Michael Schrage: Investing in Big Ideas is Bad Business
When conducting a pragmatic assessment of the economic value of ideas, The Innovator's Hypothesis author Michael Schrage was shocked to find that "good ideas" don't make much money.
Innovation expert Michael Schrage makes a pretty bold claim in his new book, The Innovator's Hypothesis. So bold in fact that he slapped it on the cover in subtitle form: "How Cheap Experiments Are Worth More than Good Ideas." Fittingly enough, considering this is a website that prides itself on spreading big ideas, Schrage appears in today's featured Big Think interview and argues from an economic standpoint that there's very little value to be found in good ideas:
"The reality is when you do a hard-core, realistic, pragmatic analysis of the economic value of ideas, you realize for most organizations the overwhelming majority of ideas they have lose the money. They do not break even. Good ideas are bad."
A little hyperbolic? Yeah, perhaps. But just because Schrage makes his points with rhetorical flair doesn't diminish their validity. As a research fellow at MIT's Sloan School of Management, Schrage is uniquely equipped with an ability to see through the sugarcoated facade of ostensibly good ideas. And in approaching innovation not from a wide-eyed and wondered perceptive, but rather, as he puts it, a "quasi-academic" one, Schrage identifies the processes from which companies draw the most value. In the real world, good ideas far more often than not lead to nowhere, despite what our biases have led us to believe:
"There’s a bit of a survivorship bias. You know, the good ideas that survive are celebrated as a good idea. All the 'good ideas' that died along the way, cost us money along the way, wasted our time along the way, wasted our emotion along the way. They’re forgotten and buried."
Again, Schrage's intention here is not to hate on visionaries, but to explain why investing in visionary ideas is an unwise and unprofitable allocation of your resources. It's not unlike investing in a Hummer when you need a commuter vehicle, or stocking up on Gatorade when water would suffice. If the goal is to extract the most value relative to what you put in, then there's no better way to not do that than to invest in a "good idea." Instead, Schrage says we need to remove the romance we've injected into ideas and understand that our blind allegiance to them is more the result of good branding than genuine value:
"Ideas are the wrong unit of analysis for thinking about innovation. Ideas have a great brand, you know. Somebody says, 'I have a great idea,' people pay attention. If you say, 'I have a brilliant hunch,' they’re going to look at you like you’re a nut."
If ideas are the wrong unit of analysis for innovation, then what's the right unit? Look back to Schrage's bold idea and you'll see it slapped right on the cover of his book: "Cheap Experiments Are Worth More than Good Ideas":
"I think you need to have the rigor and intellectual self-discipline not to think in terms of what is a good idea, but 'what is a testable hypothesis?' ... The best way to get a return on [an] investment is to reframe that good idea as a testable hypothesis that can be run in a fast, simple, cheap business experiment."
For many of us, thinking big and exploring the wide world of ideas is a great way to spend our day. For Schrage, and in particular the audience he writes for, there's no time or money set aside for abstraction. Most real companies are subject to limits. They operate at the behest of their benefactors and those benefactors want results to be divvied out in greenback form. Thus, The Innovator's Hypothesis offers a practical guide to netting the most out of innovation. Schrage's research shows that the highest value is extracted from "fast, simple, cheap business experiments." He proposes as an option what he calls 5x5 innovation, which consists of "a diverse team of five people [given] no more than five days to come up with a portfolio of five business experiments that cost no more than $5,000 (each) and take no longer than five weeks to run." Schrage says this structure is an excellent starting point for getting into the habit of executing lightweight, high-impact experiments and designing the innovations you wish to pursue.
In short: Leave the big idea boondoggles to dreamers. Focus instead on simple, efficient, and actionable hypotheses. This is the key to top-notch innovation.
Explore how alcohol affects your brain, from the first sip at the bar to life-long drinking habits.
- Alcohol is the world's most popular drug and has been a part of human culture for at least 9,000 years.
- Alcohol's effects on the brain range from temporarily limiting mental activity to sustained brain damage, depending on levels consumed and frequency of use.
- Understanding how alcohol affects your brain can help you determine what drinking habits are best for you.
If you want to know what makes a Canadian lynx a Canadian lynx a team of DNA sequencers has figured that out.
- A team at UMass Amherst recently sequenced the genome of the Canadian lynx.
- It's part of a project intending to sequence the genome of every vertebrate in the world.
- Conservationists interested in the Canadian lynx have a new tool to work with.
If you want to know what makes a Canadian lynx a Canadian lynx, I can now—as of this month—point you directly to the DNA of a Canadian lynx, and say, "That's what makes a lynx a lynx." The genome was sequenced by a team at UMass Amherst, and it's one of 15 animals whose genomes have been sequenced by the Vertebrate Genomes Project, whose stated goal is to sequence the genome of all 66,000 vertebrate species in the world.
Sequencing the genome of a particular species of an animal is important in terms of preserving genetic diversity. Future generations don't necessarily have to worry about our memory of the Canadian Lynx warping the way hearsay warped perception a long time ago.
Artwork: Guillaume le Clerc / Wikimedia Commons
13th-century fantastical depiction of an elephant.
It is easy to see how one can look at 66,000 genomic sequences stored away as being the analogous equivalent of the Svalbard Global Seed Vault. It is a potential tool for future conservationists.
But what are the practicalities of sequencing the genome of a lynx beyond engaging with broad bioethical questions? As the animal's habitat shrinks and Earth warms, the Canadian lynx is demonstrating less genetic diversity. Cross-breeding with bobcats in some portions of the lynx's habitat also represents a challenge to the lynx's genetic makeup. The two themselves are also linked: warming climates could drive Canadian lynxes to cross-breed with bobcats.
John Organ, chief of the U.S. Geological Survey's Cooperative Fish and Wildlife units, said to MassLive that the results of the sequencing "can help us look at land conservation strategies to help maintain lynx on the landscape."
What does DNA have to do with land conservation strategies? Consider the fact that the food found in a landscape, the toxins found in a landscape, or the exposure to drugs can have an impact on genetic activity. That potential change can be transmitted down the generative line. If you know exactly how a lynx's DNA is impacted by something, then the environment they occupy can be fine-tuned to meet the needs of the lynx and any other creature that happens to inhabit that particular portion of the earth.
Given that the Trump administration is considering withdrawing protection for the Canadian lynx, a move that caught scientists by surprise, it is worth having as much information on hand as possible for those who have an interest in preserving the health of this creature—all the way down to the building blocks of a lynx's life.
The exploding popularity of the keto diet puts a less used veggie into the spotlight.
- The cauliflower is a vegetable of choice if you're on the keto diet.
- The plant is low in carbs and can replace potatoes, rice and pasta.
- It can be eaten both raw and cooked for different benefits.
SMARTER FASTER trademarks owned by The Big Think, Inc. All rights reserved.