Book of the Week: Little Bets
29 Jul 2013
Little Bets: How Breakthrough Ideas Emerge From Small Discoveries by Peter Sims discusses how to achieve greatness by starting with little bets. I didn’t know that the Google PageRank algorithm was originally designed for the Stanford Digital Library Project. It was mentioned as an alternative to the h-index when I was reading about measuring quality of research. No wonder, it was what it was designed for that in the first place. Once something becomes big, you forget that it once started out as something small. Making Bets Bets are a way of getting information, because you have no clue. The more bets you make, the more information you can obtain and the better decisions you can make.
“there’s a natural tendency to think in terms of bigger bets as you get bigger” - Ned Barnolt, former CEO of Agilent Technologies
This is why large companies fail. You need to find something small that will eventually become big. If you’re entering a large market already, it isn’t going to get bigger. It’s like monkey hoping into a tree. The tree becomes crowded. You want to plant a seed that will become a tree. Affordable Loss Principle The problem with making bets is the upside is unknown. How does one decide what to bet on? According to Professor Saras Saravathy, seasoned entrepreneurs will make bets by considering how much they are willing to lose rather than how much is there to gain. You should only gamble with the amount of money you are willing to lose. People who achieve great things are not afraid of failure, because they know failure is not a reflection of self worth. This allows them to make bets and gain information to help drive the business. If something fails, at least you’ve learned something. If you can’t tell if something failed or succeeded, then you have a problem. You’ve learned nothing. Clear outcomes are useful. This is where the startup philosophy of failing fast comes from.
“Bill and Dave started Hewlett-Packard without knowing what they would eventually produce; they knew they just wanted to work together and to build a great company” - Peter Sims
HP made a lot of little bets. Creativity, Design Thinking, Schooling
“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.” - Steve Jobs, Wired
Kids are creative, because they have no censor. As they are indoctrinated in schools, they begin to lose their creativity, because failure is not rewarded. You’re expected to get 100% on tests. This is good if you are training people to be machines that can do repetitive tasks consistently, but all of those jobs have gotten off-shored. What is left are the jobs that require thinking and creativity. Creativity comes from diverse experiences. If everyone has the same experiences, they will likely be thinking along the same lines. The problem is that our method of ranking and measuring child development relies on tests. You can only ask questions that have an easy to grade answer. You should be asking questions that make children think. Those are questions that you can’t grade. We are using the wrong metrics in our school systems.
“Prototyping allows P&G; staff to make things in order to think” - Peter Sims
I have to make things in order to think. It is like putting ink to paper. Your ideas aren’t fully formed until you can write them down. After you write them down, then you can revise and refine. It is hard to have a conversation until you have something to converse about. It doesn’t have to be a fully formed product. A shitty prototype is better, because people are more willing to give you negative feedback. Negative feedback is what you need to make a better product. You should be seeking negative feedback. Negative feedback is good. Writers know that writing starts out as crappy writing and gets better with each revision. Lucky State of Mind
“Wiseman found that lucky people tend to be open to opportunities (or insights) that come along spontaneously, whereas unlucky people tend to be creatures of routine, fixated on specific outcomes.” -Peter Sims
Dr. Richard Wisemen studied people who considered themselves (un)lucky and summarized his findings in The Luck Factor. Luck is a byproduct of how able you are to see, cultivate and act on opportunities. Luck is not something internal, but how you interact with the world. Soul Sucking Spiral
“Being at Microsoft was slowly killing his soul. He had to leave. They had gotten the best from him” - Peter Sims
Richard Tait, the creator of Cranium, had the life sucked out of him by a corporate job. He bounced around for a while with the support of his wife, making little bets until he was able to connect things together and make Cranium. Purchase Little Bets from Amazon.com or check it out from your local library.