Buy the Book:Little Bets describes the process innovators often go through. Innovation is the byproduct of dozens to hundreds to thousands of small successes and failures that allow innovators to learn and adapt and achieve a successful outcome.
The Notes
- “Ingenious ideas almost never spring into people’s minds fully formed; they emerge through a rigorous experimental discovery process.”
- Chris Rock experiments with new material at dozens of small comedy clubs before every big show. It’s trial and error. He tests 100s of jokes, most flop, but the handful that get a big laugh become the starting point for his next show.
- Writers for the Onion come up with about 600 possible headlines for 18 articles each week — a 3% success rate.
- “You can’t put into a spreadsheet how people are going to behave around a new product.” — Jeff Bezos
- 2 Types of Innovators
- Conceptual – often prodigies, that chase bold ideas early in life.
- Experimental – uses a series of trials and errors to lead them to discoveries.
- The small successes, setbacks, and failures help develop ideas and direct the next course of action.
- “The great advantage of working in this way is that when trying to do something new or uncertain, we rarely know what we don’t know.”
- “If I find ten thousand ways something won’t work, I haven’t failed. I am not discouraged, because every wrong attempt discarded is just one more step forward.” — Thomas Edison
- “At the core of this experimental approach, little bets are concrete actions taken to discover, test, and develop ideas that are achievable and affordable. They begin as creative possibilities that get iterated and refined over time, and they are particularly valuable when trying to navigate amid uncertainty, create something new, or attend to open-ended problems. When we can’t know what’s going to happen, little bets help us learn about the factors that can’t be understood beforehand.”
- Mistakes and errors are central to success.
- Successful entrepreneurs tend to embrace uncertainty. They use failure, error, and surprising outcomes as a way to learn, iterate, and progress.
- Design Thinking – uses creativity to build up to a solution rather than starting with the final answer.
- Little Bets Approach
- Experiment – learn by doing. Test, gather info, identify problems, repeat, to build ideas. Failing fast speeds up the learning process.
- Play – use improv and brainstorming to generate imaginative ideas without judgment. No idea is too stupid at the start.
- Immerse – use the real world and other disciplines as inspiration for new ideas. Ask questions, be inquisitive.
- Define – recognize problems/needs before solving them.
- Reorient – Be flexible. Uses small successes and failures to pivot in a new direction.
- Iterate – test, refine, retest.
- Scientific Management
- Evolved during the industrial era. Broke jobs down by specific tasks to optimize efficiency.
- Example: Henry Ford’s production line.
- Its top-down, linear system drove efficiency but suffocated creativity. It relied on detailed planning and reducing errors based on past experience.
- Every new project was planned out in advance. The downside is limited flexibility — leads to wasted time and money in the planning phase, sunk costs, and potential for bad decisions.
- “Much of what we would like to be able to predict is unpredictable. Global market movements, political and cultural complexities, and demographic shifts constantly reshape the ground beneath us. This certainty of uncertainty is becoming ever more evident with the accelerating pace of technological change.”
- Tyranny of Large Numbers
- As companies get bigger they tend to focus on bigger bets to continue growth.
- The risk of overlooking smaller bets in new areas with little to no competition is that bigger bets are more likely to be in existing areas with stronger competition and fail spectacularly.
- Big bets leave less room for error. Small bets allow for error.
- The Illusion of Rationality – when a plan or model seems logical but hasn’t been validated in the real world.
- “The cornerstone of counterinsurgency operations is what Army strategists call developing the situation through action. Central to the process is acknowledging that mistakes will be made, like violating cultural norms or initially picking the wrong partners, because soldiers are operating in an arena of uncertainty.”
- 2 Advantages of Little Bets
- The Affordable Loss Principle
- A focus on the amount you’re willing to lose rather than the amount you expect to gain from a bet. Little bets help refocus on losses over gains.
- It starts with the assumption that losing — failure — is not only possible but part of the process.
- Development of Means:
- Who you are: values and tastes.
- What you know: expertise.
- Who you know: network, friends.
- Entrepreneurs tend to be constantly improving their means.
- The Affordable Loss Principle
- “I believe in bumbling around long enough to not give up at things. And eventually success comes your way, because you tried to fail in every possible way, the only way that’s left is the one successful way, and always, for entrepreneurs, seems to come last. It’s so obvious when it comes.” — Vinod Khosla, SUN Microsystems co-founder
- “By expecting to get things right at the start, we block ourselves psychologically and choke off a host of opportunities to learn. In placing so much emphasis on minimizing errors or the risk of any kind of failure, we shut off chances to identify the insights that drive creative progress.”
