Video: 10x Not 10%, Product Management by Orders of Magnitude by Ken Norton

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History is littered with companies who missed the boat on big new innovations and optimised their way to obsolescence – from Kodak inventing the digital camera but shelving it for fear of cannibalising their film revenue, to Swiss watchmakers inventing the quartz watch movement but letting the Japanese eat their market with it. Ken Norton from Google Ventures joined us at Mind that Product 2015 and shared what he thinks underlies this phenomenon.

It’s a story about how the human instinct for loss aversion cripples companies’ abilities to make good decisions. Imagine two projects identical in scope and effort, but the first project looks like a sure thing – 99% chance of delivering $1 million to the bottom line, while the second project looks far riskier – 1% chance of delivering $1 billion to the bottom line. Which would you choose? Which would your company choose? 10percentDecision Theory tells us that option 2 is actually far more valuable – a 1% chance at $1 billion is still worth $10 million, yet most companies will choose the sure thing every time.

As Alphabet CEO Larry Page says, “It’s natural for people to want to work on things that they know aren’t going to fail. But incremental improvement is guaranteed to be obsolete over time. Especially in technology, where you know there’s going to be non-incremental change.”

So how do we stop taking the obvious path, the safe path, the 10% path? The key is to stop thinking about incremental improvements and start thinking about 10x improvements. Just adding a zero, an order of magnitude, forces you to challenge your assumptions and approach the problem from a different angle, but this also frees you up to new ideas and new solutions.

Thinking 10x requires a whole new mentality and a whole new way of working. The irony is small startups think only big companies like Google with cash to burn can work this way – and big companies think only small risk-taking startups can work this way – but in this talk Ken outlines eight things every company can do to start organising itself to work this way.

And while not everyone is aiming to land on the moon, and not everyone works for Google or SpaceX, that doesn’t mean you can’t use moonshot thinking. If you set crazy ambitious goals and miss them, you’ve probably still achieved something remarkable.

Watch this illuminating and insightful talk and then share it with your colleagues – are you thinking 10x? Or will you iterate yourself to obsolence?

Want more inspirational talks like this? Make sure not to miss our 2016 Mind the Product Conferences in London and San Francisco!

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  • The 99% bet is only less valuable than the 1% bet when the bet costs nothing! How does the bet change when it costs no additional investment to have a 99% chance to make a million dollars, or make an additional $400 million investment to have a 1% chance to make a billion? The costs to take either bet vary from company to company. 99% of the time you will still lose the 1% bet. Mr. Norton’s point is an inspiring sentiment; no one would start an innovative company if they truly internalized the odds, but it doesn’t change the odds. It’s easy to point at Kodak or Blockbuster in hindsight, but as Ken Norton does admit, it’s never so cut and dry. 🙂

    • Alicia, you may be right with your calculation, but I guess the concept is about attitude rather than money. They want people to expand their frame of thinking.

      Martin, this is another nice post that I want to link from my blog http://inspiredproductmanager.wordpress.com .

    • nickcoster

      I agree with your sentiment Alicia, however the thought experiment assumed the same cost for a different reward. In either case a $15k bet would be a safe risk, while a $35 million one would be absurd since it completely exceeds the risk weighted return.

      Things get interesting though when you consider real real world investments that may represent a significant % of the expected benefit.

      If the investment stakes are in the order of $500k, then the 99% chance of success only represents a return of ($990k – 500k)/500k or 0.98x return, while the moonshot idea will be (10,000k – 500k)/500k or 19x return on investment.

      But in either case the bigger fear is the losing of the $500k. Scenario 1 is safe with only a 1% chance of losing the money. While in scenario 2 there is a 99% chance of losing. The power of risk aversion shifts our attention to the safe small bets at the expense of doing the bigger things that may actually turn out to be what keeps the business afloat in the long term.

  • My name

    It’s not only about the Expected Value of the project (as is used in Ken Norton’s figures). It’s also about other statistical parameters. Ask any actuary. Running successful projects is one thing. Evangelising bullshit about it is another.

  • I love the essence of the 10x concept; reframing the mind from looking for the next logical improvement step to leaping beyond that. It makes me curious to find out how teams could benefit from this in regular retrospectives to improve their collaboration!?

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