"Why You Believe The Things You Do" and The DHM Model: Understanding Beliefs and Product Strategy

Aviral Vaid

Aviral Vaid

Jan 26, 20246 min read

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"Why You Believe The Things You Do" and The DHM Model: Understanding Beliefs and Product Strategy

Beliefs play a significant role in shaping our perception of reality. What we believe to be true is often influenced by our desires and need for certainty. The more something helps us deal with uncertainty, the easier it is for us to believe it, regardless of its relationship to the truth. This is a result of our innate capacity to believe things that are advantageous for us to hold, rather than beliefs that are rooted in actual truth.

In the legal world, there is a concept known as Gibson's Law, which states that for every PhD there is an equal and opposite PhD. This illustrates the notion that people can be led to believe and defend almost anything, as beliefs are often driven by the desire to justify past actions, protect our reputation, provide hope, maximize income, or signal belonging to a particular group or tribe. Beliefs serve various purposes in our lives, and their connection to truth can sometimes be tenuous.

Our memories of past events are not always accurate. They are filtered through our subjective lens, where we keep what makes sense and discard the confusing details. The danger lies in the fact that beliefs based on personal experiences can seem evidence-based, leading us to believe that they are true. However, when faced with a complex world and overwhelming observations, our minds tend to cherry-pick the most attractive evidence to fit into simple narratives that appease us. This inclination to simplify and create stories makes it easier to fool ourselves into believing falsehoods rather than admitting mistakes.

Changing our minds and beliefs is often a challenging task. It can feel like all the effort we put into establishing our previous beliefs was wasted. Moreover, when we change our minds and adopt new beliefs, it can be difficult to take them seriously, especially in the eyes of others. The fear of being seen as fickle or inconsistent can make us hesitant to embrace new beliefs fully. This fear of judgment and the desire to eliminate uncertainty leads us to believe things that may bear little relation to reality.

Now, let's explore the connection between beliefs and product strategy, specifically through the lens of the DHM Model. Product strategy is all about finding ways to delight customers in hard-to-copy, margin-enhancing ways. The DHM Model encompasses various elements that contribute to a successful product strategy.

Firstly, brand plays a crucial role in building trust with customers. It takes years of consistently delivering value and avoiding actions that erode trust to establish a strong brand. Customers need to believe that your product is reliable and trustworthy.

Network effects and economies of scale are additional factors that can create a competitive advantage. When a product or service benefits from network effects, its value increases as more users join the network. This creates a barrier for competitors and makes it harder to replicate the product's success. Similarly, economies of scale allow companies to reduce costs and offer competitive pricing, making it challenging for others to match their value proposition.

Unique technology is another aspect that can set a product apart. By leveraging innovative and proprietary technology, companies can offer features or capabilities that competitors cannot easily replicate. This creates a distinct selling point and enhances the product's value.

Counter-positioning involves positioning your product in a way that directly challenges the established norms or competitors' offerings. By differentiating yourself and offering a unique value proposition, you can attract customers who are seeking alternatives to existing solutions.

Switching costs refer to the obstacles or costs associated with switching from one product or service to another. By making it difficult or costly for customers to switch, you can increase their loyalty and reduce the likelihood of them considering alternatives.

Process power and captured resources are additional elements that contribute to a hard-to-copy advantage. Process power refers to the efficiency and effectiveness of a company's operations, allowing them to deliver value consistently. Captured resources, on the other hand, involve securing key resources or assets that are critical for the product's success, making it challenging for competitors to replicate or access them.

To develop a robust product strategy, it is essential to engage in continuous experimentation. This involves evaluating different prices and business models over the lifespan of the product. Product strategy is not a one-time activity but an ongoing process that requires adaptation and evolution.

To apply the DHM Model to your own product, you can engage in a few exercises. Firstly, take a moment to jot down how your product currently delights customers and then brainstorm ideas on how you can further enhance their satisfaction in the future. This exercise helps you identify areas for improvement and innovation.

Next, use the eight hard-to-copy powers discussed earlier as a springboard to generate ideas. List ways your product can create a hard-to-copy advantage by leveraging these powers. This exercise prompts you to think creatively and identify unique selling points for your product.

Lastly, consider conducting price and business model experiments over the next 1-3 years. List a few potential experiments that you can explore to test different pricing strategies and business models. This allows you to gather data and insights to inform your product strategy decisions.

In conclusion, our beliefs often stem from our desire for certainty and our need to protect ourselves or advance our interests. Beliefs can be influenced by various factors, and their connection to truth is not always strong. Similarly, product strategy is driven by the goal of delighting customers in hard-to-copy, margin-enhancing ways. Understanding the DHM Model and engaging in exercises to evaluate and enhance your product strategy can lead to increased success and differentiation in the market.

Actionable advice:

1. Continuously challenge your beliefs and be open to changing your mind. Embrace new information and insights, even if it means admitting previous mistakes. This flexibility allows for growth and the possibility of adopting more accurate and beneficial beliefs.

2. Foster a culture of experimentation within your product strategy. Embrace the idea that product strategy is an ongoing process that requires adaptation and evolution. Regularly evaluate different prices, business models, and strategies to ensure you are maximizing value for your customers.

3. Seek diverse perspectives and feedback when developing your product strategy. Engage with customers, team members, and industry experts to gain insights and challenge your assumptions. This diversity of input can lead to more robust and innovative product strategies.

By understanding the complexities of belief formation and incorporating the DHM Model into your product strategy, you can navigate the challenges of uncertainty and maximize your chances of success. Remember, beliefs and product strategies should be rooted in reality and driven by a genuine desire to provide value and delight customers.

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