Some of the best things began as apparently stupid ideas. Some of the worst things also began with stupid ideas–obvious to everyone but the person who had it. Since a lot of risk and value rest on understanding which is which, how do we sort out the good, the bad and the ugly?
When I was still in the product design business, I saw all manner of inventions intended by their founders (and their life savings) to revolutionize some part of the world. I designed a watch for dogs (while still in the "anything-for-a-buck" phase of my business growth), listened to a proposal for a gadget that told you that your wallet had just been stolen and read detailed plans for a manual cruise control consisting of a stick jammed in the accelerator pedal. The lunacy of these concepts seems obvious but when is a seemingly bad idea genuinely a bad idea? And when does it defy the logic of the experts?
A truck with square wheels seems counterintuitive and an obvious candidate for the bad idea club but it actually worked (kinda). It required a special suspension and could get up to 60 mph before the tires disintegrated but it did run, allowing its engineers to jarringly dislodge the viewers assumption of what is possible, if not desirable or advantageous.
Why did Xerox miss the computer revolution even though they invented most of the technologies that eventually became Microsoft and Apple? (Perhaps their self-identity as the "document company" is a clue.) Why didn't Sony capitalize on what became the iPod. They had the content, the global distribution, the expertise manufacturing small devices and they invented the Walkman but Steve Jobs just waltzed right in and scooped them. Maybe they thought no-one would pay for songs they were already stealing.
Part of the problem lies with the curse of experience and insider knowledge. It's very difficult for people who know things to forget that they know thing and develop what the buddhists call "beginner mind". How do we learn to see the world with fresh eyes?
I coach two legendary Canadians who were each on the Dragon's Den at different periods. They both understand the theatrical nature of the show, it's underlying silliness and the inherent limitations that accomplished rich people have in picking winners. Most of the Dragons actually did relatively few deals for this reason. The cost of type I errors (investing in something dumb–a "false positive") is usually less than missing a truly good opportunity (a type II error, or "false negative"), except when it isn't. This bias is built into the human decision making calculus where, in primitive homo sapiens, false positives lead often to death and a halt of that particular DNA.
It's very difficult to transcend this evolutionary bias and avoid winning a Darwin award entirely. In venture capital and private equity, the whole point is to generate alpha (returns that are much higher than the movement of the general market or indices) by betting against the conventional wisdom (what all the investors "know" and have priced into the value of the stock.)
Some of the most valuable inventions in the history of the world began their lives looking stupid to the so-called experts. The benefit of betting against the accumulated intuition of the market when it works can be huge as is the cost of being wrong. But this is what the founders of every great company and the designers of every great product have done. But when is that smart and when is it dumb?
How do we learn to both trust our gut instincts and consider something counterintuitive precisely because it is counterintuitive? The key to that seems to be in working in an area that we have deep experience in and paradoxically developing the beginners mind: stay curious, ask lots of questions and don't assume we know every fucking thing.
Book four with former Dragon Brett Wilson is coming soon. Book three with former Dragon Bruce Croxon is available here. Get yours before the end of June when we switch themes (and Dragons) from curiosity to simplicity.