what we want to achieve, significant and inspiring enough to be worth committing to. A key result is a measurable statement of how we will know the objective has been reached, specific enough that at the end of the period nobody can argue about whether it was met. An objective typically has three to five key results.

Doerr adds rules that matter more than the format. Committed OKRs, which a team is expected to achieve in full, are kept apart from aspirational OKRs, which stretch beyond what the team is sure it can do; Google’s guidance has been that reaching 60 to 70% of an aspirational key result is a good outcome. OKRs are public across the company, so that any team can see what any other is trying to achieve. A large share of them are set from the bottom up, by the teams themselves. And they are kept separate from compensation, because a goal tied to pay will be set low and met.

The evidence for goals of this kind comes from goal-setting theory, and it predates OKRs. Edwin Locke and Gary Latham, summarizing 35 years of research in 2002, found that specific and difficult goals lead to higher performance than vague or easy ones, provided people are committed to the goals and receive feedback on their progress. That finding, and not Google’s success, is the reason to take OKRs seriously. Doerr’s celebrity cases are best read with care, since we hear about the organizations that succeeded and rarely about those that used the same method and failed.

OKRs without theater

Goal-setting has a dark side as well, and the research describes it too. Lisa Ordóñez and her co-authors, in “Goals Gone Wild” (2009), documented the side effects of goals pushed too hard: narrowed attention that ignores everything outside the goal, unethical behavior to meet a target, and the erosion of cooperation between people with competing goals. Locke and Latham replied in the same journal, and the exchange is worth reading for its honesty: both sides agree that goals are powerful, and they disagree about how often the power goes wrong. The Software book’s Section 10.5 tells the best-known recent case, the Wells Fargo sales-target scandal of 2016.

At Encore, four failures appeared in the first round of drafts, and each had a repair. The first was the key result written as an output: “ship the resale rules console”. It describes something the team will build, and it would be met even if no organizer ever used the console. The repair was to name the behavior the console should cause: “at least two of the three pilot organizers set their own resale rules without help from Support”. The second was the cascade that removes choice, in which a director’s key results were copied, word for word, into the objectives of each team below. The teams below had nothing left to decide, and the repair was to give them the problem and ask for their results. The third was scale. Forty teams with seven or eight key results each produce some three hundred numbers that nobody reads, and Encore’s rule since is that a team proposes no more than four. The fourth was the quietest and the most damaging: an engineering manager who began to cite key results in performance reviews. Within a quarter the team’s proposals had become noticeably safer, which is exactly what Doerr’s rule predicts, and the practice was stopped.

The Resale team’s objective for its first live quarter shows the form after those repairs.

Objective  Fans who cannot go pass their seats to real fans at face value,
           and everyone at the door trusts the result.        (aspirational)
KR1  Verified resales completed per eligible pilot event: from 0 to 40
KR2  Share of listings that sell before the resale window closes: ≥ 55%
KR3  Resold tickets refused at the door because of a reissue fault: 0  (committed)
KR4  Pilot organizers who set their own rules unaided: 2 of 3
Guardrails (watched only): primary sell-through on pilot events,
           bot-block rate on resale buyers, Support cases per 1,000 resales

KR1 counts only the eligible events of the three pilot organizers; it is a narrower measure than the month-18 target the memo sets across every eligible event, which Section 10.5 reports. KR3 is committed, and the rest are aspirational. Its committed status follows from the strategy: a reissued ticket that fails at the door breaks the one promise that the whole bet rests on, so it is not something the team is allowed to fall short on. The guardrails sit outside the key results, because a team that meets its targets by harming primary sales or letting bots in has not met them. Chapter 4 makes them into measures.

Three kinds of outcome

Teresa Torres, in Continuous Discovery Habits (2021), gives the clearest account of which outcomes a team should own. She distinguishes three. Business outcomes measure the health of the business, such as revenue or retention, and they lag: by the time they move, the causes are months old, and many teams contribute to them. Product outcomes measure changes in what customers do inside the product, and a single team can move them directly. Traction metrics measure the use of one particular feature, and they suit work on a feature already known to matter, or a new trio still learning its product. Torres recommends that trios own product outcomes, because those are close enough to influence and meaningful enough to matter.

The Resale team therefore owns verified resales completed per eligible event, a product outcome. Resale revenue is a business outcome, and it depends on Encore’s pricing, on the economy and on which tours happen to sell out. A verified resale counts as completed only when the reissued ticket is scanned at the door. That definition matters, because it ties the team’s outcome to the fan’s real experience and makes it the main input to the north-star measure, resold tickets that scan at the door, that Section 4.1 builds. The share of listings that sell is close to a traction metric, and the team watches it as a leading signal.

Roadmaps and the one commitment

If teams own outcomes, what becomes of the roadmap, the dated list of features that sales and leadership have long relied on? Cagan’s answer, and the one set out at length by C. Todd Lombardo, Bruce McCarthy and their co-authors in Product Roadmaps Relaunched (2017), is to replace the dated list with problems in priority order, each linked to the outcome it serves. Such roadmaps rest on practitioners’ experience, and they tell sales what Encore is working on and in what order without promising features that discovery may yet show to be wrong.

Some dates are real, and pretending otherwise helps nobody. Cagan’s name for them is high-integrity commitments: the few promises made with a fixed date, typically because another party depends on them, made only after enough discovery to know what is being promised and what it will cost. In this book, Encore’s high-integrity commitment for Verified Resale is the organizer contract season. Every autumn, mid-size promoters sign the ticketing terms for the following year’s tours and festivals. If Verified Resale terms, the face-value cap, the fee share and a working rules console that organizers can try, are not ready to include in those contracts, the first live events slip by a full year. The commitment was made in the fourth month, after discovery, and it is Encore’s only dated promise to organizers. The Software book’s Section 10.2 follows a different date, the partner API’s availability to Rowmate, which is the commitment as the engineering teams experience it. Both dates are real; each book follows the one that matters to its readers.

