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Just over the crest of the highest point on Sand Hill Road, amid a cluster of relaxed buildings that could easily pass as residential units, sit the offices of Andreessen Horowitz (A.H.). Inside, you enter a lobby that doubles as a library featuring some of the favorite books of Marc Andreessen, who originally made a name for himself as co-founder of Netscape, the early web browser, which sold to AOL.

There’s a wide array of books in the A.H. lobby – from highly technical tomes about coding to more popular and well-known best sellers that have been ingested by millions, like Built to Last by Jim Collins. Reflecting on the self-conscious nature of the book selection and placement, the receptionist describes how each book was selected for a reason. Each book has a story behind it, she says. There’s a lot of modern art, too, all around, and within the bowels of the offices once you’re past the reception, including Robert Rauschenberg paintings. It’s all part of the brand. Anyone who has worked in venture capital understands that the industry is driven by sales as much or more as by thinking or ideas. And, when it comes to marketing and public relations, one thing is certain: No Silicon Valley venture firm is as vociferous and aggressive with marketing these days as Andreessen Horowitz.

Ben Horowitz was a product manager at Netscape, then co-founded the software firm Opsware with Andreessen, which eventually sold to Hewlett Packard for $1.6 billion. Horowitz, who was chief executive officer of Opsware, is the effective manager, while Andreessen, who was the chief technology officer of AOL, is a technology genius. The two have been inseparable since launching Andreessen Horowitz in 2009, and the firm has raised about $4.0 billion since. That is an ungodly amount of capital raised, especially in such a short period of time. It took the firm where I once worked, Summit Partners, which is considered a top-tier firm as measured by returns, 15 years to get to that level. A.H. has done it in five. In a very short time, A.H. has become one of the hottest Silicon Valley venture capital firms with investments in Facebook, Twitter, Pinterest, Airbnb, Box, Foursquare, and Skype, a deal that earned A.H. investors a 4x return on the firm’s $50 million investment in 2009.

Nearly overnight, Andreessen Horowitz has leaped into the top-tier of Silicon Valley venture capital firms, and the firm’s momentum has only increased thanks to some combination of brilliant salesmanship and marketing — a new model that is highly differentiated as well as, it seems, more creative and more entrepreneur-friendly than the traditional venture capital firm model. We’ll get to that in a bit; Let’s start with the marketing.

Marc Andreessen and Ben Horowitz. Credit: Forbes.

The way Andreessen and Horowitz market their firm and themselves is by producing “thought leadership.” Horowitz penned a book about his experiences as an entrepreneur before becoming a VC entitled The Hard Thing about Hard Things: Building a Business When There Are No Easy Answers, which was well-received by everyone from Silicon Valley entrepreneurs to The Economist magazine. “These are halcyon days in Silicon Valley and other hives of entrepreneurship around the world,” the Economist review gushed, “Nobody knows this better than Ben Horowitz. One of the Valley’s most prominent venture capitalists, Mr. Horowitz was previously the chief executive of a prominent start-up and personally experienced what he dubs ‘the Struggle.’… Not all his advice is compelling, but there is more than enough substance in Mr. Horowitz’s impressive tome to turn it into a leadership classic.”

Meanwhile, Marc Andreessen is outspoken to say the least, and perhaps his most quoted phrase to date is, “Software is eating the world” (this even serves as the tagline on the A.H. company website). He jumped onto Twitter in earnest this past January, and hasn’t stopped tweeting since, accumulating over 25,000 tweets in that time-frame. He tweets about education, financial systems, political institutions, and, obviously, a lot about technology.

An analysis of Andreessen’s peripatetic tweeting revealed that Andreessen tweets between 50 and 200 times a day, with an average of 120 tweets a day. On one day, February 5th of this year, Andreessen tweeted over 500 times, including a lengthy discussion about the future of the news business. His feed is required reading around Silicon Valley, where Andreessen is highly respected for his intuition and insight especially about the Internet and software, according to my conversations with Andreessen’s fellow board members (Andreessen sits on the boards of eBay, Facebook, and Hewlett-Packard).

Andreessen takes to Twitter akin to how an impassioned preacher might take to the pulpit to deliver a big sermon on Sunday morning. Some refer to the Andreessen monologues as “rants,” while others refer to them as “meditations,” but regardless, a lot of people listen when he goes into pontification mode. He outlines his thoughts and points in sequential order, then pushes the tweets out one after the other, starting with “1/” then “2/” and so on. One recent example, from June 1st, involved robots and machines. Here is how it went:

“1/One of the most interesting topics in modern times is the “robots eat all the jobs” thesis; best book on topic: [a link to Amazon for the book “The Second Machine Age” by Erik Brynjolfsson and Andrew McAfee]” 2:10 PM — 1 Jun 2014

“2/The thesis is that computers can more and more substitute for human labor, thus displacing jobs and creating unemployment.” 2:11 PM — 1 Jun 2014

“3/At core, this is Luddism (http://en.wikipedia.org/wiki/Luddite ) — “lump of labor” fallacy, that there is a fixed amount of work to be done.” 2:12 PM — 1 Jun 2014

“4/The counterargument is Milton Friedman: Human wants and needs are infinite; there is always more to do. 200 years of history confirms.” 2:15 PM — 1 Jun 2014

“5/To avoid the Luddite mistake, must believe “this time is different”, that either (a) there won’t be new wants and needs (vs human nature),” 2:15 PM — 1 Jun 2014

“6/Or (b) It won’t matter that there are new wants and needs, most people won’t be able to adapt to contribute & have jobs in new fields.” 2:16 PM — 1 Jun 2014

“7/While it is certainly true that technological change displaces current work & jobs, and that is a serious issue that must be addressed…” 2:17 PM — 1 Jun 2014

“8/It is equally true, and important, that the other result of each such change is a step function increase in consumer standards of living.” 2:17 PM — 1 Jun 2014

“9/As consumers, we virtually never resist technology change that provides us with better products/services even when it costs jobs…” 2:18 PM — 1 Jun 2014

“10/Nor should we. This is how we build a better world, improve quality of life, better provide for our kids, solve fundamental problems.” 2:19 PM — 1 Jun 2014

“11/Make no mistake, advocating slowing tech change to preserve jobs = advocating punishing consumers, stalling quality of life improvements.” 2:20 PM — 1 Jun 2014

“12/So how then to best help individuals who are buffeted by producer-side technology change and lose jobs they wish they could keep?” 2:22 PM — 1 Jun 2014

“13/First, focus on increasing access to education and skill development — which itself will increasingly be delivered via technology.” 2:23 PM — 1 Jun 2014

“14/Second, let markets work (voluntary contracts and trade) so that capital and labor can rapidly reallocate to create new fields and jobs.” 2:24 PM — 1 Jun 2014

“15/Third, a vigorous social safety net so that people are not stranded and unable to provide for their families.” 2:25 PM — 1 Jun 2014

“16/The loop closes as rapid technological productivity improvement and resulting economic growth make it easy to pay for safety net.” 2:26 PM — 1 Jun 2014

Pause. Deep breath. Twenty minutes passed. Then, it seems, Andreessen got a second wind:

“1/The flip side of “robots eat all the jobs” not being discussed: The current revolution in the “means of production” going to everyone.” 2:47 PM — 1 Jun 2014

“2/In the form of the smartphone (and tablet and PC) + mobile broadband + the Internet: Will be in almost everyone’s hands by 2020.” 2:48 PM — 1 Jun 2014

“3/Then everyone gets access to unlimited information, communication, education, access to markets, participate in global market economy.” 2:48 PM — 1 Jun 2014

“4/This is not a world we have ever lived in: Historically most people in most places cut off from these things, usually to a high degree.” 2:49 PM — 1 Jun 2014

“5/It is hard to believe that the result will not be a widespread global unleashing of creativity, productivity, and human potential.” 2:50 PM — 1 Jun 2014

“6/It is hard to believe that people will get these capabilities and then come up with… absolutely nothing useful to do with them.” 2:50 PM — 1 Jun 2014

“7/And yet that is the subtext to the “this time is different” argument that there won’t be new ideas, fields, industries, businesses, jobs.” 2:51 PM — 1 Jun 2014

“8/In arguing this with an economist friend, response was “But most people are like horses; they have only their manual labor to offer.” 2:55 PM — 1 Jun 2014

“9/I don’t believe that, and I don’t want to live in a world in which that’s the case. I think people everywhere have far more potential.” 2:55 PM — 1 Jun 2014

Phew. I’m exhausted just re-pasting.

Evidently, Andreessen is a freak of nature when it comes to the ability to process inputs and outputs – so much so that Teddy Roosevelt might have had trouble keeping up. But when it comes to his own sense of himself and his operating philosophy, he seems quite clear. In fact, Andreessen’s Twitter bio says a great deal: “FOR creators & contributors to technology, science, art, ideas, a better world. STRONG VIEWS, WEAKLY HELD. Proud solutionist since 1994.”

It’s also clear that Andreessen takes to Twitter as both a preacher, and a listener/learner because he often engages with people who reply to his tweets, and as was mentioned the back and forth can take his number of tweets into the hundreds on any given day.


