As I already said in this blog, “Eating the big fish” is another great book that was suggested to me in 2021 when I started my adventure with Collidascope.
I was reading the 4th chapter “The First Credo: Intelligent Naivety”, very interesting.
Honestly nothing new or mind blowing, but a robust and important discussion on having a fresh and curious view in our business life.
A Sad Note
Just a small digression on the book in general, I found the book weaker in terms of its academic bibliography compared with How Brands Grow and, also, it is more anecdotal rather than proposing its thesis through a strong experimentation method.
Maybe it is not the goal of the author, maybe it is my engineering mindset but this aspect made me more sceptical of some of the author’s conclusions.
Despite this (a non-negligible point by the way) I still recommend the book as an interesting moment for you to reflect and evaluate some marketing business cases.
Challenging the status quo
Now coming back to the chapter, it starts with a very powerful quote from Twila Tharp
Experience is what gets you through the door, but experience also closes the door. You tend to rely on memory and stick with what has worked before. You don’t try anything new. *
The goal is to challenge the status quo and the key to disrupting an industry is how to be “naive” about what can and can’t be done.
Some successful examples are provided to support the thesis of how many people disrupted an industry without previous experience:
- Jeff Bezos with Amazon, who previously worked as a hedge fund manager
- George Hicktom, CEO of Tourism New Zealand. He created one of the most admired country brands (I didn’t know that!), but he had no previous experience in marketing and tourism
- James Dyson, who studied interior design at the Royal College of Art before founding one of the most famous hoover companies (and becoming one of the richest people in the UK).
These are great examples and I loved their story, but I’m fairly sure, not 100% certain, that this is cherry picking (Cherry picking – Wikipedia) or a perfect example of survival bias (Survivorship bias – Wikipedia), because the others who tried and failed are not part of the author’s narrative.
Not only, James Dyson before arriving at his final product, designed 5126 prototypes.
Amazon stocks before becoming valuables took decades!
This means for me that “Challenging Status Quo” is a very deadly path and only few are able to succeed.
The author affirms that one common trait in established business is a natural tendency to think of its market category as special, intrinsically different from the others.
This behaviour hides the opportunity to learn and be open to innovation from other categories and markets.
However, and I agree with the authors, consumers don’t see markets as silos but there are some grades of connections or common traits.
And the author notes this:
“[…] consumers haven’t had the benefit of working on the business for a number of years, either. They don’t think that what they enjoy about the experience in one market has to be necessarily any different from what they like in another”
It can be true if I think about how Bill Gates was doubtful about the internet, or how Microsoft and Google waited before starting their Cloud Platform for individuals.
Avoid this pitfall
To avoid this pitfall and losing opportunities the author suggests having an “Intelligent Naivety” which can be described as the attitude of not accepting the status quo, instead always asking “why?”.
What he is saying is true in theory, but it is practically tough, really tough and must be properly structured.
Also because established company CEOs are too often evaluated on short term metrics and, like for Amazon, waiting 10/15 years before harvesting the profit of a successful product can be unfeasible.
The “Intelligent Naivety” pushes your inexperience for creating new insights.
But again a new question: How much budget do you have to afford being naïve?
The company should accept and manage the risk in a way that revenues from consolidated products will be reinvested in R&D
On this point be aware that more than 7 out of 10 new ideas, even when they get off the ground, will fail.
Some companies are aware that the vast majority of business ideas fail to generate positive results:
- Microsoft declared that roughly one-third of their ideas yield negative results, one-third yield no results, and one-third yield positive results (Kohavi and Thomke, 2017).
- Streaming service Netflix believes that 90% of its ideas are wrong (Moran, 2007).
- Google reported that as much as 96.1% of their ideas fail to generate positive results (Thomke, 2020).
- Travel site Booking.com shared that 9 out of 10 of their ideas fail to improve metrics (Thomke, 2020).
So I definitely do not agree with the author on being Naive, at least I think the word choice leads to an oversimplification of the issue.
Instead I believe the company should accept and manage the risk in a way that revenues from consolidated products will be reinvested in R&D aware that most of the new ideas will fail.
Naive Approach
The author also suggests how to have a “Naive Approach”
- Establish afresh the core issue facing the brand or the company(the big fish), taking a step back and more accurately defining the problem
- Help define, therefore, what business we should really be in
- To free ourselves to see all the possibilities of the category
- To allow us to see what we may need to break with from the past to enable a stronger future
Even though there are different examples in the chapter that I loved to read and think about, I found them not so actionable and scientific.
For that reasons I thought on how to make this 4 points more practical:
- Always monitor industry trends, you can use google trends, industry fairs and more importantly the Genchi Genbutsu Philosophy. The last one is a Japanese principle that means “go and see”. It pushes to live the product, live the customer’s needs or pains to truly understand the situation.
- Talk to your customers regularly by allocating proper time on this activity especially if you are in product development. To define what business you are you must speak with them regularly to understand what issue you are solving. Are you selling a drill or are you helping a husband to make the house nicer or a builder to speed up his work?
- Define a solid budget in R&D. Have a list of ideas, even completely different from your core business and try to prototype them. When I say completely different you should still have a point of connection with your core business, for example the new idea solves an internal issue or optimise an internal process like for AWS.
- Your industry and your product will not live forever. Be prepared for this change in the same way Intel made a huge shift when the memory business was not profitable as in the past due to the aggressive Japanese competition. Being prepared means investing in R&D, when it is possible invest in Corporate Venture Capital activities, always aware that the failure rate is high and should be balanced by the revenues of established products
Let me know here, on Twitter or Linkedin if this article was insightful and helpful for defining your innovation strategy (and company survival)!
*Just for historical note Twila Tharp is an American Dancer, Director and choreographer who was known for her innovative work.
** The shift was also possible thanks also to the italian physicist Federico Faggin who invented the first commercial microprocessor. Federico Faggin – Wikipedia
Kohavi, R. & Thomke, S. “The Surprising Power of Online Experiments,” Harvard Business Review 95, no. 5 (September-October 2017)
Moran, M. Do It Wrong Quickly: How the Web Changes the Old Marketing Rules . s.l. : IBM Press, 2007. 0132255960.
Thomke, S. H. (2020). Experimentation Works: The Surprising Power of Business Experiments. Harvard Business Review Press.
