Terms

Glossary of terms.

📄️ Adaptability

An organization's capacity to adjust its strategy, structure, and operations in response to changes in the environment, market conditions, or competitive landscape. Key to overcoming inertia.

📄️ Agility

The ability of an organization to move quickly and easily, responding rapidly to opportunities or threats. Often contrasted with inertia; managing inertia aims to increase agility.

Obstacles that make it difficult for new competitors to enter a market, such as high capital requirements, regulatory hurdles, established brand loyalty, proprietary technology, or network effects. Defensive strategies often focus on raising these barriers.

📄️ Change Management

The structured approach used to transition individuals, teams, and organizations from a current state to a desired future state, often involving processes to manage resistance and facilitate adoption. Crucial when managing inertia or implementing new strategies.

📄️ Chicken And Egg Problem

A situation where two interdependent groups are required for success, but neither will participate without the other. Common in marketplaces and platforms where you need both buyers and sellers, or producers and consumers, to see value. Solving it usually involves seeding one side through incentives, partnerships, or staged rollout to build initial momentum.

📄️ Chokepoint

A critical component or position others depend on. Controlling a chokepoint gives you leverage in supply chains or ecosystems.

📄️ Commoditisation

The process by which a component evolves from novel and uncertain to standardised, ubiquitous, and low-cost. Typically involves a shift in user expectations, decreasing margins, and increasing competition.

📄️ Constraint

A limitation or bottleneck within a system, value chain, or market that restricts flow or performance. Strategies can involve creating, exploiting, or removing constraints to gain advantage.

📄️ Consumption Data

Data gathered from how users interact with and consume a product, service, or platform. Used in 'Sensing Engines' (ILC) to identify patterns, emerging needs, and successful innovations within an ecosystem.

📄️ Cost Of Transition

The difficulty or expense required to shift from one technology, provider, or model to another. Often used to create defensive moats.

📄️ Critical Mass

The minimum level of adoption or participation required for a network, platform, or standard to become self-sustaining and generate significant value. Reaching critical mass is often key to exploiting network effects.

📄️ Disruption (Disruptive Innovation)

An innovation that creates a new market and value network, eventually displacing established market-leading firms, products, and alliances. Often starts by targeting overlooked segments or offering simpler, cheaper alternatives.

📄️ Economies Of Scale

Cost advantages gained by increasing production volume, usually through fixed cost amortisation or process efficiencies.

📄️ Evolution

The process by which components change over time, moving from uncertain, rare, and custom-built (Genesis) towards stable, common, and industrialized (Commodity/Utility). Wardley Mapping places components along an evolution axis (X-axis) representing this journey.

📄️ Fear, Uncertainty, and Doubt (FUD)

A marketing or communication tactic used to dissuade customers from choosing a competitor's product by spreading negative (often vague or unsubstantiated) information to create anxiety about the alternative. A strategy aimed at reinforcing user inertia.

📄️ Feedback Loop

A cycle where the output of a system influences its subsequent input, leading to amplification (positive feedback) or stabilization (negative feedback). Network effects create positive feedback loops where growth begets more growth.

📄️ Horizon Scanning

The practice of systematically searching for and analyzing weak signals and potential future developments across various domains (technology, social, economic, political) to anticipate future threats and opportunities.

📄️ Incumbent

An established company or entity that holds a significant position or market share within an industry. Incumbents often face challenges from new entrants and disruptive innovations due to inertia.

📄️ Industrialisation

The transformation of a product or activity into a scalable, repeatable, and optimised form. Emphasises efficiency, standardisation, and operational control.

📄️ Inertia

Resistance to change. Can stem from users, systems, internal politics, or existing investment. Critical to recognise and overcome or exploit.

📄️ Innovate-Leverage-Commoditize (ILC)

An ecosystem strategy cycle described by Simon Wardley. An organization innovates (or allows others to innovate on its platform), leverages the ecosystem built around it, senses successful patterns, and then commoditizes those patterns into its core offering, repeating the cycle.

📄️ Innovator's Dilemma

The Innovator's Dilemma is a concept introduced by Clayton Christensen in his book of the same name. It describes the challenges that established companies face when they are confronted with disruptive innovations. These innovations often start at the lower end of the market, targeting niche segments or underserved customers, and gradually improve over time, eventually displacing established products and companies.

📄️ Jevons Paradox

When increasing efficiency leads to increased overall consumption. Common in utilities, compute, and storage.

📄️ Liquidity (Marketplace)

In the context of marketplaces (two-factor markets), liquidity refers to the ease and likelihood with which providers can find consumers and consumers can find providers. High liquidity is crucial for marketplace success and network effects.

📄️ Lock-in

A strategic position where users or partners become dependent on your offering, making it costly or painful to leave.

📄️ Market Dominance

A position where a company holds significant control over a market, often characterized by high market share, pricing power, and strong barriers to entry. Strategies like 'Tower and Moat' aim to achieve this.

📄️ Metcalfe's Law

Metcalfe's Law proposes that network value scales proportionally to the square of users (N2), reflecting the increasing connections. This law highlights the growth of network value as more users join, emphasizing the importance of user base in determining a network's worth.

📄️ Moat (Strategic)

Defensive barriers built around a company's core business ("Tower") to protect it from competition. These can include network effects, high switching costs, economies of scale, brand loyalty, or intellectual property.

📄️ Positioning

Deliberately placing your organisation, product, or capability in a part of the market that offers future strategic advantage.

📄️ Price Elasticity

A measure of how demand changes in response to price variation. High elasticity means demand is sensitive to price changes.

📄️ Probe (Strategic)

A small-scale, low-risk action or experiment designed to test competitor reactions, market reception, or potential opportunities without committing significant resources. Used in strategies like 'Circling and Probing'.

📄️ Reed's Law

Reed's Law is a principle in network theory that states that the utility of a network increases exponentially (2N) with the number of users, particularly when considering the formation of groups within the network.

📄️ Sensing Engine

A mechanism (usually data-driven) used to detect patterns, user behaviour, or emerging trends to inform strategy.

📄️ Situational Awareness

A deep understanding of the competitive landscape, including user needs, component dependencies, market evolution, and potential competitor moves. Wardley Maps are a tool designed to improve situational awareness for strategic decision-making.

📄️ Sunk Cost Fallacy

The cognitive bias where individuals or organizations continue a behavior or endeavor as a result of previously invested resources (time, money, or effort), even when current evidence suggests it's no longer the best course of action. A major source of inertia.

📄️ Switching Costs

The effort, expense, or friction users incur when moving from one solution to another. Often exploited to increase lock-in.

📄️ Uncertainty

The lack of predictability about the future state of components, markets, or competitive actions. Strategies in early evolutionary stages often focus on reducing uncertainty through exploration and experimentation.

📄️ Utility (Evolution Stage)

The final stage of evolution in Wardley Mapping, characterized by highly standardized, reliable, commodity-like services often provided on a pay-per-use basis (like electricity or basic cloud compute). Competition is based on operational efficiency and price.

Author

Dave Hulbert

Builder and maintainer of Wardley Leadership Strategies