Andreessen’s public persona, stated as an artistic identity (or aspiration), stands in stark contrast to the way most venture capital firms are oriented. When I worked as a venture capital investor some ten years ago, the hot firms were Kleiner Perkins, Sequoia Capital, Benchmark, and Accel. All of these firms had charismatic leaders with a gift for sales and marketing. In fact, anyone who has worked inside the venture capital industry learns pretty quickly that sales and marketing skills are prized more than just about any other skill, even technical expertise, because you have to get deals by winning entrepreneurs over. If you don’t sell in venture capital, you lose. Inside the belly of the industry, I heard the quote: “Second place is first loser” for the first time. It’s easy to laugh about, but that’s the mentality of the industry. And, you’re only as good as your last deal.

John Doerr of Kleiner Perkins worked in marketing for Intel before becoming a venture investor. Cloaked in prestige, these firms got the best deal-flow, since partnering with Kleiner meant a Gold Standard seal of approval. Kleiner made hundreds of millions of dollars for investors on the first wave of the Internet as well as technology pioneers in general, with investments that included AOL, Google, Amazon, Juniper Networks, Symantec, Genentech, Intuit, Sun Microsystems, and Electronic Arts.

Today, Kleiner Perkins still has a premium brand, and John Doerr is widely respected, especially by the senior states-people of Silicon Valley. Yet, as someone who works with or speaks with countless entrepreneurs, Kleiner Perkins is rarely a topic of conversation these days. Kleiner is becoming old school. As I’m sure even John Doerr would admit, Kleiner is no longer the “hot” VC firm. If anything, Kleiner is seen as a bit stodgy (as stodgy goes in Silicon Valley). Kleiner is old power, if you will.

The predominant old way of thinking about venture capital is that you: a) build up a great brand and reputation with a large portfolio of investments, b) hire partners who have individually strong brands of their own, and c) collect hefty management fees on each fund. The industry standard is a 2–2.5% yearly “management” fee, a figure that gets pretty large on a billion dollar fund. And, in my experience, not surprisingly, the senior people get a disproportionate slice of that management fee. At the same time, the venture capital industry has been a glaringly poor-performing asset management group, consistently under-performing the S&P 500. (For more detail on the struggles within the VC industry, a recent article on the Harvard Business Review Blog by Diane Mulcahy, a senior fellow at the Kauffman Foundation, entitled “Venture Capitalists Get Paid Well to Lose Money” is well worth reading).

That was then. This is now.

In a white paper on the subject of old power versus new power, Henry Timms, executive director of the 92Y in New York City and founder of the social media movement #Giving Tuesday, along with Jeremy Heimans, CEO of Purpose, write that old power is scarce, held by a few. Old power acts like currency. It is top down, and hierarchical; it commands. The old power pie is fixed – either you have it, or you don’t. Think of Washington DC or Hillary ’08 as old power. New power, on the other hand, can be multiplied and acts like a current. It is collaborative, non-hierarchical, open and participatory. The new power pie can be expanded the more nodes are added to the network. Think of Twitter or Airbnb or Obama ‘08 as new power exemplars.

These days, the title new power in Silicon Valley would go to either angel investors writ large, such as YCombinator, or Andreessen Horowitz, and not just because they are marketing the hell out of themselves and their ideas. The team at Andreessen Horowitz plays down hierarchy and seeks to be inclusive as it expands to nodes at the periphery of its network. A.H. sees everyone as a potential contributor to its network. Members of the team who I spoke with emphasize that the power of a network lies in its external nods (i.e. distant acquaintances) – a nod to inclusivity and the need to constantly expand the network. The firm’s strategy is nearly perfectly positioned for what entrepreneurs look for in a partner today.

For one, the emerging generation of Silicon Valley entrepreneurs has learned just how confrontational the relationship between venture firms and founders can be. Nick Bilton, a reporter for the New York Times, detailed just how acrimonious things can get between founders and boards in his recent book Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal, which details the clashes between Twitter’s board and founders Jack Dorsey and Evan Williams. Savvy entrepreneurs naturally want to avoid acrimony as much of that as possible, and one of the main ways they try to do that is to partner with venture capital firms that are either led by entrepreneurs or very “entrepreneurial friendly” – meaning for simplicity sake that investors are nice people, who understand the realities and inevitable ups and downs of the creative process. A.H.’s mission and public relations strategy is squarely aligned with entrepreneurs.

It’s all about the ecosystem

Of course, every venture firm naturally tries to market themselves as entrepreneurial-friendly. What differentiates Andreessen Horowitz is something else, something very different than Kleiner, Sequoia, Benchmark, or Accel have done. Using customer relationship management software as a foundation, Andreessen Horowitz seems to be creating one of the largest, most networked, and powerful ecosystem platforms in the world. It is an astonishingly simple idea that yet is disrupting old power on Sand Hill Road and in Silicon Valley venture capital.

I received a detailed tutorial on the A.H. software system from a woman whose job it is solely to build out the A.H. network. Here is how it works. Let’s say you’re an entrepreneur who wants to sell into General Electric. Well, a host of A.H. relationship managers can type “General Electric” into the system and presto: You see dozens of contacts within the A.H. ecosystem working at G.E., including Beth Comstock, senior vice president and Chief Marketing Officer. The software also specifies who from A.H. is the primary relationship owner, and when the last contact was made. All interactions get tracked, even emails, so that anyone at A.H. can review the relationship history. And, the large and growing team only increases the power of the ecosystem as they contribute to it.

It starts to sound a little freaky, and it definitely felt a bit transactional when I thought about my name being just another A.H. contact, but this is not like the Wizard of Oz, here. The A.H. team, from the top down, is very open about the A.H. proprietary system and network for anyone curious to learn about it. And, some of the smartest minds in business, including G.E.’s Comstock, are paying very close attention. Comstock is also taking steps toward using a similar ecosystem approach with G.E., as I’ll touch on later.

Entrepreneurs value a few things from VC investors, namely the ability to help hire good people and the ability to access customers. Ron Conway, who like YCombinator is considered by many to be a premier angel investor in the Valley, used to be seen as the most networked person in the Valley. He kept track of all of his key relationships in Excel spreadsheets that he and his team then sent to the entrepreneurs he backed so that Conway can make introductions to potential new hires or customers.


A.H. takes the relationship management system to a whole new level. The firm sees itself as a talent management company, and the model that Andreessen and Horowitz used comes from a very surprising place as far as innovations in Silicon Valley go: Hollywood.

Hollywood? Yes, Hollywood. It’s counter-intuitive, I know, but here’s the quick story.

When Andreessen and Horowitz came together in 2009 to start a firm after their time together at Opsware, they focused on recreating a talent management model like the one pioneered by Michael Ovitz, the founder of Creative Artists Agency. Akin to CAA, yet unlike traditional venture capital firms, A.H. employs dozens of people whose job it is build relationships with people who can help Andreessen Horowitz companies. In Hollywood, Ovitz’s model of talent management, agents spend a great deal of time building up their clients and developing their talents; the focus is on using relationships to advance the talent’s best interests. A.H. puts that model into motion to support all that it does to source, develop, and support entrepreneurial ventures. I was at an event hosted by General Electric in San Francisco last year where I saw the model in action.

G.E. hosted the event in a cool warehouse space in San Francisco’s creative and highly entrepreneurial “Dogpatch” neighborhood. As backdrop, there was a giant G.E. aircraft engine lit by reddish mood lighting, and the purpose of the day was to help G.E. build awareness and relationships. I was there in part because I was a member of a small innovation advisory panel assembled by Comstock to help G.E. think out of the box. Ron Conway was there, and said hello. So was Eric Ries, a best-selling author who wrote a book called The Lean Startup, a book that building products and services by releasing ideas quickly and learning from fast iterations about what works and doesn’t for customers. The book has become required reading for both Silicon Valley web entrepreneurs as well as most G.E. employees, thanks in no small part to G.E. CEO Jeff Immelt’s glowing endorsement. You get the basic picture.

Anyhow, at the event, I also ran into Suhail Doshi, the founder of mixpanel, a hot start-up in the mobile analytics space. I had met Doshi, who is in his early to mid 20s, previously at a dinner hosted by a mutual friend. Not only did we share a lot of laughs, I was very impressed with him. He was clearly a very focused and talented entrepreneur, and he displayed all the characteristics – curiosity, collaboration, drive, and resilience – that you see in the most successful entrepreneurs.

Peter Sims and Suhail Doshi at the GE event in San Francisco's Dogpatch neighborhood 2013.After Jeff Immelt and Comstock spoke, Doshi and I hung out by the giant engine, and decided to snap a picture. There to take the picture, about 20 feet away, were two people from Andreessen Horowitz. These two A.H. employees were at the event seems to network like crazy, but their first job was to talk with Doshi about how mixpanel was going and what his needs were. One thing that Doshi wanted to do was meet Beth Comstock since he hadn’t met her yet. The A.H. partners offered to help but since I knew Comstock well, I was happy to make the introduction. Doshi and Comstock ended up speaking for about 10–15 minutes, as other executives, many of them older, from more industrial companies, waited.

