Execution is hard
There’s a phrase: pick a strategy, doesn’t matter which one, and stick to it. If it was that simple, then why doesn’t everyone do it?
Sticking to a strategy is really, really hard.
It’s easy to stick to a strategy when things are going well, but very hard when they aren’t. But sticking to the strategy when things aren’t going well is often the critical part of realizing value from the strategy.
Tennis example
Tennis is a fascinating game of strategy. For the most part, professional tennis players hold their serve. This means, winning a tennis match will come down whether you can win a game on your opponent’s serve. Assuming you hold 100% of your service games, if you just win one game on your opponent’s serve, you will win the match.
There are two strategies you can use:
Conservative
If you play conservatively, you will win a maximum of 48% of all points on on a given service game from your.
Aggressive
If you play aggressively, you have an 100% chance of winning all the points on one of your opponents service games, but a 95% chance of losing every point on all the other service games.
Which strategy should you choose?
The only winning strategy is to play aggressive, but the conservative strategy will feel better. Unfortunately in tennis, there is no partial credit. Winning 48% of the points on your opponents service game, will result in the same overall score as winning 0% of points. Let’s say your opponent beats you 6–0. It doesn’t matter whether you won 48% of the points in each game or 0%, the score is still the same.
There are lots of winning strategies, but sticking to one is hard
One might think it’s easier to play aggressive, but it’s not.
Imagine what it feels like to not even win a single point on every game when your opponent is serving. Imagine sticking to that strategy over the course of a match.
What most players will do is play 1 point aggressively, miss badly, then immediately start playing conservatively. This is the opposite of sticking to the strategy.
Those players will lose the match.
Executing on high conviction bets is hard. That’s why I have a ton of respect for tennis players, CEOs, hedge fund managers who are able to stick to a strategy that in retrospect looks simple.