Why did the auto dealers in New Jersey work to get Tesla’s direct sales model banned in the state?
Why do Uber and Lyft have to battle taxi and limousine commissions in order to do business?
And why didn’t Hilton or Marriott start Airbnb?
One of the reasons is domain dependence, something Nassim Taleb covered in Antifragile. As humans, we tend to see things framed through our own experiences. And, as humans, we can’t experience very many things in relation to the opportunities available to us. So to an auto dealer in New Jersey, Tesla looks like an attack on their business model, while Uber and Lyft scare T&LC’s who fear loss of regulatory power and large hotel chains can’t understand why people would rent their homes to total strangers.
The old adage “when all you have is a hammer, everything looks like a nail” is essentially what domain dependence is. Only in reality we don’t know the thing in our hand is called a hammer and that the thing we’re looking at might be a grapefruit. That’s because we have no familiarity with the concept of a grapefruit, because it’s never been in our domain to experience.
What’s the risk of domain dependence? You either miss a growth opportunity or get blindsided more quickly than you can react with either new products or regulations from your bought- and paid-for politicians.
Ideas for developing immunity to domain dependence:
- Hire people from outside your industry. Sure, Marriott wants CMOs and CPOs from the hotel industry. But what if their product and marketing people had backgrounds from companies that relied on crowdsourcing for product ideas? I don’t think they’d have beaten Airbnb to the punch, but they may have reacted more quickly.
- Hire for attitude and learning speed. Bring in people from outside your industry. Even if they don’t know much about what you do today, if they can learn quickly, they’ll figure out what you do and then add their novel experience. Your company’s domain can only get larger, which is a good thing.
- Consciously exit your domain. Stop going to your industry’s trade shows. Only read the industry rag once a week. You’re already an expert in what you do, right? So study some other fields. Could they help you today? Who knows. But you’ll be more likely to notice that you have a hammer in your hand before you swing it at that grapefruit.