Ron Conway can only cover so much ground on his own. The same is true for John Doerr. Either of those highly successful Silicon Valley investors would like to help their entrepreneurs in any way they can, I’m sure. But the fact of the matter is that Andreessen Horowitz is the firm that has dozens of people out there acting as catalysts, relationship managers, and dot connectors for an ever-growing ecosystem to support entrepreneurial value creation.

The A.H. software tool allows the team to further delineate a contact to show how that person can add value to the A.H. entrepreneurs: Say this person, someone like Beth Comstock, has “enterprise-level” purchasing ability (i.e. the ability to spend a large sum), or is an “early adopter,” or whatnot. Again, A.H. team members constantly emphasize that value is created at the edge of the network, so they are very inclusive in the way they develop their ecosystem. You never know where the next Mark Zuckerberg is going to surface, so the A.H. team visits 20 college campuses a year in search of talent, often accompanied by people from their portfolio companies.

Unlike the small, hierarchical teams at most venture firms, the A.H. team is chock-full of “partners,” all of whom are specialists: there are 26 investment partners, 16 partners specializing in marketing, sales and business development (i.e. people who help build sales teams), 12 partners specializing in “technical talent,” basically an in-house recruiting firm to identify and track the best technical talent, 7 partners who specialize in recruiting executive talent, 9 partners who are pure marketing specialists, 5 partners who specialize in corporate development (i.e. helping A.H. portfolio companies with their exits), and 22 partners focused on “operations” or making sure trains run on time.

Not all partners are equal

Of course, not all “partners” are equal. In addition to Andreessen and Horowitz, the firm has seven general partners, all of whom are men: John O’Farrell, Scott Weiss, Jeff Jordan, Peter Levine, Chris Dixon, Lars Dalgaard, and Balaji Srinivasan. That’s pretty old school, but people inside A.H. insist that they are trying very hard to recruit a female general partner, going so far as to say there is a list of 300 prospects. The supply side has indeed been limited when you factor in that GPs at A.H. have all started and grown successful tech companies. Diane Greene, founder and CEO of VMWare, would be great, but she doesn’t seem interested in becoming a VC, and there are only so many Diane Greenes. Big changes are brewing as new women-led venture funds have spun out of Kleiner and other big firms. It’s only a matter of time for the new generation of female founder CEOs to come of age and exit their companies, ready for the fields of venture capital and A.H.

All of that said, I cannot emphasize enough how different the A.H. model is from the traditional VC firms. When I worked in the industry, the people we were there to serve were the senior people in our firm, and help them to be more successful. On every email, the culture was to address our notes from the most senior to the least senior. Our firm was structured to help the partners succeed, and helping entrepreneurs came after investment sourcing. Success meant making money. Period. Of course, A.H. is focused on making money as well, but based on the firm structuring alone, A.H. has flipped the traditional staffing model on its head, and is clearly focused on finding ways to create as more and more value from its network – and, ultimately to make entrepreneurs successful.

It’s interesting to see that so many people are considered “partners,” a noticeable absence of the hierarchy that defines most venture capital firm cultures. Most venture firms are driven by a handful of partners, and supported by vice presidents, associates, and analysts. What’s more, while in the past, some Silicon Valley venture firms had hired one or two people to help with market development, those people were seen as a nice to have. At A.H. specialists are the firm.

What I find most fascinating about the A.H. ecosystem model is that, while it may feel transactional, most innovative businesses of the future are going to have to be highly networked, and enable large ecosystems. There was only one Steve Jobs. For every other company – such as G.E., let’s say – the ability to innovate and grow is increasingly dependent upon drawing the best talent and ideas into the company’s ecosystem. So, for instance, we heard a lot about G.E.’s focus on “big data” at that event last year. Well, then a bunch of entrepreneurs, industry thought leaders, and venture investors walked away with a clearer understanding of G.E.’s assets and needs – making it all the more easy and natural for them to call Beth Comstock with a hot lead or idea. G.E., not surprisingly, established G.E. Ventures, a venture investing arm of its own in Silicon Valley to take advantage of just these types of opportunities. Companies don’t innovate, people do. The more companies can learn to act as platforms for innovation, as Apple or Facebook do so well, the more innovations can flourish. A.H. is just a networked platform for innovation, with a mission to help entrepreneurs and creators capitalize on opportunities with the best people and customers quickly.

While it’s clear that Andreessen Horowitz has bounced into the top echelon of venture capital firms, at least with respect to ability to raise heaps of capital quickly (an unheard of $4 billion raised just 5 years into existence), deal-flow, and the premier brands it has invested in, the commercial success of the model is still far from proven. Time will tell whether playing for the long-term relationships will translate into superior returns. What’s more, because A.H. has raised an astounding amount of capital, which leads to more and bigger investments by blanketing Silicon Valley and beyond with bets, the team will get spread more and more thin. The key question is this: what do entrepreneurs get out of it? Perhaps they can get better served by going with a firm where the partners aren’t overwhelmed. It all depends on the people involved.

One thing is certain: The new firm in town has made all the other venture capital firms look like white sheep, upended from a steady state by the rise of angel investing, and Andreessen Horowitz, perhaps the blackest sheep firm of them all.

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steve and ed

As the three-year anniversary of Steve Jobs’ passing approaches in October, complete lessons from his life and legacy are still far from written or understood. Walter Isaacson’s biography Steve Jobs, published soon after Jobs’ death in 2011, provided a formidable starting point, yet we still have a great deal to learn and understand about what made Jobs such a unique innovator and leader.

In studying Jobs closely over the past several years, I’ve become convinced that the common narratives we’ve heard neglect a central aspect of Jobs’ of genius and success. And, it’s something that we can all learn from, which is this: Steve Jobs was a superb collaborator with the people whom he respected and trusted.

Now, we’re all familiar with the common narratives about Jobs’ unique talents and success: that his unique genius was in his ability to foresee technology vectors and envision, design, and execute truly brilliant products and platforms — from the Macintosh to the iPhone to iTunes to Apple stores (as well as, it must be said, a host of ideas that failed miserably). As a leader, Jobs’ sheer force of personality and charisma motivated everyone involved — sometimes with a “reality distortion field” — to achieve mind-numbing perfection with products, down to every last detail of Apple’s packaging.

Yet, Jobs’ product genius and charisma cannot explain the parallel — and simultaneous — breakthrough successes at both Apple and Pixar Animation. Just contrast how Jobs led at Apple, where he by all accounts made the final product and branding decisions as the company’s “editor,” compared with the roles he played at Pixar. At Pixar, where Jobs was the chairman and primary funder during the company’s start-up years, Jobs played the role of chief business strategist and leader yet was nearly entirely hands-off from the creative operations and development of Pixar films. For example, Jobs never once participated in a story review session for a Pixar film.[1]

Instead, Jobs relied on John Lasseter, Pixar’s creative lead, Ed Catmull, Pixar’s lead technologist and president, and a small initial cadre of animators, including Pete Docter (who would go onto direct Monsters, Inc. and UP) and Andrew Stanton (who would go on to direct wall-e and Finding Nemo), to develop Pixar’s ways of working and processes. Jobs, for instance, gave Lasseter and company full leeway to establish Pixar’s approach to developing new ideas, including exhaustive storyboarding, as well as the company’s routine of animation “dailies,” the daily meetings where animators discuss their works in progress each day in order to advance and build-up or “plus” each others’ ideas.

Catmull, now president of both Pixar as well as Walt Disney Animation (a position Catmull has held since Disney acquired Pixar for $7.4 billion in 2006), was Jobs’ longest-running colleague, a working relationship that spanned 26 years. Catmull dedicates a chapter of his superb recent book Creativity, Inc. to what it was like to work with Jobs. Catmull, who has the least overt ego of any senior executive I’ve ever met, saw Jobs mature enormously over time, especially in the development of personal empathy and humility.

In fact, Catmull, sees Jobs’ life as having taken a classic Hero’s Journey arc.

From his widely-reported immature and often arrogant youth, Jobs by all accounts appeared to develop into a far more empathetic human being and wise leader. But that personal transformation would not have happened without what leadership scholar Warren Bennis described as “crucibles”  — those personal crises and setback experiences that shape us much like “medieval alchemists used in their attempts to turn base metals into gold” — and, that allow for personal and leadership metamorphosis.

Back to the beginning and how Pixar became Pixar thanks to a brilliant collaboration

Freshly fired from Apple at age 30, not even Jobs could have envisioned what Pixar would ultimately become when he bought the company from George Lucas in 1985. He had learned about the nascent company from his friend Alan Kay, the legendary technologist, on a walk along the railroad tracks in Palo Alto. Kay had attended the University of Utah to obtain a PhD with Ed Catmull, a brilliant technologist. Catmull, who wanted to do something great with his life’s work, decided at Utah that his life aspiration would be to make the first full-length digitally animated film. Most everyone thought he was nuts.

A few years out of graduate school, Catmull was recruited by George Lucas to run LucasFilms’ computer imaging division. The company made hardware to support digital animation for Lucas’ films, as well as other imaging technologies, such as MRI imaging. But after a couple of years of R&D work, Lucas went through a difficult divorce, and needed cash, so he had to sell the company. Enter Steve Jobs, the lone bidder standing after Lucas’ efforts to shop the deal around.