The Product Kata

Quarterly objectives and weekly work need something to connect them, or a team will set its objectives in January and rediscover them in March. Melissa Perri adapted a practice from manufacturing for that purpose. Mike Rother’s Toyota Kata (2009) described the Improvement Kata, the routine by which Toyota’s managers taught improvement: understand the direction, grasp the current condition, establish the next target condition, and experiment toward it. Perri’s Product Kata, first published on her blog in 2015 and expanded in Escaping the Build Trap, applies the same four steps to product work. The team restates the direction it has been given, analyzes where its product stands today, sets the next goal it can reach within weeks, and chooses experiments to move toward it. The Improvement Kata has a long record in manufacturing. The Product Kata is a practitioner adaptation without published evaluations, and Encore uses it as a habit, without making it a ceremony. Each pass through the loop asks whether the last experiment moved the outcome, and each answer feeds the weekly discovery work that Chapter 3 describes.

Recap. Leaders give teams problems, and teams propose the results they can achieve. OKRs work when they follow Doerr’s rules, which goal-setting research supports and whose failures the same research describes. Teams own product outcomes, roadmaps list problems in order, and the few real dates become high-integrity commitments made after discovery, which for Encore means the organizer contract season.

Exercise 2.5. Take one of your team’s key results and decide whether it is an output, a traction metric, a product outcome or a business outcome. Rewrite it one level up or down, and say who in your organization would object to the rewrite and why.

Kata: The Empty Court

Your brief: “Courtside.” Courtside runs a booking marketplace for sports courts in eight cities: tennis, padel and five-a-side pitches. It has 60 engineers in eight teams, and its market has three sides. About 900 clubs list their courts and set their prices. About 400,000 players book courts by the hour, and some 3,000 coaches book courts in blocks for their lessons. Coaches now want to resell the slots they have booked and cannot use, which happens often when lessons are cancelled. Clubs are split: some welcome the extra bookings, and others fear that coaches will block-book prime evening hours cheaply and resell them at a premium, which a few already do through group chats. Players complain that the best slots are never available. Courtside’s leadership has a one-line strategy, “become every player’s home for sport”, and wants a resale feature in the next quarter.

Deliverables:

1. Strategy kernel — One page in the form of Section 2.1’s kernel: a diagnosis that names the real problem with coach resale today, a guiding policy, five or fewer coherent actions, an explicit list of what Courtside will not do, and a proximate objective.
2. The jobs — A job statement for clubs, players and coaches, each with its functional, social and emotional dimensions, its real competitor, and the questions a round of switch interviews would need to answer.
3. The market’s shape — The core interaction of coach resale in one sentence, its main negative network effect and how you would curate it, which side is hard, and who pays what.
4. A map — A Wardley map anchored on one player need, with at least six components placed on the evolution road, and the one component Courtside must own.
5. A team objective — An objective with three or four key results for the first quarter, marked committed or aspirational, with the guardrails you would watch alongside.

Rubric:

Where you now stand

You can now tell a strategy from a statement of ambition, by asking for its diagnosis, its guiding policy and the coherent actions that follow, and you can write one with a proximate objective and a list of refusals. You can describe the people a product serves by the progress they seek, and you can reason about a market with several sides: its network effects, the side that is hard to attract, and who should pay. You can map where an advantage lies and how the landscape is moving, and you can turn the whole into objectives that teams propose and own. What you cannot yet do is know whether any of it is true. Every job in Figure 2.3 is a hypothesis, and so is every assumption behind Encore’s guiding policy: that fans will trust a reissued ticket, that organizers will switch resale on, that partners will accept the cap. Chapter 3 takes those assumptions to the people who can confirm or refute them, beginning with the cheapest test that could prove the strategy wrong.

References

• Richard P. Rumelt — Good Strategy Bad Strategy: The Difference and Why It Matters. Crown Business, 2011.
• Richard P. Rumelt — The perils of bad strategy. McKinsey Quarterly, 2011 — free online.
• Walter Isaacson — Steve Jobs. Simon & Schuster, 2011.
• Michael E. Porter — What Is Strategy?. Harvard Business Review, November–December 1996.
• Clayton M. Christensen, Taddy Hall, Karen Dillon, David S. Duncan — Competing Against Luck: The Story of Innovation and Customer Choice. HarperBusiness, 2016.
• Carmen Nobel — Clay Christensen’s Milkshake Marketing. HBS Working Knowledge, 2011 — free online.
• Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary — Platform Revolution. W. W. Norton, 2016.
• David S. Evans, Richard Schmalensee — Matchmakers: The New Economics of Multisided Platforms. Harvard Business Review Press, 2016.
• Jean-Charles Rochet, Jean Tirole — Platform Competition in Two-Sided Markets. Journal of the European Economic Association 1(4), 2003.
• Simon Wardley — Wardley Maps. Self-published, 2016 onward — free online.
• John Doerr — Measure What Matters. Portfolio/Penguin, 2018.
• Edwin A. Locke, Gary P. Latham — Building a Practically Useful Theory of Goal Setting and Task Motivation: A 35-Year Odyssey. American Psychologist 57(9), 2002.
• Marty Cagan, Chris Jones — Empowered: Ordinary People, Extraordinary Products. Wiley, 2020.
• Teresa Torres — Continuous Discovery Habits. Product Talk, 2021.
• Melissa Perri — Escaping the Build Trap. O’Reilly, 2018.
• A. G. Lafley, Roger L. Martin — Playing to Win: How Strategy Really Works. Harvard Business Review Press, 2013.