Methods vs. Playbooks: Know When To Use Them

Imagine waiting for the pedestrian sign to cross the street. The light turns green. Do you start walking immediately or look left and right to ensure no cars are coming?

Our choice reflects our trust in drivers who typically go through that crossing and our past experiences on roads around the world. If we cross the street strictly based on the green light, we follow the collective societal playbook that it is safe to cross the street when the light turns green. If we look left and right to ensure no cars are coming even with a walk sign, it reflects our instinct that this specific intersection or time of the day is riskier than another.

There’s no correct answer to this question, and we can choose our preferred approach in such personal situations. However, our decision-making effectiveness must be optimal in a company where actions and decisions impact the collective, which spans customers, investors, employees, partners, and society.

Every scenario can be drawn as a simple construct with inputs coming into a box labeled "process" and outputs leaving that process. This construct can apply to personal decisions and actions, interpersonal communication and activities, and company-level choices.

Inputs range from data gleaned through human physical senses to information gathered from complex research and even unexpected events that impact us. Outputs can be simple words or day-to-day actions to sophisticated collective results created by groups of people.

We will focus on the process of converting inputs to outputs. Every second of our lives, we convert inputs to outputs. The effectiveness of this process determines whether we are effectively using precious resources, such as time and money, and optimally managing risks around critical outputs.

How are methods different from playbooks?

Converting inputs to outputs can be based on a playbook or a method. The primary difference between playbooks and methods is the timeline of problem-solving. Using a playbook implies that when we see a specific set of inputs, they are very familiar to us, and we know that there is a ready-made path to get to the outcomes. This templated path is a "playbook."

Playbooks are literal procedures that tactically convert inputs to outputs without live problem-solving. Good playbooks imply that problem-solving occurred in the past based on experience with many prior iterations of very similar situations. They are most effective in high-frequency scenarios with low downside impact risk.

Conversely, methods imply that we must go through a live problem-solving exercise when we see a certain set of inputs, investing time and resources to arrive at a unique output that only applies exclusively to those specific inputs. The reason for this difference is that each situation is not genuinely similar, even if there are shallow appearances of similarity. Additionally, methods are the appropriate choice if poor outcomes imply catastrophic impact.

Methods are constructs that require live problem-solving once the situation has arrived and the inputs have been revealed. They apply to situations where each iteration vastly differs from the others, and the downside impact risk of bad outcomes is high. 

Every situation in life gives us an option to use a playbook or a method. A 27-year-old who is considering getting engaged and married to the person they are dating can take one of two paths. The person can depend on the wisdom presented to them through their college friends' life decisions and their parent's advice about the path forward. This equates to using a playbook approach. The same person could also go through an intrinsic personal analysis of their relationship with their significant other and extrapolate how their family background, personalities, and present relationship dynamics project into a fulfilling relationship in the future, which follows a methodical approach.

The key difference is when the problem-solving happens. In a playbook approach, we trust the problem-solving completed by someone else in the past, and we choose to use that historical problem-solving as a precise template for actions and decisions we can take and assume that the inputs are similar enough. i.e., a playbook’s outputs are the same regardless of the situation.

Conversely, in a method approach, we depend on using all the inputs we can get our hands on and a robust problem-solving model and then investing time and resources to perform detailed problem-solving in the present to create a tailored output unique to our situation. i.e., the outputs of a method are always unique to the situation because we consider the inputs unique enough.

Methods and playbooks are primarily differentiated by when problem-solving occurs. Playbooks don’t require problem-solving in the present, while methods require solving the problem live after the inputs are identified and ingested. They serve very different purposes, and misapplication results in poor outcomes.

Playbooks and methods serve very important purposes in life and work like fast-twitch muscles and slow-twitch muscles. This is not about one being better than the other.

Problems arise when we mix up when to use playbooks and methods. If we use a playbook where a method is appropriate, we are accepting a very high risk that our actions and decisions for that given scenario will not match our reality and will mislead us. If we use a method where a playbook is appropriate, we are likely investing too much time and money to address a situation that doesn’t demand it.

Typically, we use a method where a playbook is optimal when we have experienced too many poor outcomes in the past, even though practical comparable situations are available in history. The underlying feeling here is fear that a low-probability negative outcome and catastrophic impact will happen to us again.

We resort to using a playbook when a method is optimal because we feel real or perceived pressure about how much time is available or realistic to address a given scenario. When we perceive that time is short, we tend to circumvent necessary problem-solving and resort to canned answers that may not lead to optimal outcomes.