Despite the unproven market potential of Pixar’s hardware, Jobs had immediately fallen in love with the technology. In David Price’s excellent history of the company The Pixar Touch, Jobs originally believed the company would be the next great hardware firm.

In fact, when he bought Pixar, Jobs never believed that the company would ever make money on digitally animated films. Pixar would become the HP of imaging, Jobs predicted.

pixar image computer

As Price outlines, Catmull, Lasseter, and another early cofounder, Alvy Ray Smith, had always focused their dreams on making a full-length animated film despite the fact that the technology required to do so was believed to be at least a decade away. Jobs knew about their passion when he bought the company from Lucas. (Lucas had even told Jobs that the team was “hell-bent” on making animated films.) And, Jobs always appreciated that passion, but he valued their skills and talents even more. So, he allowed the team to make short animated films in order to demonstrate the value of Pixar’s hardware. Learning how to make short films extremely well was, in fact, how Catmull, Lasseter, and company learned how to tell animated stories, and to make the technology (software and hardware) to eventually support making a full-length digitally animated film.

It was an extremely difficult journey, and ultimately cost Jobs $50 million in personal investment.

After the hardware wouldn’t sell in the marketplace, Jobs pivoted Pixar’s vision and focus in the mid-1980s and let the world know that Pixar was going to be a great software company. That strategy lasted for an even shorter period of time. Close to bankruptcy, Pixar had developed its digital animation, technology, and storytelling capabilities and short films to the point where the company won the Academy Award for its short film Tin Toy in 1988. That was the clarion call Jobs needed. He then pivoted the company again, to focus on animated commercials, and soon enough, had a deal with Disney to produce the first full-length film: Toy Story.

And, so, while not even Steve Jobs could have predicted that Pixar would produce blockbuster digital films, Catmull and Lasseter never would have gotten there without Steve Jobs as funder, strategist, external negotiator and salesman. Given the agonizing setbacks and toils along that path, and regular need for capital, Catmull describes Jobs as “our protector.” It was a brilliant collaboration, with each person performing the roles best suited to their talents and experiences.

How to argue with Steve Jobs

Steve Jobs was obviously a extremely driven and demanding collaborator. Yet, with the people he respected and trusted, such as Catmull and John Lasseter, Jobs listened, shifted his positions when convinced, and even valued collaborators’ personal preferences. Catmull, for instance, described in an interview about Creativity, Inc. at Stanford University how he and Jobs would argue when making decisions.

Despite Jobs’ frequently confrontational style, Catmull says that he and Jobs never once got into a yelling argument. That would go against Catmull’s personal nature, something that Jobs evidently respected. “The way it worked was,” Catmull discovered, “That I would say something to him, and he would immediately shut it down because he could think faster than I could.” Catmull would then wait a week, give Jobs a counterargument to what Jobs said, and Jobs might shut it down again, and the pattern would repeat, sometimes for months, until the two reached a resolution. Catmull reflected on how those interactions unfolded:

In the end, one of three things happened: About a third of the time, he [Jobs] said, ‘Oh, I get it. You’re right.’ And that was the end of it. And, there was another third of the time when I [Catmull] would say, ‘You know what, actually, I think he’s right. The other third of the time, where we didn’t reach consensus, he just let me do it my way. Never said anything more about it.’[2]

Tellingly, over 20 years later, Catmull, Lasseter, Docter, Stanton, and many others have stayed at Pixar, often turning down very lucrative alternatives, and focused intently on developing the next generation of filmmakers and company leaders. Jobs wasn’t the visionary at Pixar, he was the glue.

The hero departs: If Steve Jobs (especially “the younger” Jobs) didn’t respect or like you, he gave the middle finger to collaboration, and could be a massive asshole

All of that said, Jobs’ often confrontational personality naturally rubbed a lot of people the wrong way. For instance, Alvy Ray Smith, a brilliant technologist, left Pixar during its formative years following numerous personality clashes with Jobs, which he describes in detail as well as to share his side of Pixar’s history (revisited) on his website.

Meanwhile, during Apple’s early years, Jobs could be nothing short of impossible. As his co-founder Steve Wozniak has said, a lot of people who worked with the younger Jobs despised him. “Some of my very best friends in Apple, the most creative people in Apple who worked on the Macintosh, almost all of them said they would never, ever work for Steve Jobs again,” Woz recently explained in an interview with the Milwaukee Business Journal, “It was bad.”

Wozniak explained that in his earlier years at Apple, Jobs pushed people to bring products out before they were ready, creating enormous strain on employees and creating rifts.

“He would directly confront people and almost call them idiots,” explained Wozniak. “But you know what? When they confronted him back and told him why they were right in understandable forms, he was just testing and learning, and he would respect those people and give them high privileges in the company.”

“That was one thing he did respect — someone who believed enough in their own ideas to speak for him, not just shut up and be shy around him,” he said.

Again, while it must be said, we’ve all heard Jobs stories like these, and this narrative. Jobs “the younger” leadership was often destructive and counterproductive. But, according to all accounts I’ve gathered, through a number of personal crucibles — most notably getting fired from Apple — Jobs grew his leadership and his ability to collaborate enormously.

The hero returns: Steve Jobs the remarkable collaborator

Despite the fact that Jobs burned countless working relationships with his style, especially early in his career, he developed a remarkable number and array of productive collaborations throughout his career with some of the most respected leaders in their domains. Owing to some combination of pure results and mutual respect, which included his willingness to listen to people he respected and reconsider his views, Jobs was a magnet for talented collaborators and partners.

A sampling includes: Pixar’s Catmull, the brilliant technologist who grew into a strong manager and leader (Catmull is frequently known inside Pixar as “The Pope”), as well as John Lasseter, a once-in-a-generation creative leader, once fired from Disney before he was hired by Catmull, and who is now Chief Creative Officer for both Pixar and Disney Animation. Meanwhile at Apple, Jobs forged a host of extremely effective, long-running partnerships, notably with senior vice president of Design, Jonathan Ive, who has led Apple’s design team since 1996, a partnership that has been well documented. Other very strong collaborations included Scott Forstall, the mobile software chief with whom Jobs partnered to design and commercialize the iPhone, as well as retail chief Ron Johnson, with whom Jobs worked closely to design and launch Apple’s stores.

Critically, Apple’s long-time Chief Operations Officer Tim Cook became the operational ballast to Jobs’ creative, marketing, and product genius. Before becoming Apple’s CEO after Jobs’ death, Cook led huge operational improvements and efficiencies throughout Apple’s supply chain, such as reducing inventories from 60 to 30 days. Not since Bill Hewlett and David Packard has Silicon Valley seen a partnership with such effective balance of innovation (Hewlett) and operations (Packard). (Mark Zuckerberg and Sheryl Sandberg have forged an impressive partnership as well.)

Now that Cook is CEO, the biggest question that I (and many others) have in the post-Jobs era at Apple is how well Cook will be able to build and maintain productive collaborations.

While there is a notable absence of female collaborators in the above list, perhaps Jobs’ most impressive partnership of all was with his wife Laurene Powell, whom he married in 1991. After years of relationships that exposed Jobs’ youthful arrogance and weaknesses, including the birth of a child who Jobs failed to initially acknowledge and support, Powell and Jobs forged what was by all accounts a remarkable partnership, including raising three children.

And, today, it is Jobs’ close collaborators who carry his legacy forward: at Pixar, Apple, Disney, as well as within philanthropy, which Powell leads admirably. Her current work includes College Track, a nonprofit based in East Palo Alto focused on increasing high school graduation rates for underserved students, as well as the Emerson Collective, which is focused on supporting the entrepreneurial spirit including through educational programs and reform.

And so, nearly three years after his passing, while Steve Jobs’ once-in-a-generation talents are gone, his dreams and values live on through his collaborators. To me, that ability to forge extremely strong and trusting collaborations was Steve Jobs’ real genius, and one that we can all learn from.

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Original article as it appeared in NYT here.

PREOCCUPATIONS

Daring to Stumble on the Road to Discovery

By PETER SIMS

AT the recent Aspen Ideas Festival, the New York Times columnist Thomas L. Friedman said that when he graduated from college, he was able to go find a job, but that our children were going to have to invent a job.

Jobs, careers, valued skills and industries are transforming at an unheard-of rate. And all of the change and uncertainty can make us risk-averse and prone to getting stuck.

Despite these realities, our education system emphasizes teaching and testing us about facts that are already known. There is much less focus on our ability to discover, create and reinvent.

The same often holds true in the workplace. Perfection is rewarded, while making mistakes is penalized. It’s no wonder that “failure” has taken on a deeply personal meaning, something to be avoided at nearly all cost.

The skills we’re taught work well for familiar situations, yet we’re trained to perfect our ideas and use the past to predict the future with linear plans in a nonlinear world. As such, we need a completely new mind-set. Linear thinking is a death knell for creativity.

When I worked as a venture capital investor, I found that most successful entrepreneurs don’t begin with perfected ideas or plans — they discover them. Entrepreneurs think of learning the way most people think of failure.

