Mental Model Posts ‘Tragedy of the Commons’

How to Avoid a Bad Business: The Ravages of Commoditization

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Photo by Stuck in Customs

Certain aspects of business can behave in fairly predictable ways.  One of the ways, which is more painful than funny, is the tendency of products or services to become commodities over time.  When this happens, it’s often five mental models that come together and drive everything towards commoditization.

First of all, Zipf’s Law (R.I.P. George Zipf) has been repeatedly observed in many different environments.  Zipf noticed that the most common word in the English language appeared 10 times more often than the tenth most common word.  He noticed it in other languages as well – he got excited.  What he really noticed was the phenomenon we now call “winner takes all.”  So in any market, this is at work.  Get to number one – it’s just better that way.  Read More »