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LITTLE BETS
INNOVATION SECRETS FOR EVERY EXECUTIVE
According to Peter Sims, author of Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, there are two types of innovators: conceptual innovators who pursue bold new ideas and often achieve their success early in life, and experimental innovators who use slow, iterative, trial-and-error approaches that gradually lead to breakthroughs. In Little Bets, Sims illustrates the experimental process of innovation, accomplished through a series of small bets.
The Growth Mindset
Success as an experimental innovator, Sims writes, depends on a "growth" mindset, which sees failures and setbacks as learning opportunities. People with a "fixed" mindset, in which skills, abilities and intelligence are considered innate and present from the beginning, are unable to accept and benefit from failures, since failure challenges their self-worth. Growth mindset people, however, are not afraid to fail, and are therefore constantly challenging themselves to innovate and improve. Howard Schultz had a simple idea: bring the concept of the Italian coffee house to the United States. However, his original shops — with their bow tie wearing baristas (who hated the bow ties), menus written mostly in Italian and non-stop opera music — were hardly well received. Learning from the chorus of complaints from customers, Schultz slowly tweaked and changed his concept to eventually create the ubiquitous Starbucks coffeeshop now present on nearly every street corner.
The Affordable Loss Principle
Innovators using the small bets approach, writes Sims, tend to operate under the "affordable loss principle" — in other words, focusing on what they can afford to lose rather than calculating expected gains. When first purchased by Steve Jobs, for example, Pixar was at once a hardware business, software business and a digitally animated TV advertising company. The future of the company, it seemed to Jobs and others, was in the Pixar Image Computer that helped people visualize complex images. Jobs dedicated only a small fraction of his investment toward the digital animation section of the company, but didn't expect to ever see a return on that money. As Sims explains, had Jobs based his decisions not on what he could afford to lose, but rather, as someone with a different mindset might have done, on what he expected to gain from digital animation, he might have shut down the group early on.
Sufiya and the Professor
The story of Muhammad Yunus and the birth of micro-lending illustrates another principle of experimental innovation: the importance of immersion. "One of the best ways to identify creative insights and develop ideas is to throw out the theory and experience things first-hand," Sims writes. Yunus was an economics professor in Bangladesh theorizing, he told the author, "about sums in the millions of dollars." Then he started wandering through nearby villages and discovered craftspeople such as Sufiya, all but enslaved to local middlemen because she could not afford 22 cents for bamboo. Outraged, Yunus lent her and others the miniscule sums they needed, and the world-famous Grameen Bank was born.
Using examples from a variety of disciplines, from architecture to stand-up comedy, Sims has provided a learned and entertaining how-to guide to innovation.
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