A prime example is Howard Schultz, one of the most successful entrepreneurs of our time. When he started what would become Starbucks, he modeled the first stores after coffeehouses in Milan, a new concept for the United States in the 1980s. He was clearly onto something, but the baristas wore bow ties — which they found uncomfortable — and customers complained about the nonstop opera music and menus that were written primarily in Italian. And the early stores had no chairs. Mr. Schultz routinely acknowledges that he and his team made a lot of mistakes. But they learned from them, as they did from countless other experiments.

Consider another example — what it takes to create great comedy. Editors at The Onion, the humor publication, estimate that they try out hundreds of headlines each week before they finally decide to use only a small percentage of them.

Even the most successful stand-up comedians, like Chris Rock, try thousands of new ideas in front of small club audiences in order to develop a one-hour act. Some jokes fail, but Mr. Rock is willing to be imperfect; he persists night after night because every small bet takes him closer to a brilliant act on the big stage.

This is how comedians and entrepreneurs must work — by making countless small bets to discover what works. The real genius is in the approach.

The same holds true for leaders, managers and collaborators. They must to be willing to learn from mistakes. Affordable risks should be encouraged, and small failures celebrated — these are the mark of learning organizations. Otherwise, risk aversion will lead to stagnation and decline.

In a time when valued skills and occupations shift constantly, we must be able to discover interests, opportunities and careers by experimenting. Or by reinventing ourselves altogether.

The architect Frank Gehry, for instance, designed relatively conventional buildings for much of his early career. But inspired by how contemporary painters and sculptors worked, Mr. Gehry performed a series of experiments on his own house in Santa Monica, Calif., during the late 1970s .

Working with plywood, corrugated metal and chain-link fencing, he built a new exterior around his original house.

His experiments were the precursor to what would become his distinctive style, evident in the Guggenheim Museum Bilbao in Spain and the Walt Disney Concert Hall in Los Angeles. The money was good in conventional architecture, yet he decided to start anew, using his own style and voice.

INVENTION and discovery emanate from the ability to try seemingly wild possibilities; to feel comfortable being wrong before being right; to live in the world as a careful observer, open to different experiences; to play with ideas without prematurely judging oneself or others; to persist through difficulties; and to have a willingness to be misunderstood, sometimes for long periods, despite the conventional wisdom.

All these abilities can be learned and developed, but doing so requires us to unlearn many of our tendencies toward linear planning and perfectionism.

As the technology pioneer Alan Kay put it: “The best way to predict the future is to invent it.” It begins with a little bet. What will yours be?

Peter Sims is the author of “Little Bets: How Breakthrough Ideas Emerge from Small Discoveries.”

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Originally published on Harvard Business Review’s blog.

It’s a great disservice to everyone, especially young people, that the stories that we often hear about the most accomplished entrepreneurs sound so effortless. The truth is just the opposite, even for visionary creative success stories like those of Mark Zuckerberg, Jack Dorsey, Howard Schultz, Wendy Kopp, and even the legendary Steve Jobs. Like any creative process, any entrepreneur who wants to invent, innovate, or create must be willing to be imperfect and make mistakes in order to learn what works and what does not.

It took Dorsey years of experimentation before he finally latched onto what ultimately became Twitter. Wendy Kopp started Teach for America, initially as a conference, on a shoestring budget after graduating from college. And Howard Schultz, while he had great foresight to recognize that Americans needed a communal coffee experience like those that existed in Europe, failed on his first try. As I wrote in Little Bets, when his first store opened in Seattle in 1986, there was non-stop opera music, menus in Italian, and no chairs. As Schultz acknowledges, he and his colleagues had to make “a lot of mistakes” to discover what would become the Starbucks we know today.

Despite what we may have read, Steve Jobs was no different. Here are five of Jobs’s greatest mistakes, all of which history shows he ultimately learned from:

1. Recruiting John Sculley as CEO of Apple. Feeling that he needed an experienced operating and marketing partner, the then 29-year-old Jobs lured Sculley to Apple with the now legendary pitch: “Do you want to sell sugared water for the rest of your life? Or do you want to come with me and change the world?” Sculley took the bait and within two years, Sculley had organized a board campaign to fire Jobs. Jobs himself would surely consider hiring Sculley as a great mistake.

2. Believing that Pixar would be a great hardware company. When Jobs was the last and only buyer standing in 1986 when George Lucas had to sell off the Pixar graphics arm of LucasFilms (for $10 million), he never expected the company to ever make money on animated films. Instead, as Pixar historian David Price shows in his excellent book The Pixar Touch, Jobs believed that Pixar was going to be the next great hardware company. Not even a visionary like Steve Jobs could predict what unfolded at Pixar, yet to his great credit, he supported cofounders Ed Catmull and John Lasseter as they pursued their dream of producing a full-length digitally animated film from day one. He protected their ability to make small bets on short films in order to learn how to eventually make a full-length feature film in Toy Story.

3. Not knowing the right market for NeXT computer. Although Jobs tried to spin NeXT computer as an ultimate success when the assets were sold to Apple in 1986 for $429 million, few in Silicon Valley agreed. The company struggled from the start to find the right markets and customers. If you haven’t seen the video about Jobs describing the vision for NeXT’s customers, you should watch it on YouTube. It’s clear that even Jobs was confused. In it he says, “We’ve had, historically, a very hard time figuring out exactly who our customer was, and I’d like to show you why.”

4. Launching numerous product failures. The Apple Lisa.  Macintosh TV. The Apple III. The Powermac g4 cube. Steve Jobs was brilliant about understanding how technology vectors were evolving, yet even he screwed up royally, and often. The lesson that I take from these defunct products is that people will soon forget that you were wrong on a lot of smaller bets, so long as you nail big bets in a major way (in Jobs’s case, the iPod, iPhone, iPad, etc). Jobs was a market research group of one at Apple, which carries with it great risk, yet it should be noted that his batting average improved over time, which comes as no surprise to those who study the benefits of developing strong creative muscles though deliberate practice.

5. Trying to sell Pixar numerous times. By the late 1980s, after owning Pixar for four or five years, Jobs tried on multiple occasions to sell the company, just to break even on his investment, which ultimately equaled roughly $50 million. He shopped Pixar to, among others, Bill Gates, Larry Ellison, and numerous strategic partners and companies. No potential buyer bit. It’s a good thing for Jobs, and his legacy. He eventually engineered the sale of Pixar to Disney for $7.4 billion in 2006.

The lesson, it seems, is fairly simple: Even the great business visionaries and luminaries of our times often fail and have setbacks. Imperfection is a part of any creative process and of life, yet for some reason we live in a culture that has a paralyzing fear of failure, which prevents action and hardens a rigid perfectionism. It’s the single most disempowering state of mind you can have if you’d like to be more creative, inventive, or entrepreneurial. The antidote is to try a small experiment, one where any potential loss is knowable and affordable.

The revolution will be improvised.

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Published originally on MarketWatch.

SAN FRANCISCO (MarketWatch) — Google Inc. has reached another fascinating period of its growth and evolution.

Three years ago, the Internet giant risked becoming the next Microsoft as it became more political and bureaucratic on the back of astronomical growth. But Larry Page’s return as CEO has brought welcomed product focus, leadership, and accountability, and the company attracts and retains some of the best engineers in the world. These factors and great profits have taken Google’s GOOG -0.91%  stock to record highs.

Yet one of the most important questions among Google insiders will be whether Page & Co. can embrace and institutionalize a culture of experimental innovation that made Google, well, Google in the first place.

For answers, they can look north to Seattle, where Amazon.com AMZN +1.91%   routinely pioneers, reinvents, and evolves.

While Amazon founder Jeff Bezos clearly banks on the role of significant inventions, such as the Kindle, he has created a culture of experimental innovation at Amazon better than any other current CEO. (It helps that Bezos still owns more than 19% of the company.)

For example, when Bezos and his “S Team” at Amazon (short for “senior team”) consider a new opportunity, they do not frame the decision-making process around being able to earn hundreds of millions of dollars.  Instead, they ask whether they think the opportunity could generate at least $10 million in revenue, and if they get excited about their hunch, they will assign some of their best intrapreneurs to the project.


Reuters Jeff Bezos.

As Bezos has often underscored: You can’t put into an Excel spreadsheet how customers will respond to a new idea.

Amazon’s strategy and decision-making process starts (and perhaps ends) with improving the customer experience.  Every important meeting, project, or initiative at Amazon begins with a discussion of how the ideas will ultimately benefit customers.

Bezos and team, in fact, constantly experiment in a very strategic and incremental way to mitigate risks. There’s a lot of internal experimentation, which is where the insights about the problems and needs served by Amazon Web Services (AWS) originated.  Google is trying to catch up to Amazon in cloud computing, and it’s likely too late.

Amazon’s incentive and reward systems reflect the importance of learning and discovery throughout the organization. Employee reviews include a section on what was learned from trying experiments, regardless of success or failure. That’s the power of a strong culture.

As my partner Casey Haskins, founding CEO of BLKSHP Innovation often says, “You are what you measure.”

