Watch Out For Unintended Consequences

Always look for side effects.

Not everything goes as we expect it to go.

The unintended consequences are the outcomes of an action that were not foreseen. Results we didn't expect to see when we decided to implement an initiative or set a goal to solve a problem.

These consequences can be good, bad, or really bad. They are usually grouped into three types:

  • Unexpected benefit: When the action or goal led to a positive side-effect.
  • Unexpected drawback: When the action or goal led to a negative side-effect.
  • Perverse incentive (also known as Cobra Effect): When the action or goal implemented to solve a problem ends up making the problem worse.

Let's see some examples of the first two of them for your consulting practice. I'll write about the Cobra Effect tomorrow, due to its importance.

Unexpected Benefit

An unexpected benefit is positive, and is what we sometimes call "luck" or "serendipity". Here are some (contested) examples:

  • During the cold war, large areas in the border between Eastern and Western Europe were "no-man's lands" and unoccupied for decades. This led to the blossoming of a natural ecosystem in this huge corridor, also known as the European Green Belt.
  • Wartime also led to several ships being sunk in shallow waters, which created artificial coral reefs. Those reefs are not only an attraction for divers but also valuable to promote marine life and control erosion. Now, in response to the loss of coral reefs to global warming, retired ships are being purposely sunk.
  • Although most drugs in medicine have negative unintended consequences, some are beneficial. The drug Viagra, famous for treating impotence for men, was initially developed to lower blood pressure. The positive side effect was only discovered in clinical trials.

When marketing consulting services, we see unexpected benefits as a function of your surface area or reach. You increase your luck by exposing yourself to more people and opportunities:

  • The more articles or blog posts you write and publish, the bigger the chance of one of them being found through search, shared by an influencer, or going viral.
  • The more projects you deliver in your field, the easier it will be for you to spot opportunities for new offerings, IP, and partnerships.
  • The bigger your network (active connections and relationships), the bigger the chance someone will share or refer opportunities to you.

Unexpected Drawback

Initiatives or goals with unexpected drawbacks solve the problem, but cause negative side effects that couldn't be predicted. Some examples are:

  • Airbnb allows people to travel to a place for tourism or business without the need of building additional hotel rooms, stay in alternative locations, and often pay lower rates. But there's a tipping point for the ratio of listed properties in a city. After that, market rents tend to increase and impact not only the local population but also the landscape of neighborhoods.
  • In the last decade, there was a growth in the number of Ultra-high-net-worth people in the world. Those who live in countries with high-income taxes or low political security started looking for options to move their assets, and buying real estate in foreign countries such as Hong Kong, Canada, and Australia became popular. This led to uninhabited communities and higher housing costs for locals.
  • Public policies designed to protect the US steel industry did their job, but also caused a reduction in the national steel production, higher costs to users, and higher unemployment in other associated industries.

In consulting, unexpected drawbacks from marketing or sales initiatives are the norm, not the exception. I see many of those when consultants start adopting tech or automated tools prematurely:

  • Sales enablement tools used for email or social media outreach can help you streamline processes. But the marketing promises of Martech vendors and the way these tools are designed incentivize consultants to perform spamming, which is illegal and potentially damaging to their reputation.
  • Using paid advertising to drive traffic to your website or grow your marketing platforms is fast and scalable. But dark funnel activities and poor marketing attribution artificially inflate their effectiveness - leading to a cost of acquisition that's higher than informed, and a lot of non-fit prospects.
  • Adopting specialized software early on can also lead to long-term risks to your business due to dependency. When you don't develop redundant systems or the capabilities to perform a task without that tool or platform, any future changes to it will directly impact your firm.

Question for you: Are you setting the right goals for your business and clients? Take a look at them, and brainstorm what are the second-order effects that they can produce when pursued or achieved.

Tomorrow, we'll discuss the Cobra Effect and how you can avoid it.

Thanks for reading. You can get more specialized and actionable growth insights for micro consultancies in our newsletter. Every Tuesday, you get one idea from Danilo, one quote from other experts, one number you need to hear, and one question for you to level up your consulting practice.

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