Thinking Big? Then Think Little Bets!
I recently interviewed Peter Sims about his upcoming book, Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, as it tackles a topic that is near and dear to us at frog: trying a lot of ideas quickly in order to rapidly find the most promising one. Sometimes this can be seen as a scattershot approach, but if done smartly it is usually more reliable than an approach that puts a lot of effort behind a small number of risky bets.
Peter Sims is the coauthor with Bill George of True North, the Wall Street Journal and BusinessWeek best-selling book. Little Bets is published by Simon & Schuster: Free Press and will be available in mid-April. Peter has had a long collaboration with faculty at Stanford’s Institute of Design (the d.school), his work has appeared in Harvard Business Review, Tech Crunch, and Fortune, and he’s a contributor to the Reuters and Harvard Business Review blogs. Previously, he worked in venture capital with Summit Partners, a leading investment company, including as part of the team that established the firm’s London Office. He can be found on Twitter @petersims.
What is “Little Bets” about?
Well, little bets are way to explore and develop new ideas. Chris Rock develops new comedy routines by making little bets with small audiences; Amazon’s CEO Jeff Bezos makes small bets to identify opportunities in new markets like cloud computing. I wanted to understand what went on behind the scenes, how people like Bezos, architect Frank Gehry, Army counterinsurgency strategists, or Pixar filmmakers, actually work and make decisions. I was surprised to learn how similar their approaches were. Little bets are at the center of an approach to get to the right idea without getting stymied by perfectionism, risk-aversion, or excessive planning.
How are Little Bets different than the fail fast/fail early approach? How do you prevent Little Bets from being too scattershot?
Failing fast and failing early is one method, of over a dozen, described in the book. Bezos, Rock, Gehry would agree: use rapid, low-cost prototyping as much as possible to identify problems and opportunities. But it’s not like throwing spaghetti against a wall. They are extremely focused and rigorous and bound by constraints. Gehry calls his constraints “guard rails,” which include things like budget, timeframe, materials, political or regulatory rules, and the nature of the building site itself. He and his team can be as creative as they want, so long as they stay inside that box. Constraints provide anyone with parameters to guide and measure progress or as Google’s Marissa Mayer has put it, “Constraints shape and focus problems and provide clear challenges to overcome.”
It sounds a lot like design thinking. Is that a big part of the book?
It’s a big part of the book’s DNA, for sure. My initial inspiration to write the book came from working with people at the Stanford Institute of Design, the d.school. I had coauthored True North: Discover Your Authentic Leadership so I was out speaking and working with leaders, managers, and entrepreneurs and almost none of them liked the term “design,” or could get their heads around what to do with it. But because I had worked previously in venture capital, it became increasingly clear the basic methods from design were extremely similar to the way entrepreneurs, especially those bootstrapping their businesses, made decisions when doing something new. They had to get out in the world, make sure they were solving the right customer problems, iterate like mad, work within constraints, and build up to great outcomes.
That was much more compelling to that audience, and in speaking with Army brass, it turned out counterinsurgency strategists must use extremely similar methods. I couldn’t believe I went through my entire educational experience, including business school at Stanford, without learning how to think and work using these types of methods. So, design was a big influence, but designers who’ve read the book have said they learned a lot about how people in such disparate fields work, so I hope that it can contribute in some small way to the evolution of design thinking as it permeates other fields – from business management to science to education.
How little is little? How does the sense of scale change with an organization (or should it)?
I define little as something that’s affordable and achievable. It’s a personal or leadership decision beyond that.
What about big bets? Why do you focus on little bets?
Everyone wants to make big bets. Be bold. Go big. But the irony is that people routinely bet big on ideas that aren’t solving the right problems. The research shows that this why companies often fail. I also think ingenious ideas are over-rated. Just as Pixar storytellers must make thousands of little bets to develop a movie script, Hewlett Packard cofounder Bill Hewlett said HP needed to make 100 small bets on products to identify six that could be breakthroughs. So, little bets are for learning about problems and opportunities while big bets are for capitalizing upon them once they’ve been identified.
It’s one thing to start a culture from scratch with a little bets mentality (Amazon, Google, Starbucks, all mentioned in your intro chapter), quite another to shift the mindset of an established organization and culture. How can large, older organizations make this happen, not just in a skunk works, but at scale for meaningful change?
That’s a great question that hasn’t been solved yet, but I will say this. It starts at the top and there must be a strong desire to shake things up. I interviewed a number of Procter & Gamble executives and former CEO A.G. Lafley moved the needle by bringing design thinking into the company, such as by hiring over 150 designers to act as internal champions, teaching managers there how to prototype, and requiring senior P&G leaders to live with customers around the world. Change is slow, but it happens at the individual level. Interestingly, as I prototyped the methods from Little Bets with different audiences, leaders inside some of the most risk averse organizations, including General Motors, The U.S. State Department, or stodgy parts of P&G all said the same thing: “little bets are the antidote to risk aversion.” They see little bets as part of the solution, so I’m hopeful they can be a Trojan horse, a weapon, for those who want to achieve meaningful change despite biases toward the status quo.