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? Decision 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?