Moving ahead

The primary innovation challenge for Page and Google going forward will be to create a strong culture that utilizes Google’s immense assets, insights, and platform for experimentation and discovery, as well as monetization. You can’t have one without the other.


Reuters

Larry Page.

Google execs are grateful that Page has brought renewed product focus and leadership, while eliminating inefficient bureaucracy and politics — yet Google is also a far less-experimental company and culture than it was even five years ago. Page and Google co-founder Sergey Brin increasingly look to the top-secret Google X Lab, home of a number of brilliant inventors and engineers led by Brin, for the company’s innovations. (Google X is where the driverless car project is housed.)

Nowadays, there isn’t an example of a company that relied on great inventors to produce lasting and sustainable innovation. As Haas School of Business professor Henry Chesbrough has documented well, centralized R&D, such as at Bell Labs and Xerox PARC, has given way to an era of open innovation.

This would hardly be news to Page, but creating a culture that balances entrepreneurial discovery and ruthless execution is extremely difficult.

Amazon has consistently struck that balance.

The advantage that Page and Brin appear to have is the same quality Bezos has in spades. All three executives have extremely curious and pioneering minds, perhaps dating back to their Montessori schooling, and their respective experiences building Google and Amazon exemplify creativity and invention through discovery and learning.

As Bezos has said, “What is dangerous is not to evolve.” If Page and Bezos are able to create cultures and leadership cohorts that can continue to evolve long after they step down, then they truly have built something to last.

Peter Sims (www.petersims.com)is the author of “Little Bets: How Breakthrough Ideas Emerge from Small Discoveries,” and founder of The BLKSHP Enterprises.

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Last week, thanks to Kieron Boyle, Head of Social Finance and Investment at the UK Cabinet Office, who I was introduced to by Jonathan Greenblatt, head of the White House Office of Social Innovation and special assistant to President Obama, I had the privilege of visiting 10 Downing Street with a group of BLK SHP from the U.S. and the U.K. to discuss innovation, entrepreneurship, and social entrepreneurship with senior advisers to the Prime Minister and the UK Cabinet.  It was a fascinating visit.  As England teeters on the verge of a triple-dip recession, I actually came away inspired by the creative approaches and experiments leaders and people are now taking there.  What follows below are some synthesized observations and insights.

Originally published on Forbes.

English: 10 Downing Street doorIf there’s a bell curve of risk aversion by sector, government and philanthropy are at the far right end (by far).  A high-level American diplomat recently described to me the risk aversion in Washington these days as “paranoia,” a fear of failure or making a mistake that leads to a state of near paralysis.  Innovation and entrepreneurship are all but non-existent in Washington at a time when reinvention and renewal is needed most.

Yet, hard as it may be to believe given the current state of affairs, a trip to London and Number 10 Downing Street last week has given me renewed optimism that changes may be starting to bubble from the bottom up, in small yet significant ways.  The insights come just in time for second-term Obama Administration officials to pay heed.

After all, being President is a thankless and nearly impossible job.  While I have been vocal in challenging the Obama Administration to listen and collaborate better, you’re damned if you do, and you’re damned if you don’t these days.

Before turning to the optimistic news, here’s some background about thinking differently about the second-term innovation strategy.

Take government investment in new technology.  The history of technology and Silicon Valley is closely linked to government investment and research monies sparking new industries.  Hewlett Packard originally relied on government contracts to fund radio frequency technology research, while National Science Foundation grants helped fund Google’s early days.

While the Obama Administration should be applauded for its leadership and courage for investing in renewable energy, the problem with a strategy of making a lot of big bets is that one (really) bad big bet on Solyndra, which received a $535 million loan guarantee from the Department of Energy, became the object of pervasive and prolonged criticism.

Interestingly, the strategy of betting big, rather than small, is one of the signs that corporate innovation researchers Clayton Christensen and Jim Collins have found signals a risk of systemic organizational and financial decline.  *(For more detail on these topics and problems, see The Innovators Solution By Christensen and Michael Raynor and How the Mighty Fall by Collins.)

Given the brutal context of national political discourse, it’s of little wonder that I don’t know of more than a handful of very talented people in my generation who have an interest in pursuing roles in government or running for office.  I literally don’t know more than 10 people, and I’m fortunate to know many rising GenX and Millennial stars from my research and various experiences.  The ones who hold a strong interest for politics and public life seem to be mostly driven by external ideas of who they are, rather than an authentic connection to either themselves or average citizens.  That’s certainly different from most (though not all) past American eras, where an ethic of public service ran deep and was honorable.

The institutional problems are deep and systemic.  The state of the media, lack of accountability within social institutions, and a well-documented corruption in the plutocracy, all reflections our cultural priorities, surely deserve significant blame.  *(For more insight and analysis on these topics, I would recommend That Used to Be Us by Thomas Friedman and Michael Mandelbaum, and It’s Even Worse Than It Looks by congressional scholars Thomas Mann and Norm Ornstein.)

Larry, the 10 Downing Street cat, walks on the...Larry, the 10 Downing Street cat, walks on the cabinet table wearing a British Union Jack bow tie ahead of the Downing Street street party, in central London, on April 28, 2011. (Image credit: AFP/Getty Images via @daylife)

In what is likely the beginning of a painful triple-dip recession in England, compounded by an era of often ill conceived and poorly executed austerity measures, the middle and lower classes are hanging on by a thread.

Just ask the team at Shelter, a leading UK charity that provides a bevvy of services to keep people in their homes.  Decimated by the previous recessions, these families have lost all their savings and are losing their homes in droves.  Unlike in Continental Europe, there doesn’t seem to be much of a welfare state remaining in England, the only apparent safety net is a room with four walls.  Who helps these people?  Shelter, but its budgets are being slashed by austerity measures.  Dickens would have a field day.

Just as innovation dries up the farther away decision-makers are from the problems they are trying to solve, and companies struggle when they begin to replace experimental cultures with that made them successful as entrepreneurial ventures with controls, processes, and systems, the problems in England are highly localized.

Senior UK policy makers (who are typically trained as statisticians, policy-makers, lawyers, or economists) often understand the limits of their policy-making ability sitting in Number 10 or nearby.  Their hearts are in the right place and they want to solve citizens’ problems in new and innovative ways, yet they need political air cover from the Prime Minister and senior political leaders, as well as support from many other stakeholders to keep their ideas afloat.

Those closest to power in England will tell you that in this era, there’s an enormous need for innovation to come from outside government.  Simply put: federal government cannot turn these deep-seeded social and economic problems around alone.  What is needed is a new era of openness and collaboration across sectors – social entrepreneurship is truly rising to the fore across both sides of the Atlantic.

Alas, finally it must seem for patient readers, here is where the optimistic part begins.  As Tip O’Neil famously put it: “All politics is local.”  As problems and funding decisions get pushed down in an era of devolution of power, we’re seeing local councils in England start to innovate and experiment with fresh approaches to solving citizen problems, from the bottom up rather than the top down.  We’re seeing that same pattern here in the United States as mayors and governors become the focal points for discovering new ways of administering, funding, and servicing Medicare, Medicaid, and the like.

 

Akin to the entrepreneurial philosophy of making small bets to discover creative approaches to serving needs, solving problems, and finding opportunities, experimentation has arrived to the federal ranks of England in the form of a black sheep idea: a “Behavioural Insights Team.”

 

This arm of the UK Cabinet Office, led by the respected academic, thought-leader, and social entrepreneur David Halpern, was established by David Cameron in 2010: “with a remit to find innovative ways of encouraging, enabling and supporting people to make better choices for themselves.”

Winston Churchill in Downing Street giving his...Winston Churchill in Downing Street giving his famous ‘V’ sign. (Photo credit: Wikipedia)

The unit experiments like mad on everything from how to type tax collection letters in order to maximize participation to how to improve energy efficiency.  Halpern and senior policy-making colleagues often reference Nudge by Richard Thaler and Cass Sunstein.  Thaler has served as an advisor to the unit and the approach seems to be working, with results that include collecting an extra £200m of income tax and increasing payment rates by 15% after telling late payers in letters that their neighbors had paid their taxes.  In addition, they’re finding good results from experiments in getting people into jobs 15-20% sooner in Essex borrowing from insights within US Elections data.

Critics in the press naturally ridicule the team, nicknamed the “nudge unit,” from time to time, yet Halpern’s credibility in influence circles only seems to be growing with the results.

Little things can often lead to large gains.  Behavioral economists are developing their thinking and models on this front – what entrepreneurs and social entrepreneurs do in their sleep.  It’s not only common sense, as I wrote in Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, an experimental approach to innovation is the only empirical way to keep innovating as an individual, organization or society.

Although I am no fan of top down austerity, David Cameron earned an important measure of respect from me this week for empowering an arguably quirky approach to solving problems in a new and different way.  In such bleak times, he doesn’t have much of a choice, and that’s a good thing.  We need a hell of a lot more black sheep like David Halpern working on the side of citizens with experiments if we’re going to begin to restore their faith in federal institutions.   I’ll bet that Sir Winston Churchill would be quite proud.  Perhaps we Americans can learn from our friends across the Pond.  It wouldn’t be the first time.