Three differentiating factors

Beyond watching these feelings and our natural instincts, we mix the two when we don’t understand their optimal application. So, let’s frame the conditions under which we would optimally use them so that we can use them correctly even when we experience irrational fear or perceive time pressures. A combination of three factors helps us determine when to use a playbook or method.

The first factor is the number of inputs, which determines the complexity of the scenario.

The greater the number of inputs, the more likely we are dealing with a unique situation without historical precedent. The fewer the inputs, the more likely we have plenty of historical experience and other people’s problem-solving to draw from.

The second factor is the number of comparable scenarios we can access.

Some situations have direct comparisons available to us, so we can take historical problem-solving from ourselves or others as a trustworthy answer without redoing the math in the present. However, it is critical to ensure that the comparables we choose are truly relevant. Mistaking one or two similarities between our situation and a comparable is akin to saying, “We are wearing the same shoes, so we can all play basketball equally well.”

The third factor is the impact of the output.

The gravity of some situations is far greater than others. The greater the gravity of a situation, the more important it is to use a method, take ownership of the problem-solving, and perform live problem-solving. Suppose the impact of a poor outcome is minimal for us. It gives us a logical reason to rely on a playbook because it’s an acceptable trade-off to save time and investment in the short term in exchange for the possibility of choosing the wrong path with minimal impact. Not carrying an umbrella because others aren’t while accepting the risk of being rained on is a reasonable playbook usage.

Combining these factors – the number of inputs, the number of historical comparables, and the situation's impact – helps us choose well. We can decide whether it makes sense to ask our friends, look at what other companies are doing, or create a unique and tailored solution using a reliable method.

Imagine that an illustrative company with 100 employees wants to implement a state-of-the-art vendor payment solution.

In this scenario, the number of inputs needed to make this decision is relatively small. Inputs may include the company's size, the type of vendors it must pay, the approximate number of transactions it has to make and the size of those transactions, the regions of the world where it is located, and the type of payments. These are relatively easy to categorize.

Finding comparable companies with these parameters is relatively easy. Getting information from them may also be relatively easy because these choices are not trade secrets per se, and companies tend to share such information.

Although a poor choice can cause operational disruption, it is unlikely to be catastrophic to the company’s future if a sub-optimal vendor payment solution is chosen and remediation is required. A playbook approach can give the company a high-quality outcome by depending on the experience of similar companies, which is a faster and lower-investment approach to choosing a solution.

Now, let’s imagine that this same company is also trying to decide how its sales organization is structured. Although it may be tempting to think we can learn this answer from similar companies, the optimal answer is unique to every company.

Every company worldwide has a different offering, especially if the business isn’t selling commoditized goods like pizza, burgers, and coffee. The people who started the company, why they started it, and people who create value are different.

A sales team's responsibility to bring in revenue is highly tailored to the specific customers the company is targeting, which would be different even if one or two other companies have a similar offering. That sales team will have to hit targets aligned with the rate of return expected by that company's unique investors. The management team's approach to leading and the resulting culture is also ideally unique.

Many inputs characterize this scenario, and the permutation of inputs is astronomically high. So, it is impossible to even look for comparables, and they are unlikely to exist.

Lastly, choosing an incongruent sales organization structure puts the company’s future at significant risk. So, a company cannot make this choice by saying, “Those two successful companies are doing it, so we should, too.” In this scenario, the appropriate path is to use a methodical approach to problem-solving and design an organization structure unique to this company without relying on templates from other seemingly similar companies.

The applications of the delineation between playbooks and methods are everywhere:

• While hiring, we could consider whether we want a value creator to follow a path given to them as a playbook-thinker or apply deep analysis to the situations they encounter as a method-thinker.
• At a company level, using basic comparisons to other companies or using historical information to set the company’s market price through simple multiplication is playbook thinking. It's quick, yet likely far from reality when observed over time. Focusing on a deeper analysis of business models and the intrinsic nature of the company to arrive at a realistic price for the company is method thinking.

There are good and bad playbooks, optimal and suboptimal methods, and effective and ineffective applications of playbooks and methods. Choosing the right playbooks and methods and effective problem-solving using the optimal method comes with experience. For now, the critical delineation between the application of playbooks and methods is an optimal starting point because it can help all our companies make good decisions and actions.