What Innovators Can Learn From Vegas Card Counters

March 21, 2008

Which will help your business be more successful: statistics or probability?

Underwriters at insurance companies use statistics to assess future risks. This is based on years of collected data.

Probability is what card counters in Vegas use to increase their odds of success. This is based on real-time, real-life experience.

If you want to play it safe, use statistics. If you want to win big, use probability.

There Are Lies, Damned Lies, and Statistics – Mark Twain

Businesses are increasingly using statistics to manage decision making, as evidenced by popular books like Tom Davenport’s Competing on Analytics and the boom in CRM system usage.

The belief is that if we gather more data we can make better decisions. But this may not be true when it comes to innovation.

If you are crunching numbers, you are probably gathering information from existing customers. This will give you insight into their buying habits, usability behaviors, and other patterns. But most likely you are only gathering data on YOUR customers.  This represents the middle of the bell curve or the norm. This information may be useful in “incremental” improvement, but it will rarely lead to significant innovations.

When you move beyond the norm to the far ends of the bell curve, you will find the real interesting ideas.

Being normal is not a virtue; it denotes a lack of courage

On the far right-hand side of the curve are the market leaders; the advanced users. They may not be your customers because you can’t meet their high-end needs. Or maybe they were once your customers and they left. When someone is not a customer it is difficult to gain insights into their wants and needs. If you could somehow understand their perspectives, you may find opportunities for “advanced” innovation and insights on where the industry may be going in the near future. These innovations would be more radical, yet continuous in nature. Think of this as the Blu-ray improvement on the standard DVD (we’ll save a discussion on the demise of HD DVD for another time).

On the far left-hand side of the curve are the laggards; the less sophisticated users. Your products/services may be too advanced, too complicated, or too expensive for their needs. Again, you are probably not gathering statistics on these individuals or organizations. But here lies the greatest opportunity for discontinuous innovation.  Or as Clayton Christensen would call it, disruptive innovation.  If you can find a way of “dumbing down” your offering, you might find new and untapped sources of revenue. Quite often these products become the de facto standard, much like when PCs replaced the more sophisticated mainframes and mini-computers.

The problem is, it is very difficult to get data about the ends of the bell curve. Focus groups, surveys, and other traditional data gathering techniques are useless. I love this quote from Scott Cook at Intuit: “For every one of our failures, we had spreadsheets that looked awesome.” We can use numbers to justify anything we want. But quite often they justify the wrong actions.

The Probable is What Usually Happens – Aristotle

If a statistics-driven innovation model does not work, what would a probability-based model look? Probability tells me that if everything is equal, the more bets I have, the more likely one will be successful. The odds of 1 success out of 200 are greater than 1 success out of 20.

But how can you have more bets without diluting your effort and potential returns? The key is to learn as you go. This is exactly what card counters to.

Let’s contrast a more statistics-driven model with a probability-based model. To do so, we will use two exceedingly simplistic examples. With innovation model #1, you make a few “big bets” based on analytics you gathered from your customers (a statistics-driven model). Innovation model #2 is a more experiential “learn as you go” model (a probability-based model).

In both examples, let’s assume you have $100 million to bet, woops, I mean invest in innovation.

[Read more]

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Be Inspired to Ride a Bike

May 26, 2006

Here’s an email I received the other day:

I loved your book! It inspired me to (finally) get on the back of a Harley. Towards the end you mentioned going back to what you loved to do as a kid and I remembered that I LOVED riding motorcycles. Never owned one, but anytime someone would let me ride theirs, I was all over it!

My husband has wanted a Harley for quite some time. Every time he talked about it I cringed and made some snide remark that “he’d kill himself on it.” Funny how as a responsible, goalaholic adult, I’d made a conscious decision about how dangerous motorcycles are.

On a Sunday afternoon in March, as I was finishing up your book, my husband borrowed a friend’s Harley and went for a ride to visit my mom and step-dad. He came home about 6 PM and said “you ought to change your clothes and go with me to take Greg’s bike back.” I thought about it for a minute and said, “OK!” He was so stunned by my response that I thought I was going to have to pry his jaw off the floor!