 

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9:06 AM, January 7, 2013

 

Larger view

President Barack Obama speaks about the economy at the Daimler Detroit Diesel engine plant Dec. 10, 2012 in Redford, Mich. (Bill Pugliano/Getty Images)

Guests

  • Julian Zelizer: Professor, Princeton University
  • Peter Sims: Author of “Little Bets: How Breakthrough Ideas Emerge from Small Discoveries”

LISTEN

 

sponsor:

What kind of president will Barack Obama be in his second term?

Obama has already begun to lay out an agenda for his second term, citing gun control and immigration as two top issues.

Joining The Daily Circuit on Monday, Jan. 7 to discuss Obama 2.0 are Julian Zelizer, a professor of history and public affairs at Princeton University, and Peter Sims, author of “Little Bets: How Breakthrough Ideas Emerge from Small Discoveries.”

READ MORE ABOUT PROSPECTS FOR OBAMA’S SECOND TERM:

Obama’s second chance (Peter Sims on Forbes.com)

Six political lessons of 2012 (Julian Zelizer on CNN.com)

How progress is possible in Obama’s second term (CNN)

President Obama’s 2nd-term history lessons (Politico)

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From the Entrepreneur
Peter Sims

“Breaking free from perfectionism isn’t easy, largely because of how we’re raised and taught. We’re rewarded and loved by parents, teachers, and mentors for getting good grades, accomplishing athletic achievements, or getting into a great school or job. The problem with that approach to praise and reward is that it builds up our resistance to doing anything that’s less than perfect. And since being imperfect, and being willing to make mistakes in order to discover new paths, opportunities and approaches is essential to any creative process. Unless we’re a genius or prodigy like Mozart, we must unlearn a lot of old habits.

In my experience, many, many people, especially creative people have very judgmental parents. My dad was my harshest critic, though it was all coming from a place of incredible character and unconditional love. His dad did the same, and it just cascaded down. On the flip-side, mothers (and fathers, too) can unleash creativity with their unconditional love and unendingly optimistic encouragement and support, as my mother did (we were very close). Howard Schultz, the CEO of Starbucks, had a similar experience with his parents. Ed Catmull, cofounder of Pixar had the same, as well as his business partner John Lasseter, cofounder and chief creative officer of Pixar, whose mother emphatically encouraged him to follow his childhood interest in cartoons.

“…the key thing that needs to happen is for the person to let go of the feeling that they have to be an idea, rather than just being you…”

Since I work with and lead a lot of artists, the power relationships are very interesting. If a father and/or mother was overly critical, the key thing that needs to happen is for the person to let go of the feeling that they have to be an idea, rather than just being you as I encourage people to be. It’s one of the hardest things to actually do — but what drives it all comes down to support structures and personal will.

For a rich exploration around the negative effects of praising achievements versus effort and why certain people fear failure so much more than others, Stanford Professor of Psychology, Carol Dweck has produced the definitive body of research and book called Mindsets. You can read a great summary article on Dweck’s research in this Stanford Magazine article entitled “The Effort Effect.”

When I jumped off a cliff in my career to try to write a book that eventually became Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, I was haunted for months by a voice that had no face. It said, ‘You are not worthy…Don’t fail…No one will want to read this crap…You are a fraud!’ Sound familiar?

Dweck’s findings lead to the key insight that anyone, at any age, can become more creative if they’re willing to start trying things. I call these ‘little bets,’ a loss that you determine you can afford to take before making a small bet. The secret to being creative is that everyone who creates anything needs to overcome fears.

“The antidote to these fears is simple. Make a small bet. Do things to learn what to do.”

Maybe a little bet for you is writing a blog piece. Maybe it’s writing a paragraph on a piece of paper. Maybe it’s going to a Pilates class. Maybe it’s calling an old friend. The point is, and as Dweck’s research shows, we can move from a mindset based on fear of failure and perfectionism (what Dweck calls a “fixed mindset”) to a “growth mindset” if we just start taking small steps toward our dreams and goals.

Writer Anne Lamott, (who wrote the gamechanging, Bird by Bird recommends writing what she calls ‘shitty first drafts’ when starting something new. Just get as many thoughts and ideas down on paper as possible, without letting your inner critic take over. Similarly, as Frank Gehry has shared with me, the way he overcomes his fears of failure, is to ‘just start’ making prototypes of his ideas, starting with cardboard and duct tape, crude as they may be at first.

At Pixar, director Brad Bird calls people there who are willing to challenge the status quo and think differently about problems ‘black sheep.’

“Are you a black sheep?”

It starts today. And, it starts small, with a little bet. It’s really that simple and that hard. The world needs your creativity and passion now more than ever. With all the challenges facing our country and world, we need a creative revolution, one driven by the unleashing of millions of previously undiscovered creative talents, talents that will also allow us to be infinitely more human and original.

This revolution will be improvised.”

http://www.goop.com/journal/be/206/perfect

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Originally appeared on Forbes.

This article is by Peter Sims, author of Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, coauthor with Bill George of True North, and founder of the BLKSHP.

English: Barack Obama delivers a speech at the...He must radically change the way he leads. (Photo credit: Wikipedia)

The first time that I believed Barack Obama wanted to be president of the United States was in September 2006, when I saw an interview from Men’s Vogue in which the junior senator from Illinois was asked about his future ambitions, including speculation that he might run for president in 2008.

“My attitude about something like the presidency,” he  said, “is that you don’t just want to be president. You want to change the country. You want to make a unique contribution. You want to be a great president.” As the 2008 campaign took shape, he and his team developed an innovative organization and outreach approach that allowed him to become the David who beat Goliath and led many to believe he would be that kind of transformational leader.

But in his first term, he failed to follow though on that promise.

With the punishing and close campaign for his second term now behind him, the president has weathered a brutal first term and many personal and leadership crucibles, and seems to be emerging on the other side of those dark valleys having rediscovered his authentic voice. This transformation is yet to be fully manifested, of course, but in thanking his campaign staff on the night of his re-election, he revealed once again his humanism and the depth of his commitment to the call to public service, dating back to his years as a community organizer working with the disempowered people in Chicago. The Obama who spoke to his staff that night sounded like the Obama who said to Chicago Sun-Times columnist Cathleen Falsani in a 2004 interview :

One of the interesting things about being in public life is there are constantly these pressures being placed on you from different sides. . . . The biggest challenge, I think, is always maintaining your moral compass. Those are the conversations I’m having internally. I’m measuring my actions against that inner voice that for me at least is audible, is active, it tells me where I think I’m on track and where I think I’m off track. . . .

The most powerful political moments for me come when I feel like my actions are aligned with a certain truth. I can feel it. When I’m talking to a group and I’m saying something truthful, I can feel a power that comes out of those statements that is different than when I’m just being glib or clever.

Obama will become a transformational leader by continuing to connect in that way with the values and vision for the future that are important to him personally—the reasons he chose to help disadvantaged and disempowered people as a community organizer rather than taking a lucrative corporate job. That call to service is the life blood of his authenticity and what drew to him such broad and deeply impassioned support in the 2008 campaign. As John W. Gardner, the founder of Common Cause and the White House Fellows program and secretary of Health, Education, and Welfare in the Johnson administration once said, “The world loves talent but pays off in character,” and character remains the fundamental basis for Barack Obama’s potential to be a leader of Lincolnesque proportions.

Yet character alone will not be enough. In this intensely partisan era, in which we are facing so many intensely complex challenges—ranging from global warming to pension and tax reform to the necessity of deleveraging debt burdens at the government, organization, and personal level—the country desperately needs renewal and reinvention, not only of our physical infrastructure, but also of our social infrastructure and our systems of governing. Tax reform is an obvious example, one that every serious observer and participant in American business and politics agrees must be addressed. As during the transformational presidencies of the past, those of Lincoln, Theodore Roosevelt, Franklin Roosevelt, and Reagan, the American people today crave the right message of healing, empowerment, and progress, and the leadership to follow through on that message.

That type of leadership cannot and will not come from the top down in Washington or the Northeast corridor. It must come from the bottom up, and any type of bottom-up innovation must begin with the leadership having an understanding of underlying and quite often unarticulated citizen needs and desires. Every major progressive social change movement in U.S. history, from abolitionism to women’s voting rights to civil rights to gay rights, began with small groups of American citizens, thinkers, writers, and grassroots leaders determined to realize social change. Great presidents merely do their best to influence those directions, or, more realistically, to align their own authentic goals with the larger cultural trends.

Ronald Reagan may have said and done all the right things to help shift Southern blue to red on the electoral map, but that transformation began decades earlier when Lyndon Johnson extended the hand of presidential affirmation toward Martin Luther King, Jr., in support of the Civil Rights Act. As longtime presidential adviser David Gergen has often argued, one of Reagan’s great advantages in preparation for becoming president was to have crisscrossed the country for years as a TV spokesman for General Electric during the 1950s and 1960s, meeting more than 250,000 American citizens. In Howard Gardner’s “multiple intelligence” terminology, Gergen describes Reagan’s signature gift as interpersonal skill. He knew the American people extremely well and was able to align himself and his story with the public sentiment to craft the right message for the times.

