acovilla

I recently took on the personal challenge of re-reading the entire Incerto series by N.N. Taleb. I wanted to see what new perspectives I could find from his ideas about randomness, risk and skin in the game, and where to apply them. After thinking about some applications in different areas of life I focused on how they could impact modern business and specifically the practice of marketing. This seems especially relevant for entrepreneurs due to the uncertainty of their scenario, so I began to explore how many common marketing practices might be built on a misunderstanding of statistics and real-world uncertainty.

Many of the people who have worked in marketing seem to crave predictability. We want a simple machine where X, like ad spend, produces Y, like revenue. I realized this deterministic thinking has a fundamental flaw: The market is a dynamic system defined by uncertainty. When you apply simple, linear models to this system, you risk mistaking statistical noise for a meaningful signal. This can lead to fragile strategies built on a false sense of understanding.

This line of thinking made me question the obsession with metrics like website traffic or social engagement. Why do we focus on them? They are simple to track and provide an illusion of control. These metrics seem to be a poor substitute for reality. They fail to account for the rare events that impact business success or failure. One transformative client or one systemic market shock matters more than the engagement rate.

The same logic applies to past success. Relying on past performance, like several profitable quarters, to predict the future seems like a fundamental reasoning error. Past data contains no information about unobserved risks or sudden shifts. This search for a simple “truth” seems to infect how we measure success and how we try to validate new ideas.

The Validation Trap

This led me to think about startup frameworks or methodologies like the “lean startup” methodology. It is a powerful idea. Its popular interpretation, however, might be a victim of the same statistical delusion.

How do we “validate” a business idea today? We search for positive signals to confirm our idea is correct. I don’t think that any framework approach tries to disprove that same idea, so this search for confirmation (instead of falsification a la Karl Popper) almost guarantees to amplify the random noise. You could be mistaking random interest for market pull.

Another common test in marketing is the A/B that seems to illustrate this validation trap. First is the noise problem. Drawing firm conclusions from small sample sizes is statistically unreliable. The winner of the test is often indistinguishable from random chance. Second is the focus problem. This practice can create an obsessive focus on optimizing trivial variables. We test button colors while ignoring other types of risks and opportunities. It provides a false sense of scientific rigor while the strategy remains just as fragile.

The Resilient Strategy

Exploring these ideas made me think about an alternative. The goal may not be to predict a certain future but to build a strategy that can thrive under a wide range of possible futures.

This suggests an interesting shift. We can start asking: How will we respond if X, Y, or Z happens? These perspectives, adapted from the ideas of N.N Taleb, prioritize two things: survival and optionality. Survival means avoiding catastrophic failure. Optionality means positioning the business to capture massive upside from rare and positive events.

One way to translate this from theory into a practical strategy is the idea of the “barbell” approach. This means rejecting the fragile “middle-ground” approach of betting everything on one unproven idea and committing the vast majority, perhaps 90 percent, of resources to proven tactics with a limited downside. Then, allocate a small portion, perhaps 10 percent, to a series of high-risk, high-reward experiments that offer asymmetric upside. The most you can lose is 1x, but the most you can gain is 100x.

From Prediction to Preparedness

A marketer who embraces uncertainty knows that certainty is an illusion. They can trade the comfort of prediction for preparedness. So what we can start asking is: is my overall strategy robust if the unexpected happens? We can stop optimizing for the average and start building to survive the extremes.