At that moment, after reading your book, I made the choice to do something that was fun and by golly, I got on my red leather jacket, black spike heeled knee-boots and got on the back of that bike! It was simply exhilarating! So now, we’re saving to buy a Harley! Thank you Stephen for inspiring me to have fun and get out of a rut! Goal-Free Living has a life-time place on my bookshelf and I recommend it every chance I get.

Janet Anderton

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Against the Grain

May 22, 2006

Here is an email I just received from a reader that I thought I would share with you…

Hi Steve,

I really enjoyed your book.

I just thought I would share my story in case it has the potential to help other people. Over the years, I’ve learned that if there’s one thing that will rob me of any enthusiasm and motivation for any endeavor, it’s coming up with a measurable goal to achieve a result. This self-knowledge hasn’t stopped me from hitting my head against this particular wall countless times. Don’t 95% of all self-help books suggest writing down goals? And I read a lot of books.

But eventually the time would come when I’d realize that I’m actually hindering attaining the goal by trying to adhere to the timetable too strictly, and I would end up ripping up the 3 by 5 card, the Word document or sticky note. Destroying the words that came to represent a vice to me. I always felt freer and more motivated after I “forgot” the goal, and sometimes later, a lot later, I’d realize I achieved it without even trying! And I had a better time doing it.

The Q&A section of your book gave me a valuable insight into why goals have never worked out for me quite like I wanted them to. Your section on personality types led me to look up a personality test I took years ago, and just as I thought, I’m not a Judger but a Perceiver. It’s quite pronounced actually. All these years, I’ve tried to fit myself into a box of what success was supposed to look like. I remember the Yale study distinctly (Note: In the book I point out that a frequently quoted study on goal setting at Yale was an urban ledgend). How many goals did I write down after reading that story for the umpteenth time!

Anyway, I’m very grateful for your book because among other things it reinforced what I already know, but what I continue to struggle with – goals really don’t work for me. So the next time I’m tempted to write down a goal, I will think twice about it, remembering that there are other more fulfilling ways to approach life. That I can kick this addiction once and for all!

Thank you,
Caroline

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My Jabberwock

April 20, 2006

Here is a wonderful poem written by a wonderful friend, Susanne Goldstein. It beautifully describes the oneness of everything. Enjoy.

It was neither tall nor short. Open or shut.
The dark helped the light and the light signified change and healing.
It wasn’t really bad or good or narrow. Maybe the middle.
Or perhaps the edge.
Depending on leanings and dealings and the crest of the moon.
It wasn’t really in or out, or up or down.
The magic
The mystery,
The plain vanilla fantasy.
It was and it wasn’t.
It can and it won’t be.
The hot-side-jump-jive-get-no-sleep-damn-pride or
the slow-beat-noodle’s-steeped-couch-is-deep-heavy-sigh.
It’s all one.

My Jabberwock (c) 1997 Susanne Goldstein

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Goal-Free Education?

March 16, 2006

I recently appeared on a TV show in Los Angeles, “Between with Lines” with Barry Kubrick. I received quite a few emails in response. One that particularly caught my attention was one from a former teacher, Doug. He writes:

“Your book, Goal Free Living precisely addresses the problem with all of the in vogue accountability and testing in education today. I have been a teacher for 38 years and was able to accomplish so much more before the testing, standards and accountability fad that we are now so plagued with in education. In the 1980′s I had over 18 students accepted to Cal Tech. In the 90′s when I was forced to worry about high test scores on the AP exams, no longer could I let students find the subject themselves but instead had to focus on specific goals to enable them to achieve high test scores. In my last year of teaching I taught in a teacher’s dream of a prep school. I chose not to stay more than one year because the poor students were so pressured in the direction of AP exams that we could get nothing done.”

This is a pressing issue, and one that needs to be addressed. The process of setting these performance goals in our educational system is robbing children of true learning.

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Reading Goal-Free Living for the First Time…Again

February 27, 2006

One of the book’s early reviewers recently had a change of circumstances in her life. She was contemplating a career change.
Rereading Goal-Free Living, when in this new situation, gave the book new meaning. Here’s what she wrote….

