The goal of almost all innovations is to take advantage of a predicted future trend or event. There is an entire industry and research field – futurism – devoted to predicting what’s ahead and how to capitalize on things to come. Much of government policy and services are also concerned with accurately predicting the future. This is why innovation is so much like the famous game played in the Calvin and Hobbes comic strip: the rules are always changing and no Calvinball game is like any other Calvinball game.
But, as famous physicist Neils Bhor observed, “prediction is very difficult, especially about the future.” In this second posting, I will discuss three books that describe how to be innovative even in the face of uncertainty.
The first book is by Nate Silver who created “FiveThirtyEight.com” in which he accurately predicted all 35 2008 Senate races and was 99% accurate in predicting the states that voted for Obama. In The Signal and the Noise, he explains the reason why most predictions fail is that correlation is often confused with causation. In one of his examples, he describes the competing camps of baseball statisticians who depend on esoteric statistical indexes versus baseball scouts who rely solely on their gut instincts. His major piece of advice is to use Bayesian statistics where you use informed opinion along with good data analysis to better separate the statistical noise from the actual signal you are looking for. What this book teaches the innovator is that uncertainty is fundamental to any complex system and that one should continually refine their predictions.
Uncertainty is also the theme of Johansson’s The Click Moment. He argues that success is mostly driven by randomness and unpredictability. Given that, how do innovators account for uncertainty in complex situations? He suggests two major methods: placing purposeful bets and harnessing complex forces. In placing purposeful bets, the innovator needs to place many small bets that are composed of small executable steps which the innovator can accept affordable losses. Many of these bets will not pay off but it only takes a few to realize tremendous benefits. To realize these benefits, your existing systems should have large hooks to accommodate the new innovative forces. You should also be able to spot openings where you can take advantage of the momentum and intensity unleashed by the successful bets.
Like Johansson, Burrus also argues that uncertainty is a big barrier to innovation. What he suggests is to focus on what can be known – hard trends. Hard trends are either cyclic or linear changes that can be firmly established such as demographic trends or phenomena such as aging. In terms of technology, he has identified eleven hard trends:
- Dematerialization – less material means increasingly smaller devices
- Virtualization
- Mobility
- Product intelligence – our products are becoming embedded with their own intelligence
- Networking
- Interactivity
- Globalizationa
- Convergence
- Processing power
- Bandwidth
- Storage
Once you have identified the hard trends, you can then shape your future by concentrating on shaping soft trends through such tactics as “taking your biggest problem and skipping it” or “going opposite.” This is where real innovation begins according to Burrus.
The main message of all three books is that uncertainty is a major part of innovation and must be dealt with. All three books give great advice on working with uncertainty in being more innovative. Summing up all the advice, I would suggest that innovators have an active “small bets” program, learn to spot hard trends, and use data-driven decision-making to guide your innovation efforts.
Disclaimer: All opinions expressed are my own and do reflect the opinions of my employers or any organizations I am member of and should not be construed as such.
References:
Burrus, D. (2011). Flash foresight: How to see the invisible and do the impossible: Seven radical principles that will transform your business. New York: HarperCollins.
Johansson, F. (2012). The click moment: Seizing opportunity in an unpredictable world. New York: Penguin Group.
Silver, N. (2012). The signal and the noise: Why most predictions fail but some don’t. New York: Penguin Group.
Good advice –
1 – think critically about the correlation (I would add, where does it start?)
2- on randomness I would think of it differently – e.g. “Man plans and G-d laughs” – so watch that karma
3 – informed opinion – absolutely, education + experience
4 – good data analysis – very true – Harvard Business Review recently had article on the rise of data scientists
5 – trend analysis – solid
One could also add some other frameworks of analysis – the usual suspects – psychology, sociology, economics, biology and even things like art. Pop culture is accurate at predicting actual events in two ways – inventions, by imagining them (e.g. Star Trek) and outcomes, by showing us patterns that tend to repeatedly crop up in relationships and social settings.
@ Dannielle – Thank you for commenting. I agree that frameworks of analysis can be useful but how does one avoid being trapped in viewing things only through that framework?
Excellent observations! All three books sound like they are for such a time as this! The interesting thing that we need to be aware of is the complexity and uncertainty perspectives that are only going to increase.