Where the Action Is

The word "innovation" seems perilously overworked these days, invoked by corporate leaders and earnest politicians eager to signal progress and express faith in our ability to solve problems and improve the world. We're always ready to endorse the concept, though applying it may be another story. "I'll be happy to give you innovative thinking," a bedraggled employee tells his boss in a classic Leo Cullum cartoon. "What are the guidelines?"

Guidelines are what Peter Sims seeks to provide in "Little Bets," an enthusiastic, example-rich argument for innovating in a particular way--by deliberately experimenting and taking small exploratory steps in novel directions. Some little bets will not pay off, of course, in which case little is lost; but others may pay off in big ways.

Mr. Sims gives special attention to Pixar studios. Originating as a start-up within George Lucas's Lucasfilm, Pixar at first focused on making computers for viewing complex images. When Steve Jobs bought the company in 1986 (for a mere $5 million), it included a tiny team focused on animation. Its principal job was to show off what Pixar's hardware could do. But then Mr. Jobs endorsed a series of small film projects--little bets--from this division. The animated shorts were well-received, and the creative team behind them was able to refine its technique and eventually win an Oscar for best animated short film, "Tin Toy," in 1988. That project, in turn, led to "Toy Story," a film that went on to gross more than $350 million world-wide.

Mr. Sims takes us through a range of approaches, from the meticulous way in which Chris Rock tests new jokes at an obscure comedy club to Amazon's culture of continuous experimentation, which led to the gradual inclusion of third-party vendors (now accounting for 30% of Amazon's sales). Mr. Sims also highlights the value of prototyping—making crude preliminary versions of potential products to get a sense of how they'll work in practice. He shows how this approach has been used by architects (Frank Gehry arrived at his design for L.A.'s Disney Hall through a series of little bets aimed at solving "thousands of problems"); by authors (novelist Anne Lamott admits to writing dreadful first drafts); and companies (Procter & Gamble tests out "low resolution prototypes made from duct tape or cardboard" to see how users might react to a new product).

Of course, small bets can simply be a way of using trial-and-error to discover what people want. Starbucks founder Howard Schultz began with a quaint vision of an Italian coffee house (baristas wearing bow ties, only whole milk used in drinks), but it rapidly evolved in response to consumer preference. Today nonfat milk is used in almost half the lattes and cappuccinos that Starbucks serves. As for the bow ties, they remained in Milan.

The point is that good (or even just delicious) ideas rarely emerge fully formed, like Athena from the head of Zeus; rather they evolve in a discursive and unpredictable fashion. The challenge is to enable this process rather than squelch it because it is hard to manage or because its results are hard to predict.

Light, bright and packed with tidy anecdotes, "Little Bets" feels at times like a motivational speaker's presentation. Its claims are often attractive, but the analytical apparatus can be shaky: correlation is confused with causation; counter-evidence is ignored (such as those who put down small bets but never enjoy large returns); the role of circumstance or luck is underestimated; and some facts seem cherry-picked to push the message.

Consider Steve Jobs again. Mr. Sims describes him as an "exemplary innovator," supplies an insightful Jobs quote ("People don't know what they want until they've seen it") and praises him for his healthy perfectionism. Yet in Silicon Valley, Mr. Jobs is equally well known for his pragmatism ("real artists ship") and his tight control over product development and marketing, leading Forbes (and others) to brand him "a control freak." Where do these inconvenient qualities fit in the innovation narrative?

The omission is significant, since Mr. Jobs's desire for tight control is not unusual among innovators, and it highlights one big challenge of innovation. Almost everyone recognizes that it's useful to try new things and hedge risk with multiple "bets." The problem is that often the people investing their money, managing their companies or leading their teams prefer to decide which new things they want to try; their resulting directives, naturally, are expected to be executed as efficiently as possible. One answer, as Ms. Sims suggests, is a culture where deliberate experimentation is celebrated. One famous example is Google, which allows some employees to pursue an independent project for up to 20% of their time.

Another approach involves closing the distance between innovators and customers; Mr. Sims celebrates the practices of Brig. Gen. H.R. McMaster and Nobel laureate Muhammad Yunus, both of whom lived among the people they were trying to help, gleaning what Mr. Yunus called "the worm's eye view." Mr. Sims might have also selected examples from medicine, where some of the most important insights (such as the discovery of the first antidepressant) originated not from a conference room or lab but from the physicians taking care of patients. With the rise of open platforms, future innovations may well emerge from a far-flung network, including end-users.

"Little Bets" itself can also be part of the solution, particularly if it manages to focus attention on the often nonlinear, evolutionary nature of discovery and provides much-needed cover for the latent innovators within every organization desperate to escape the tyranny of Gantt charts and process metrics and keen to poke around in promising new areas. Perhaps one of them will find something insanely great.

David A. Shaywitz is an adjunct scholar at AEI.

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