Place Little Bets To Win Bigger In The Long Run
Monday October 31st, 2011 - 10:22AM
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Peter Sims says business leaders can learn a lot from comedian Jerry Seinfeld.
While that notion may cause more than a few incredulous chuckles, Sims couldn’t be any more serious.
Sims, a venture capitalist turned innovation theorist, compares how Seinfeld still tests his stand-up comedy material at small clubs to how breakthrough business ideas often emerge from a sequence of smaller discoveries— or as Sims calls them, “little bets.”
“Most people don’t start with brilliant ideas: They discover them,” Sims said to housewares leaders at the IHA’s Chief Housewares Executive SuperSession (CHESS) outside Chicago. “Little bets are smaller, affordable actions that you can take to discover new ideas.”
Trial And Error
Sims cites several corporate innovators, from Google to Pixar to Starbucks, built on a creation-stimulating trial-and-error methodology.
The discovery course prescribed by Sims is not without checks and balances. He said successful creators need to understand their financial, resource and time limits and think in terms of affordable losses— those so-called “little bets”— they could absorb on a path to cultivating a bigger concept with better odds of a bigger payoff.
“The challenge,” Sims said, “is we’re taught from an early age not to make mistakes. We’re not given a lot of space for discovery. It’s not intuitive.”
“Discovery takes a willingness to be imperfect,” he added.
At the heart of it, Sims is advocating a decision-making culture change at a time when companies of all shapes and sizes are learning the old rules of shaping business strategy might not cut it in this new economy.
It is a call to reengage organizations and inspire innovation though open dialogue. It is the antithesis of what Sims calls the “HIPPO” (highest paid person’s opinion) approach to decision-making that can muffle potentially fruitful ideas.
“The goal is to accept every offer and to make people feel good about suggesting something,” Sims said. “That keeps the ideas flowing. Don’t judge prematurely and use words like ‘but’ or ‘not.’ That stops the idea. Let everything build off one another.”
Then watch a company’s luck change, he said.
“Lucky people are lucky because they are much more open to the world,” Sims said. “When you are more open to gathering every insight you can gather, that can lead to the bigger opportunity. Indeed, you can create your own luck.”
Perfecting The Act
Some may write off Sims’ views as overly idealistic in an unforgiving business climate that requires take-charge leadership. The other side of the coin says it can be more prudent and practical to absorb a few bumps along the way to identifying and refining a winning idea than to aim so high at the onset that it sets up a calamitous collapse if and when the plan doesn’t pan out.
Despite pressure to move faster today, betting big on an outcome that is far from certain doesn’t make a lot of sense. Encouraging a business development culture to be more comfortable placing little, affordable bets in pursuit of breakthrough innovation could mean a bigger win in the end.
Peter Sims is right. There is a lesson to be learned from a performer as accomplished as Jerry Seinfeld, who still feels the need to perfect his stand-up comedy act at small clubs before hitting the big stage:
Bombing on that big stage is no laughing matter.
Dissecting what Ron Johnson got wrong during his brief, calamitous term at the helm of J.C. Penney is sure to be the focal point of retail strategy and tactics lessons for years to come. But Penney’s future could still hinge to some extent on what he got right.