Every Idea Can’t Be a Good Idea (transcription)

Here is the transcription for my Monday Morning Movie…

The other day I was at Mohegan Sun, which is a casino about an hour and a half outside of Boston. And while I’m there I love to speak with the gamblers because each of them believe they have a system. They believe they have a method to ensure that they win. And they’re all convinced they’ve won more money than they’ve lost.

Well, of course, this is not true. Casinos are not in the habit of giving money out to people. The house always wins. We know this to be true.

Why do people believe that they win more than they lose? It’s something called confirmation bias, and confirmation bias is the brain’s processing mechanism by which it finds evidence to support its belief structure. Whatever you believe, you will find evidence to support that, and you will subconsciously ignore anything that refutes your belief structure. That’s why we can have such powerful beliefs in spite of evidence to the contrary.

It’s very important for innovators to understand this concept, because every person is convinced they have a billion dollar idea. They’ve got the next big idea that’s going to change the world and make them rich. But what happens is their confirmation bias only allows them to see the evidence that supports their belief that they have a great idea. Their brain doesn’t allow them to see all the evidence that proves it’s actually a bad idea.

There’s a reason why 70 to 90 percent of new innovations fail. It’s not because these aren’t well intentioned, motivated, or excited people. But they’re people who, like all people, have confirmation bias. As a result they will subconsciously ignore the evidence that proves that what they think is a great idea, is in fact not such a good idea.

As innovators, as entrepreneurs, as individuals it’s important to recognize this. Now how do we counterbalance this?

It’s difficult for us to find evidence that refutes a strongly held belief. So what we need to do is, when we’re working on something, partner with a devil’s advocate. Find someone who’ll be the contrary point, somebody whose sole purpose is to find evidence that proves your idea is a bad idea.

Now it may be hard to hear what that person has to say. You will want to reject what they have to say. But if you can open up your mind and be willing to hear the contrary points of view, you may be able to refine your product, service, or idea, and come up with something that’s better. Or you may learn it’s just such a bad idea and you shouldn’t invest the time and money in this one. Find a different one.

This is really important for all organizations (big or small) and individuals.

We know that every gambler doesn’t win more than they lose. And we know that every idea is not a great idea.

The question is, “What are you going to do to make sure that you invest your time, money, and energy in the things that have the highest likelihood of paying off?”

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Keep Hotel Shades Closed

Today’s Tuesday Travel Tip…

Have you ever stayed in a hotel room and could not get the shades to stay closed? When the sun rises, the light blasting into your room wakes you up?

Well, here is my simple yet handy solution: use a chip clip.

Bring one of these with you on your next trip and you can keep your shades tightly closed so that your room stays pitch black all day long.

P.S. I used the “Path on” iPhone app to write the text on the image. It is a very cool app that let’s your draw text on a photo in any shape you want.

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Every Gambler Can’t Win

Today’s Monday Morning Movie…

It seems like every gambler has a system that ensures they win more than they lose. Of course this can not be the case.

The same is true with innovation. Everyone is convinced they have the next big idea and have all the evidence to support their belief. But most innovations fail.

What is going on here? And what can you do about it?

Today I discuss how the brain is fooling us into believing false beliefs.

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To Set Goals or Not Set Goals, That is the Question

Today’s Friday Fun Fact…

My Monday Morning Movie discussed some concepts from my book, Goal-Free Living.

I have long questioned the practice of goal setting.  My book (published in 2006) challenged traditional thinking about goal setting and discusses how we can not only succeed in business (and life) but to do so while achieving great happiness and satisfaction.

Due to its prevalence in business, this goal-free concept is often met with resistance.  But apparently there are others that have challenged this conventional wisdom as well.

In a Harvard Business School working paper, the authors of Goals Gone Wild reviewed a number of studies that indicate that the ”beneficial effects of goal setting have been overstated and that systematic harm caused by goal setting has been largely ignored.”  They state that the side-effects that goal-setting can have include a “narrow focus that neglects non-goal areas, a rise in unethical behavior, distorted risk preferences, corrosion of organizational culture, and reduced intrinsic motivation. “

One such study is highlighted in a recent New York Times article:

Three groups of participants were asked to create as many words as possible using random letters – similar to the game, Boggle.  Two groups were given a specific goal to formulate at least 9 words.  One of the two teams was offered a financial incentive for hitting this goal, the other was not.  The third group of participants was simply told to do their best.