- On Learning and Failure
- Fixed Mindset:
- The belief that abilities and intelligence are fixed. Failures threaten self-worth.
- Decisions are evaluated based on how success or failure impacts their social standing, grades, titles, etc.
- People with a fixed mindset look for activities that confirm their abilities.
- More risk averse.
- Growth Mindset:
- The belief that abilities and intelligence can be improved. Failure is an opportunity to learn.
- People with a growth mindset look for activities that expand their abilities. They want to challenge themselves.
- More risk tolerant.
- Note: People tend to lean toward one mindset but everyone exhibits both and a growth mindset can be developed — reframe situations as “opportunities to learn” instead of a “chance to fail.”
- Effort or Ability
- In a study, students were praised for either their effort or their intelligence to see how they responded to additional tasks.
- Students praised for their effort did better than students praised for their intelligence and liked more difficult tasks even though they had worse results.
- Students praised for their effort maintained their confidence and self-esteem despite setbacks.
- Students praised for their intelligence got an initial ego boost but lost their confidence when things got tough.
- Over 40% of students praised for their intelligence lied about their scores (fewer students praised for their effort lied).
- “Praising ability alone reduces persistence, while praising effort or the processes a person goes through to learn leads to growth mind-set behaviors.”
- Fixed Mindset:
- Perfectionism
- Healthy – driven by internal concerns: strong values around quality and excellence. Well organized and planned ahead.
- Unhealthy – driven by external concerns: the need for approval, parental pressure, and fear of mistakes. This can lead to negative consequences like depression, anxiety, and disorders.
- Note: Everyone has some combo of both forms of perfectionism.
- Prototyping
- Low-cost, rough prototypes allow for quick failures and faster learning.
- People are less emotionally invested in rough prototypes allowing for more open, honest feedback.
- “The only way I can get anything written at all is to write really, really sh*tty first drafts. All good writers write them. This is how they end up with good second drafts and terrific third drafts.” — Anne Lamont, novelist
- Improvisational Principles:
- Accept every offer — nothing is too silly or stupid. A reply of “Yes, and…” helps build ideas.
- Make your partner look good — creates a positive atmosphere and allows people to relax, and be less risk-averse.
- Humor Creates Positive Group Effects
- Increases trust.
- Improves group communications.
- So long as it’s not demeaning or derogatory.
- “People equate status and money with intelligence and insight, when often there’s little correlation.”
- Constraints
- Set limits — structure or guidelines — around a problem, making it easier to isolate and focus on solutions. It creates a helpful starting point.
- Limits help guide you on what to do and what not to do.
- Self-imposed constraints can take a big project, break it down into manageable smaller problems, and work from the inside out. Smaller problems tend to be more efficient and fit into the fail fast, learn fast ideology.
- “Inherent to agile development is to focus on smallified pieces of work and narrowly defined problems. However, the problems to be solved become better known throughout the process, rather than at the outset. This involves something that creativity research has shown to be a central aide to any creative process: the ability to actively seek out problems.”
- Problem Finders – more open to experiment, explore more possibilities, and more flexible with solutions.
- Experience
- “One of the best ways to identify creative insights and develop ideas is to throw out the theory and experience things firsthand. After all, fresh problems, ideas, needs, and desires aren’t obvious; they’re hidden beneath the surface.”
- A study by Gregersen and Dyer found a strong link between inquisitiveness and creativity. Innovators particularly focused on how people behave. Many innovators in their study attended Montessori schools that emphasize inquisitiveness and creativity through self-directed learning for young kids. Innovators also drew from their exposure to people with diverse backgrounds.
- “Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they’ve had and synthesize new things. And the reason they were able to do that was that they’ve had more experiences or they have thought more about their experiences than other people… Unfortunately, that’s too rare a commodity. A lot of people in our industry haven’t had very diverse experiences. So they don’t have enough dots to connect, and they end up with very linear solutions without a broad perspective on the problem.” — Steve Jobs
- “Most investors get their insight from traders or other investors. It’s what Chanos calls the smart-guy syndrome: When hedge-fund analysts go to a dinner in New York or London and hear someone they think is smart talk about a company. “The next day, they all go take a two percent stake in the company,” Chanos says. This is not original thinking. It’s amazing how common the smart-guy syndrome is among investors and how rare it is to find original thinking investors. In my experience, the best investors, by contrast, are contrarian thinkers. They get out into the world to find unique insights.”
