Market Forces
What external pressures shape your decisions?
The future already exists—we just don't know how to sell it
Perceive: What Are Market Forces?
Market forces are the external pressures that shape business outcomes: technology evolution, consumer behavior, competitive dynamics, and economic conditions. Understanding them is the difference between riding waves and being crushed by them.
Science and Technology
Knowledge comes in two main categories:
- Science: Knowledge about the nature of the world—what exists and how it works
- Technology: Knowledge of how to transform the physical and social aspects of our environment
Layers of knowledge built from experiments to explore potential:
| Layer | Description |
|---|---|
| Embodied knowledge | Knowledge embedded in tools—you don't need to know how a tool is made to gain leverage from using it |
| Codified knowledge | Knowledge in symbolic space: codes, recipes, formulas, algorithms, manuals |
| Know-how | Knowledge in people's heads that can't be easily transferred—requires practice |
Agency comes from capability to leverage science (best practice protocols) and technology effectively.
Social Glue
Cultural forces that shape markets:
- Environment: Love of nature, sacred spaces
- Fashion: Self expression and alignment with movements
- Food: The best way to make someone feel at home
- Music: Soundtrack of your life
- Sport: Connection with purpose and spirit
- Travel: Follow curiosity to broaden horizons
Question: Why Do Market Forces Matter?
You can't control market forces. You can only read them and position accordingly.
Hidden Psychological Forces
When planning for future market positions, consider psychological forces that shape adoption, perception, and value.
Perception-Based Forces:
- The Undiscovered Value Principle: The future often exists today but lacks proper marketing. Don't just invent—identify existing technologies that could succeed with different framing.
- The Experience Revelation Effect: Many innovations are only appreciated after experiencing them. Test incremental adoption pathways.
- The Packaging Value Multiplier: Containers and packaging can create value far exceeding their cost. Consumers pay premiums for identical contents in different formats.
Decision-Making Forces:
- The Post-Rationalization Bias: Humans justify decisions after making them rather than evaluating options rationally beforehand.
- The Unconscious Preference Reality: People rarely know what they want until experiencing it. The gap between stated preferences and actual behavior is substantial.
- The Value Transformation Dynamic: Using certain products fundamentally changes user preferences and perception of value.
Act: How to Read and Respond to Market Forces
Porter's Five Forces
How will AI and Crypto impact these forces?
1. Competitive Rivalry
- Number of competitors
- Industry growth rate
- Product differentiation
- Exit barriers
2. Threat of New Entrants
- Entry barriers (capital, regulations)
- Economies of scale
- Brand loyalty
- Access to distribution
3. Bargaining Power of Suppliers
- Number of suppliers
- Uniqueness of inputs
- Switching costs
4. Bargaining Power of Buyers
- Number of customers
- Size of orders
- Price sensitivity
- Switching costs
5. Threat of Substitution
- Willingness to substitute
- Price/performance of alternatives
- Switching costs
Application Framework
- Define the area of interest (industry or business model)
- Collect and analyze relevant data, nowcasting
- Extrapolate trends to make predictions and adjust strategic position
Market Force Assessment
| Question | Score |
|---|---|
| How well do you understand your competitive landscape? | ?/5 |
| What technology shifts could disrupt your market? | ?/5 |
| How are customer preferences changing? | ?/5 |
| What regulatory changes are coming? | ?/5 |