At the completion, the participants turned in only the answer sheets stating how many words they had created and had disposed of their worksheets.  “But the academic researchers running the experiment had a code to match the worksheets with the answer sheets and discovered that both groups that had been given a goal of creating a certain number of words — whether or not money was involved — cheated 8 to 13 percent of the time. Those in the third group rarely did.”

To set goals or not to set goals.  The debate continues.

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Innovate Where You Differentiate

This article originally appeared on the American Express OPEN Forum site, and is today’s Wednesday Work Wisdom…

I subscribe to the 20/80/80 principle. The idea behind this concept is to focus your energies on the 20 percent of those activities that create 80 percent of the value. This can mean concentrating on the customers that create the highest revenue potential or on the products that provide the greatest leverage return. Once mastered, you can spend your 80 percent on other activities that produce even more long-term value. But how do you know what those activities are?

In my book Best Practices Are Stupid, I describe a model called “The Innovation Targeting Matrix,” which helps business owners evaluate their business activities and put each into one of three categories: support, core and differentiating. Doing this helps them determine which areas are worth focusing their 80 percent on.

Support
Activities that fall into this category are those that help you run your business, but are not the business itself. Although many assume that human resources and finance fall into this area, the reality is that there are parts of every function that are “support” in nature. What distinguishes these activities is that customers don’t pay for or value them, and they don’t create direct value for your business either. Therefore, your strategy should be to outsource these activities to a low-cost provider. Or, if they are truly low value, eliminate them altogether where possible. For example, I hire someone overseas to handle my audio transcriptions. Although I could eliminate this activity, I have deemed enough value to continue with it.

Core 
The next level represents your “core” activities, which are any activities that create direct customer value. They typically range from shipping and customer service, to sales and new product development. For core activities, consider simplifying, automating, improving (e.g., Six Sigma) or, in some cases, outsourcing to a strategic partner. If outsourcing, look to hire organizations or individuals for whom this work is a differentiator. For example, I’m not a marketing expert and my clients don’t pay me for my marketing expertise, so I retained an Internet marketing company because its results set it apart in the marketplace. In this case, strategic outsourcing makes the most sense. It’s important to note that just because something is a core function—like sales—does not mean that everything a salesperson does is core. Related administrative work may be a support function, while other aspects of sales may be differentiators.

Differentiating
At the highest level are your “differentiating” activities. These are what separate you from the competition, and they represent the unique reasons why customers buy from you and not someone else. What makes you different? Is it some particular aspect of your service? Do you have a unique pricing model? Are you able to give customers access to something they can’t get elsewhere? Do you provide a feature no one else can offer? Any activity can be differentiating. There are aspects of HR, for example, that enable your organization to stand out. Identify these activities in every department. Spend your time on those activities that set you apart from your competition, and innovate where you differentiate.

In addition to using the Innovation Targeting Matrix, entrepreneurs should ask themselves the following questions to help focus their energies on the most important tasks:

• Am I the best person to execute this activity? If not, get someone else to do it. When possible, only engage in activities that you deem to be your strengths. I hired a branding company because branding is their strength, not mine.
• Is this activity something I enjoy doing? If not, consider having someone else to do the work. Creating strategic partnerships is essential to my business, but I find the work exhausting, so someone else handles this responsibility on my behalf.
• Is this activity something I need to do? This is often a tough question. From my experience, much of the work we do provides negligible value; however, we convince ourselves it is necessary. Surfing the Internet, being sidetracked by emails all day long and other distractions disguised as opportunities should be eliminated.
• Does this activity give me leverage? This is a critical question. Think about it this way. For some activities, an hour of work rears an hour of value. When my income is based solely on speaking to groups, there isn’t a lot of leverage. I’m limited by the number of hours in the day. Personal/executive coaching often has even less leverage because you’re having an impact on only one person at a time. When I license my work to others, there is greater impact as they do the work and I make the money with minimal effort. In this case, one hour of work on my part can lead to hundreds of hours of value. Selling can be leveraged too. Instead of selling once and making one sale, find a channel whereby they can create dozens or even hundreds of sales for you.

Why invest in activities that don’t yield the greatest return? There are only so many hours in a day, so focus your energies on activities that you enjoy, that are differentiating and that create leverage. Using these strategies will help you stay one step ahead of the competition.

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