Slot Machine Thinking is my own term; it refers to people who mistake losing slowly with winning gradually. What people who play slot machines seemingly don’t understand (or don’t care about) is that whether it takes you one minute or five hours to lose your money, you still lose. How long it takes is just an illusion.
There is entirely too much slot machine thinking going on in the financial services today.
When the market shifts, then you have to shift too. There is no escape; you will ultimately change the way you operate, or you’ll go out of business. Business, like nature, can be cruel. It rewards, exclusively, the most adaptable.
Unfortunately, most businesses are not very adaptable. They spend far too much time resisting change, hiding in fear and racing to the bottom (commoditization). Doubling down and doing what you did before, only better or with more urgency, won’t save you.
You need a serious shift. You need to throw your old strategy out the window and accept that it’s not working, and will not work, anymore.
Within every market there is a base (people seeking a solution), a middle (people seeking some originality, something new or different, something a little better) and a top (educated or informed and passionate consumers willing to pay more or go further for something special).
Here is what happens … Imagine the typical financial advisor.
First, a disruption happens in the marketplace, which instantly sucks the base out of the market. We live in a DIY world, lots of competition from people willing to do it for less than you, ETFs and Robo Advisors. The base of people has a lot of options.
Next, without a base, advisors have to struggle to attract enough new clients to both stick around and invest in getting better. Many of the advisors either don’t have the skills, the resources or the sense to build a business without the base. Slowly, like old ladies at the slot machines, they disappear.
Finally, the few who are the most adaptable shift to the top. These are the advisors with courage who redefine their role, who do difficult human work (that I blog about here all the time) and who become indispensible to their clients. Most advisors never make this switch. It’s too scary and weird/unknown. The Lizard breaks these advisors’ legs, incapacitates them and then slowly eats them alive.
Disruption kills anyone who created a commodity.
When you see disruption coming, you have two choices:
Get into a different line of work, or shift up faster and more boldly than anyone would believe is sensible.