- More inquisitive people tend to challenge the status quo (more likely to avoid the status quo bias). They ask probing What if? Why? Why not? questions.
- “When something seems like an opportunity—it seems like you have the skills, and maybe some kind of advantage, and you think it’s a big area—you will always get asked the question, “Why? Why do that?” But “Why not?” is an equally valid question. And there may be good reasons why not—maybe you don’t have the capital resources, or parts of your current business require so much focus at this key juncture that it would be irresponsible. In that case, if somebody asked, “Why not?” you would say, “Here’s why not…” But that question doesn’t get asked.” — Jeff Bezos
- Procter & Gamble started a program where researchers lived with customers to study what mattered to them, as it related to its products, to better develop new products around their customer’s needs.
- Diversity
- Research suggests that teams with diverse perspectives, experiences, and backgrounds lead to heightened creativity.
- Cities/countries with a more diverse population tend to be more innovative.
- Has the added value of learning from people with different viewpoints. But it requires open-mindedness.
- Luck
- A study by Dr. Wiseman wanted to find out why some people deemed themselves lucky and others unlucky.
- “Lucky” People:
- Were more aware of and open to new opportunities or ideas that pop up spontaneously.
- Tend to be more extroverted in social situations: open, curious, and trusting, which helps them build a large network of relationships.
- “Chance opportunities are a numbers game. The more people and perspectives in your sphere of reference, the more likely good insights and opportunities will combine.”
- “Unlucky” People:
- Tend to be creatures of habit and stick to a routine.
- Tend to talk to the same type of people, similar to themselves.
- Wiseman taught the “unlucky” people to be more open to opportunities, to break their routines, and trust their gut. 80% reported being happier and luckier after a month.
- Early Adopters
- Trendsetters who recognize new ideas/innovations before everyone else.
- Early active users are the perfect beta testers for product development.
- Von Hippel found that active users were responsible for 75% of the innovation in scientific instruments.
- Active users push for changes and improvements in the products that can be developed by a company before it reaches full adoption by the masses.
- Small Wins
- “Weick defines a small win as “a concrete, complete, implemented outcome of moderate importance.” They are small successes that emerge out of our ongoing development process, and it’s important to be watching closely for them.”
- Either confirm things are moving in the right direction or need to pivot.
- “Once a small win has been accomplished, forces are set in motion that favor another small win.” — Karl Weick
- “A series of wins at small but significant tasks…reveals a pattern that may attract allies, deter opponents, and lower resistance.” — Karl Weick
- ” It is important to realize that the next solvable problem seldom coincides with the next “logical” step as judged by a detached observer. Small wins do not combine in a neat, serial, linear form with each step being a demonstrable step closer to some predetermined goal. More common is the circ*mstance where small wins are scattered and cohere only in the sense that they move in the same general direction.” — Karl Weick
- Small wins build momentum and confidence,development means to reach goals, may not happen in a series, and may force the flexibility to adapt and pivot.
- “We cannot rely on past assumptions to predict the future. In this era, being able to create, navigate amid uncertainty, and adapt will increasingly be vital advantages.”
- “The side that learns and adapts the fastest often prevails.” — General David Patraeus
- “What is the purpose of education? Is it to impart knowledge and facts or is it to nurture curiosity, effortful problem solving, and the capacity for lifelong learning?”
- “Invention and discovery emanate from being able to try seemingly wild possibilities and work in the unknown; to be comfortable being wrong before being right; to live in the world as a keen observer, with an openness to experiences and ideas; to play with ideas without censoring oneself or others; to persist through dark valleys with a growth mind-set; to improvise ideas in collaboration and conversation with others; and, to have a willingness to be misunderstood, sometimes for long periods of time, despite conventional wisdom.”
- Pixar
- Ed Catmull describes Pixar’s creative process as going from “suck to nonsuck.”
- “My strategy has always been: be wrong as fast as we can. Which basically means, we’re gonna screw up, let’s just admit that. Let’s not be afraid of that. But let’s do it as fast as we can so we can get to the answer.” — Andrew Stanton, director Finding Nemo and WALL-E
- “Every time we show a film for the first time, it sucks.” — Ed Catmull
- Plussing — to build upon and improve ideas without being critical. It’s positive feedback only on how to improve on an idea.
- Emphasizes field research. The experiences make the films more realistic and relatable. Ex: they scuba dived around reefs, studied fish, and light refraction underwater for Finding Nemo.
- “We don’t actually finish our films, we release them.” — John Lasseter
