Chapter 8: Keeping the Wolves at Bay

Core Focus

The tension between simplification and usefulness in strategic mapping. Introduces worth-based development, pricing granularity, and flow.

The Simplicity Trap

Ashby's Law of Requisite Variety: "the controlling mechanism of a system must be capable of representing what is being controlled." Organizations oversimplify through 2x2 matrices, trading deeper understanding for apparent manageability.

Worth-Based Development

Using a Large Format Printer (LFP) project example: shifting from contract-based to outcome-based compensation aligns incentives. Charging per lead generated rather than upfront:

Focuses both parties on actual user value
Incentivizes cost-effectiveness
But exposes friction with rigid budgeting systems ("corporate corpus")

Result: more leads in 3 months than the client typically produced annually.

Pricing Granularity

Zimki (2006) charged per function call. This granular cost visibility enabled:

Identifying inefficient code
Informed investment decisions about optimization
Predated AWS Lambda by 8 years

Flow and Capital Movement

Maps contain multiple flows: financial, physical, informational, risk, time, social. Understanding flows enables financial modeling and reveals where to invest for maximum impact.

Efficiency vs. Effectiveness

Critical distinction demonstrated via manufacturing example:

Company proposed millions in robotics to automate server modification
Mapping revealed root cause: custom server racks forcing expensive modifications
Effective solution: eliminate the value chain by adopting utility computing
Not "make the ineffective process more efficient"

"Be very careful of process improvements focused solely on efficiency without questioning why the process exists."

Key Takeaways

Simplification carries costs - trading complexity for manageability hides critical insights
Align incentives with value through outcome-based models
The corporate corpus resists change - good intentions embedded in systems impede innovation
Maps reveal hidden assumptions normalized through repetition
Granularity enables optimization - detailed cost visibility drives better decisions
Question the premises - before improving efficiency, verify the activity merits existence

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