Experts and their mental models

I have been talking about expertise in logistics these few weeks at work and it go me thinking about the paper Lia Dibello of ACSI Labs co-wrote - “How do you find an expert?”

This 2010 paper talks about changing priorities of enterprises towards speed. If anything, this has only accelerated even further with the advent of Generative AI.

This knowledge economy, typified by global information and communication technologies, has created a new kind of market volatility. Successful enterprises now prioritise speed and flexibility over the old standards of size and access to resource.

I have been on multiple customer calls where we inadvertently talk about their AI initiatives. The list usually ranges from 1 to 5 but their choices reveal their expertise of business. This comes into the foreground when I am talking to service providers who operate in logistics space.

In the conversation I am trying to extract their mental model of the domain. The paper has a very nice explanation of mental model.

The term mental model refers to mental structures that instantiate long-term domain knowledge and that are used to reason through a specific task. Mental models develop as a function of experience, and are not based on pure logical deduction.

My sense making on the customers expertise starts with how they introduce themselves. If they focus on just names of their previous employers then they will be itching to invest in new technology because in their mental model, technology provides the differentiation and they should be adopting newer things.

And if they introduce by listing their experience in terms of roles they have done, their mental model is much more well rounded. They are more focused on the function over form and when we talk to value that aligns with their mental model, it sticks.

In the end a mental model is a form of simulation mechanism for decision making.

Mental models enable simulation; that is, decision makers mentally “run” the model to make predictions about possible events in the environment or in a system and to prepare for future outcomes.

The key to expertise in logistics space is being aware that it is a trigger economy. We come into play when commerce takes place and are reliant on transactions requiring goods to move.

We are essentially a service provider looking to differentiate when the market forces our services to be commoditised. It is local in nature and for a company looking to move goods, it ties multiple such service providers together to make it happen

And the experts do signal their mental model in calls.

For example let us consider a brokerage in North America. If a company is seeking your services for moving freight. It is doing so because your brokerage has competency and capability within the region of operation. You are equipped to secure freight that can handle the commodity of the company and can increase your capacity as an organisation when the demand increases from company.

Going back to business expertise. Lia DiBello frames it as a function of triad

Our research revealed that people who have achieved a high level of business expertise have a deep understanding of the following three core areas: (1) factors involved in effective operations, (2) forces influencing the market, and (3) those driving business finance and economic climates. Consistently successful business leaders have been shown to intuitively understand these areas and their impact on each other, and to pay attention to this fundamental triad in a uniquely dynamic way within a guiding context of business strategy. …… Unlike most business professionals, they are attuned to the early indicators of widespread change. Beyond this, they are expert at keeping the triad in balance, or shifting the balance when external conditions are conducive to do so.

Over the last 3 years in the freight market if your brokerage retained gross margins with positive growth, you have operated with expertise. In contrast if your brokerage grew fast but with the new scale you are scrambling to retain the margins and desperately searching for tools to help , you were a service provider the shipper leveraged due to stagnant freight rates. The former are not waiting for the market to turn or hoping it turns. They effectively operate in the market they get.

If and when it turns, they will shift their focus to newer competencies to diversify their customers. The current shift in market towards increased uncertainty and shrinking capital unless you are investing in AI reveals a renewed focus on effective operations. With these impacts, how you increase your operational efficiency remains to be the key. And deploying a bunch of voice agents to field your carrier calls is not one of them.

This ties to product building as well. Management below the executive level is typically skilled in one or two of three factors in the traid.

In contrast, competent managers (one level down from experts) tend to be very talented in only one or two of these areas; however, they often do not understand the dynamics between these areas as well as the “superstars” do. Competent managers are likely to be very successful when larger market or economic trends are favourable to their specific skills.

If you could demonstrate increased expertise on any one factor of the triad and frame it within the customer’s mental model of logistics, it helps in relaying the value proposition stick to the experts on the customer side.

I want you to leave this post with one takeaway, its the motivation to find answer to this question - how can the product I build increase the expertise of my customer?

If you can answer that within the mental model of the customer, you will start seeing success when delivering your sales pitches.

Round up

I have been meaning to write about aggregators and platforms referencing the Bill gates line from a stratechery post and its derivation for logistics space.

A platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it. Then it’s a platform.”

In logistics, building true platforms where suppliers can engage with their buyers on the platform has not thrived. Instead, the focus has been on building aggregators which intermediate between buyers and suppliers.

I will write more about this in the next issue but I have come to believe there are no strong network effects in marketplaces in logistics. Since most of the marketplaces are modelled as an aggregator.

Links that resonated

Phantom Obligation

This post talks about how the design of rss reeders are similar to E-mail inboxes and how it leads to an obligation you want to honour for no one.

Outcome Orientation as a cure for information overload

If you are similar to me, on any given day there are 50-60 posts in your rss feed reader and you might feel the obligation to catchup. When you honour the obligation, you end up being overwhelmed with information overload. This post from Cedric talks about how you could avoid it by being outcome oriented.

Sign off

I am back to having two phones on me at all times. The lack of profiles on iOS led me to invest in an android phone.

In my early years of working, most of my work happened when I was on the move. I never had the habit of sitting in a designated place to work. So, working out of phones became second nature(like writing this newsletter).

My current setup requires that I move around a bit and I don’t want to carry my laptop whereever I go. So, a phone with work apps will be handy in pushing through work when I am in between things. Also, it comes handy as I don’t have to text people on personal messages when traveling because I don’t have the official chat app on my phone.

In short, I don’t feel the anxiety of not spending enough time at the desk because far more work gets done even when I am not on my laptop.

Signing off till next time,

Vivek, fearing re-occurrence of carpal tunnel syndrome