What good is a subject matter expert? At first glance, it appears that in the age of Google, Wikipedia, and Amazon (books/Kindle/Audible) an expert doesn’t possess any special knowledge that others don’t have or cant access.
This past weekend, as I listen to Timothy Snider on BigThink (watch here) talking about Donald Trump and the rise of populism, I realized that the purpose of an expert is not knowledge, but pattern recognition.
- Doctors don’t know more about lung cancer than the latest trade journals nor their medical school textbooks, but they have seen hundreds or thousands of patients and eventually develop an internal “gut feeling”
- Timothy Snider is not the most knowledgable historian in the world, but as a historian he is able to look at Bexit, Trump, far-right German nationalism, etc. and identify recurring patterns. E.g. in times of economic stagnation and growing income inequalities, public support for right-wing governments surges as it did in Nazi Germany.
- An experienced real estate agent who has worked through the real estate bubble of the early 90s and the 2008/2009 financial crisis is well aware of the fact that the demand for real estate ebbs and flows, but there is always a customer at the right price and long term, real estate appreciates
After reflecting on this fact, I realized that in free economies, the company that adds the most value to their customer’s lives dominates the market. This conclusion may seem disconnected to the examples above, but in my own way, I think after hearing about the rise and fall of many businesses, this is my “gut feeling”.
1872 -Aaron Montgomery Ward created a mail order catalogue and started out by purchasing products and shipping them to customers (today’s “dropshipping”). He eventually cut out the middlemen at the general store and passed big savings to customers. Ward started with an 8.5×11 order sheet and within 2 decades grew it to a 540-page catalogue.
1888 – Richard Warren Sears was selling watches through mail order catalogue. By 1894, the catalogue had grown to 322 pages. By partnering up with others, Sears, Roebuck and Co. products ranging from cars to sewing machines and by become more efficient, it became developed a reputation for high quality products and customer satisfaction.
Macy’s – realized that shopping malls were become more accessible and popular and added value to their customer’s lives by making opening stores that had everything in them.
Walmart- is built around a culture of “everyday low prices” has resulted in Walmart saving Americans ~39 Bil/yr (advertised amount, source 1, source 2). Walmart has a tolerant return policy, some stores are open 24 hours a day, has a massive selection, etc.
Amazon- we all know the story of Amazon and their amazing recent successes. They add value to their customer’s lives by offering shipping within a few hours, having a massive selection, offering super-competative prices, etc.
So, whats the lesson here? No matter how big, successful or dominant you are if you aren’t evolving and adding the ABSOLUTE most value that you can to your customer’s lives you will be eliminated from the marketplace. The Pareto principle holds true once again – if you aren’t dominating in your marketplace your going extinct.