I was fortunate to be one of the early reviewers of Goal-Free Living manuscript. I read it several times and gave top of mind thoughts as the book evolved. I recall smiling periodically at the sections that resonated with me. But, for the most part, I had intellectualized the book and approached it from an editor’s perspective. Frankly, by the “umpteenth” time reading it, I could barely bring myself to look at the book cover that sat atop my living room coffee table. But then an interesting phenomenon occurred.

The company I have been working with for the past 5 years was making changes. My role evolved to support the needs of the business. Unfortunately this evolution did not support my own needs. The new role was driving me toward activities that I felt unfit to do. More importantly, they were activities I loathed!
Although I wanted to share my concerns with my boss, I was concerned that doing so might put my job at risk. The uncertainty of a jobless future was daunting. However, after several hours of discussing this with my husband, we agreed that my happiness was more important and we could make ends meet. With that settled, I went to cook dinner.

Then, from the other room I heard a voice – a voice like that of a preacher at his pulpit.

“Trust that you are never lost. I once gave a presentation on Goal-Free Living, and a woman in the audience asked a question: “I work in a cubicle in a well-known technology firm and I am unhappy….”

I instantly recognized the words. It was from the second secret in Goal-Free Living. I put down my spatula and headed back into the living room where my husband continued reading. For the next 20 minutes I sat on the floor as he read to me the very same words I had read so many times before. But this time, as I listened – I wept. Before, what were merely words on a page, now reached down to the core of my heart. Every word had meaning given my circumstances. It was as if I were hearing it for the first time.
And in all honesty, I was! I was in a different place in my life.
The words danced from my husbands lips and gave me renewed inspiration and hope.

If you read Goal-Free Living today and you find it to be an interesting concept that does not completely resonate…hang onto it. As your life evolves, the deepness of this book’s meaning will give you a whole new book to read again, for the first time, in the future!

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Making an Impact

February 7, 2006

My theme for 2006 is “impact.” It makes me feel incredible when I receive emails, like this one…

FINALLY!

Stephen,

Thank you so much. I could never put my finger on it, but the high pressure of all the goal setting made me anxious, and I felt like I was missing the boat half the time.

I’ve spent thousands of dollars on life coaches to help me reach goals prematurely which only stressed me out. Turns out, I was right on track all along, and just needed to enjoy the journey.

Goal free, stress free! This is not to say that I don’t have dreams I work toward. Of course I do. But now, I enjoy the process and don’t put unnecessary and counter-productive pressure on myself.

I can’t express how much lighter I feel after reading just a little bit of your book! It was like you were speaking right to me.

So, will I reach my goals? I don’t know. But I do know I’ll keep growing and enjoy the unique journey that is….my life.

I could just hug you!

Thank you, thank you.

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Business Plans = Bankruptcy?

February 6, 2006

I recently received the following email…

I appreciated your blog entry on goal-free business. My experience with start-ups has taught me that it is the journey, because the destination isn’t always what you originally intended. The first start-up company I was with managed to sell for profit in the midst of the telco bust (we were a telco). Why were we able to to this? Because we adapted and managed to do it fast–this involved a major change to our business plan. We had our hands in the business as well as on the business. I feel this balance kept us from having tunnel vision.

The president of the second company I was with wrote an excellent business plan. It looked great on paper and he proceeded to execute his plan without examining how it was impacting the business. He didn’t understand why things didn’t work out they way they were supposed to. Within 8 months, the company went bankrupt.

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Funny Email

January 21, 2006

Here’s an email I received last night…

I just got your book yesterday and started reading it. My 7 year old 1st grader came over and slowly spelled out the title: goal-free-li-ving. He then remarked “I didn’t know there was a book about our soccer team!???” – his poor team hasn’t scored one single goal yet this season.

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The Secrets of Staying Young

November 22, 2005

Over Labor Day weekend I met a wonderful woman, Susan Silver, at a conference in California. Susan, a successful television writer for shows including the Mary Tyler Moore Show, the Bob Newhart Show, Maude, and many others, is now writing a column entitled “The Search for Mr. Adequate.” It is the entertaining chronicles of her search for the perfect – well, adequate – man. This week she talks about the secret to staying young. You may recognize one of the people mentioned in the article. Click here to enjoy this article.

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