By Andy Boynton, with William Bole
The question in the title is raised—or should I say, answered unreservedly—by MIT research fellow Michael Schrage in a provocative new book titled The Innovator’s Hypothesis: How Cheap Experiments Are Worth More than Good Ideas (MIT Press). In it, he argues that even good ideas are “the enemy” of innovation because they distract people from what’s most important—making sure you could do something useful with the ideas.
As someone who has taught and written widely on the importance of ideas (see my book with Bill Fischer titled The Idea Hunter), I was surprised by the ferocity of his argument. I was also surprised by how much I agree with it.
First, the ferocity.
If I were to quickly and broadly summarize Schrage’s position, it would seem as if I were exaggerating. So here’s an unfiltered taste of his jeremiad against ideas.
Good ideas are actually the enemy of productivity. A focus on good ideas inflicts terrible damage—operational and emotional—on good managers and good businesses alike. Business ideaholics, not unlike meth addicts and other junkies, are always looking for the next fix. They crave the buzz, rush, or high that supposedly comes from injecting a really good idea into their managerial mainstream. Good ideas might be better described as the empty calories of enterprise innovation: accessible, tasty, and momentarily satisfying. But they're not good for you. They’ll make you sick.
Not only that—ideas are “harmful nonsense.” They’re “bad investments,” and those who think otherwise are promoting a “value-destroying dogma,” the author asserts. You get the idea. In general, Schrage is assaulting what he terms “the idea of ideas,” the notion that ideas are at the heart of innovation.
Clearly, the rhetoric is over the top, but I find myself agreeing with the substance of his argument, or with a good chunk of it. Let me explain.
It’s great that leaders, teams, and organizations have gained a growing appreciation of how fresh ideas can jumpstart the innovation process and lead to high-value products and services. There is, however, a serious temptation to fall in love with the process of generating raw ideas, to proliferate them endlessly and forget that something needs to be done with the ideas. And that something should be done in a smart way. You have to make sure the money spent on innovating isn’t greater than the value drawn from the innovation.
In other words, Schrage is trying to turn the focus from ideas themselves to the implementation of them, especially through testing, experimentation, and prototyping. This is the real challenge, the hard work, in his view. In that respect, he likes to quote Joseph Schumpeter: “Successful innovation is a feat not of intellect but of will. Its difficulty consists in the resistance and uncertainties incident to doing what has not be done before.”
Innovation Dollars for Fifty Cents
What I like most about Schrage’s approach is his smart guide to working with the ideas. It’s all about forging low-cost, low-risk experiments that help you figure out, for one thing, if the ideas are any good, but also to develop the ideas and make them better. He envisions small teams working collaboratively, as well as competitively with rival groups in the company, to craft business experiments that win the attention of top management.
For him, high-value innovation is much like value investing—which Warren Buffett has famously defined as buying dollar bills for fifty cents. The question, in Schrage’s mind, is: How do you get a dollar’s worth of innovation for fifty cents?
His general answer to that Buffett-inspired question is experimentation. His specific answer is what he styles as the “5x5 methodology.” Give a team of five people up to five days to come up with five business experiments that cost no more than $5,000 each and take no longer than five weeks to run. This is not to be taken literally (Schrage is not insisting that every experiment in every organization has to cost exactly $5,000, and so on). It’s a creative way of thinking about how to buy valuable insights at a discount.
One of my favorite examples in the book is the way that a young Steve Jobs and his colleagues went about creating a better, and much cheaper, mouse.
Back in the late 1970s, in the early days of Apple, Jobs admired the handheld mouse that served as an interface for Xerox’s Alto computer. The cost of producing each Xerox mouse was running north of $400. Jobs, in search of a cheaper version, was thinking more along the lines of $25. He retained a design team to come up with a mouse that would cost no more than that to make.
One of the designers, Dean Hovey, recalls:
The first place I went to was Walgreens. I bought all the roll-on deodorants I could find on the shelves. They had these plastic balls in them that roll around…. I hacked together a simple spatial prototype of what this thing might be, with Teflon and a ball. The first mouse had a ‘Ban Roll-On’ ball.
In the end, Jobs had his cheap, reliable mouse. “The time and material costs for this rapid experiment were less than $1,000,” Schrage reports. He points out that Xerox or IBM would have undertaken a far more elaborate and costly innovation process, involving manufacturers as well as designers, to produce a better mouse. In other words, the big company wouldn’t have gotten a dollar’s worth of innovation for mere pennies, as Steve Jobs did.
Implied here is a critique of the strategic planning process favored by many big organizations. The practice, more or less, is to come up with an idea and commit substantial resources to research and development, and then launch the product. This is a tribute to pure rationality: reasoning from the start that an idea is good, and betting big that your hunch is right. Pretty soon, an innovation project could become too big to fail. It’s hard to turn back because you’ve invested too much in the idea. That’s not much of an experiment. And, because of the costs, you might not be willing or able to run many other experiments. So, in that case, you’re not casting your net widely and testing a broad range of innovative possibilities.
Schrage notes that companies will often absorb these extraordinary costs in the lofty name of “strategic innovation.” He supplies a joke (heard in venture capital circles and elsewhere) to get across what he sees as the folly of this approach:
Q: What do you call an investment that takes two dollars to produce a dollar’s worth of value?
A: Strategic.
The Case of Amazon
The bottom line of The Innovator’s Hypothesis is that experimentation, not ideas, is the essence of innovation. My hypothesis is that you can’t separate the two, or shouldn’t. Ideally, you’d have a constant flow of interaction between ideas and prototyping (which are basically rough versions of an idea), all through the innovation process. And, you do need ideas to get the process going. Schrage wouldn’t put it this way. He doesn’t even like using the word “ideas,” apart from the polemical context. He prefers to speak of “beliefs” and “hypotheses.” (He defines a business hypothesis as a “testable belief about future value creation.”)
To illustrate this point, Schrage cites Greg Linden, whose group at Amazon, in the company’s early years, “believed that the retailer could create an even better shopping experience for customers if its software could make intelligent recommendations on what to buy,” based on their past purchases. Linden “hacked up a prototype,” a test site for a limited stream of customers. An impressive number responded by clicking on the recommendations and adding the items to their Amazon shopping carts.
Schrage’s conclusion: “The prototype enacted the idea. The experiment made the potential real.” True. No one knew it was a good idea until Linden and his group tested it with the customers. But of course, the idea launched the experiment. And it was a good experiment because the idea was good. I would bet that Linden and others at Amazon came up with many other ideas that weren’t so good or worth testing. That only goes to prove what Thomas Edison said— “To get a good idea, you must first get a lot of ideas.”
The search for great ideas remains vital to the innovation process. Without great ideas, you won’t have great experiments. If you’re not much of an idea hunter, you won’t be much of an experimenter. The ideas you’re testing will be unpromising, unproductive, and uninspired.
Experiment. Experiment. Experiment. But don’t forget the ideas.
Andy Boynton is Dean of the Carroll School of Management at Boston College and coauthor, with Bill Fischer, of The Idea Hunter: How to Find the Best Ideas and Make Them Happen (Jossey-Bass), written with journalist William Bole.