If President Obama can capture and connect with the public’s urgent desire today for creative problem solving, crafting the right vision, message, and, most important, approach to governing, he will have his shot at greatness. But in order to do so, and to lead in a truly transformational way, he and his team must create a much different culture in the White House during the second administration—one that is more outward facing than inward facing, one that treats the White House as a platform for amplifying and collaborating with the public, with companies, causes, and groups across sectors—in order to govern from both the top down and also the bottom up. All the major drivers of influence, from the media to publishing and thought leadership channels to academia and to popular culture, are no longer managed and driven by a small handful of gatekeepers and opinion leaders. Social media technologies have democratized and distributed influence and power, so that we’re all now part of various tribes—our extended families, our workplace and school networks, and our “friend” circles.  The democratization and distribution of power means both that no president is likely to be able to harness the kind of widespread public support needed to tackle today’s “wicked problems” if he doesn’t listen to those tribes and work with them in developing solutions. In order to be a transformational leader, President Obama must tap into the wisdom of the crowd. He must make the White House a platform for convening and building ecosystems for solving problems in new ways. This new style of governing  is urgent because of both the nature of the problems we face and the deeply divided nature of the country.

The  presidential campaign felt like a modern day Civil War. It  displayed the worst of the country’s ideological extremism—racial bigotry, religious intolerance, and competing libertarian versus communitarian economic worldviews. It also highlighted the insidious role of money in the political system. Tom Friedman and Michael Mandelbaum argue persuasively in their 2011 book That Used to Be Us that money has corrupted America’s political parties and institutions to the point of near moral bankruptcy.

It is a very sad statement about the political system that someone must pay anywhere from $2,000 to $38,500 to meet the president, or any elected leader, for that matter. Given the short-term incentives to cater to donors’ desires, our politicians  are increasingly required to spend disproportionate amounts of their time raising money rather than working on problem solving. This has made the government much too reactive. Poll-tested and cynical incrementalism has replaced visionary leadership. Virtually no one—from my Uncle Joe, who’s a truck driver, to John Huntsman, Sr., the highly respected executive and wealthy philanthropist who helped bankroll his son’s campaign for the Republican presidential nomination in 2011 but told The New York Times in October 2011 that  the political system is broken—no one feels represented or heard anymore.

You don’t need to read Tom Friedman to understand the core problem. My Uncle Joe reads the local newspaper at best and says it better than Friedman could: “We’ve forgotten who is the boss in this country. The citizens are the boss!”

Meanwhile, the problems we’re facing are ever more difficult. We’re a nation beleaguered by war yet still rightfully fearful of very real threats and instabilities abroad. The Army has faced a comeuppance in the Middle East, where the arrogant and ignorant strategies of politicized generals, most notably Tommy Franks, gave way to the realities on the ground.  Ret. Col. Casey Haskins, the former director of military instruction at West Point, after serving as the chief of strategic plans for Multi-National Force—Iraq, puts it, “Not only can we not teach doctrinally approved solutions any more [which take roughly two years to be approved], the truth is, we don’t even know all the problems!”

Reforming Fannie Mae and Freddie Mac, confronting global warming honestly, and reforming the tax system are urgent priorities that got virtually no attention in the presidential campaign, save small tidbits in the presidential debates.

On top of that we face extreme levels of inequality not seen since the Gilded Age, and many workers just don’t have the skills needed to compete in today’s hypercompetitive globalized economy.

These are the types of problems that no president, even with the best senior team and staff in the world, can solve alone. That’s why it’s so important that President Obama now correct for the errors in his first term and come through with the innovative, open, engaged, and progressive style of governing he initially promised.

In 2008 the electorate flocked to Obama largely because of his message that he would govern in a new way, and because his campaign team did in fact create a new kind of campaign built on a larger base of supporters and smaller contributions, and so on. But then, for a variety of good reasons and some unknown ones, the president abandoned that approach as soon as he took office. He and his closest advisers failed to stay connected with supporters, even the most ardent ones, their potential champions, education partners, and eyes and ears on the ground all around the country. Around this time in 2008, someone in the transition team decided not to shift the campaign’s new media team, even though it could have kept it in place as a not-for-profit in order to maintain the network of grassroots support and two-way communication, which it had managed to do so effectively during the campaign. Instead most of that group was turned over to the Democratic National Committee, with a few members led by Macon Phillips taking jobs in the White House. That was a mistake.

Yes, of course the transition team had to focus on managing the worst economic crisis in recent history. Time was of the essence. But time is always of the essence for high-performing organizations, and that doesn’t mean that the solution set of policy options could not have been expanded. Greater engagement with the business community would only have enhanced the stature of and external support for the economic team. Instead, the team suffered from a style that resembled “the smartest guy in the room” syndrome, a common failing of insecure CEOs and managers who are often driven by a culture of fear and arrogance rather than a culture of inclusiveness, authenticity, and empowerment. They bought into a false tradeoff between the need to deal with the crisis and the power of engaging people to develop a longer-term strategy for governing differently; those should not have been mutually exclusive options. That insular style of economic management and policy making was the greatest leadership failing of the President’s first term.

Obama had at his disposal an army of extremely talented, respected, and influential people who were eager to be involved in his historic administration, whether formally or informally; they were just waiting to be asked, and to be led. I  saw this first-hand. I was one of 15 members of the Business Leaders for Obama team, a group chaired by Gary Gensler, who went onto become the chairman of the U.S. Commodity Futures Trading Commission, and which included Julius Genachowski, who would head the Federal Communications Commission, Alec Ross, now senior adviser for innovation to Secretary of State Hillary Clinton, and private equity investors including Steve Rattner, Robert Altman, and Mark Gallogly.

We were tasked during the campaign with leading outreach to the business community, gathering endorsements, and providing policy position feedback. I was asked because of my experience as a management writer as coauthor of True North: Discover Your Authentic Leadership, with Bill George, former chief executive of Medtronic and now a professor of management at Harvard Business School, as well as my previous work in venture capital with Summit Partners.

After the election, because I had come to know so many people who went on to jobs on the transition team in mid to late November 2008, I had a number of conversations with members of the team encouraging them about how the administration might be able to leverage the grassroots elements of the campaign into a different way of governing. The driving question was: How do we stay truly connected with all of these citizens around the country to create feedback and educational and campaign mechanisms, in order to govern differently? Why, for instance, didn’t impassioned retired teachers in Napa, California, who had been such great local champions during the campaign, continue to play a role? One person I spoke with about this on several occasions was Joe Rospars, who had led the Obama ’08 new media team and thought it was a good idea.

But in a short time that army of foot soldiers, from those retired teachers to  the Silicon Valley coalition of green energy leaders for Obama and the several hundred CEOs who had offered the president their personal endorsements, lost their connection to the Obama team, and as a result lost their sense of connection to the larger cause we had believed in, as well as  our feeling of empowerment and shared purpose.

If I were to list the names and titles of people who discussed with me  their common dismay at this turn of events, it would read like a Who’s Who of Silicon Valley and the power networks of the Northeast corridor.

The good news is that now Obama has a second chance. If there’s one thing the president has surely learned in his first term, it is that he cannot do it all on his own. The president and his team have a tailwind of victory behind them now like the one they came into office with, and they have a window of time to get a team in place to engage with these broader champions and networks and to reconnect to larger causes that are so vital to this constituency, ranging from the desire to help reinvent the economy and job creation programs to education reform and bridging the skills gap and addressing urgent environmental concerns. And the good news is that the president’s senior advisers seem interested in making this change. White House Chief Technology Officer Todd Park has, for example, been on a roadshow of sorts all fall, going around the country with Steve Case and a band of chief executives, technologists, and opinion leaders sharing sketches for new ways of leading, yet also, more important, listening.

Obama is also well suited for the new more open governing style. Fortunately, the president’s greatest assets in taking advantage of the possibilities of this networked and transparent world are the same things that brought him such impassioned support in 2008: his integrity, character, and authenticity and also his desire to be innovative. If there’s one thing that Jon Stewart, Steven Colbert, and the army of supporters he needs to rally can smell out quickly, it is a lack of authenticity. Just ask Mitt Romney. And there’s nothing more powerful in an open and transparent world than authenticity.

The biggest question now is whether the president and his team can truly listen. I’m not talking about analyzing reams of polling data. They’re clearly very good at that. I’m talking about being able to act like an anthropologist, to get what Nobel Prize winner Muhammad Yunus who is both an economics professor and a leading social entrepreneur, calls getting out of the office to get “the worm’s eye view” about social problems that are new and complex before using an experimental and entrepreneurial approach to solving them. The president can learn more about what’s really going on in the country by watching The Daily Show with Jon Stewart, and by monitoring trends on Twitter and Facebook every night before he goes to bed, than he can by listening to a small circle of advisers who couldn’t possibly cover as much ground.

The great news is that the administration can lock arms in collaboration with a sea of social ventures, led by social entrepreneurs who  are united around common values and purpose. The American people from Detroit to Louisville to the rural areas of Northern California have been reinventing and renewing all through the punishment of the financial crisis. The artists, entrepreneurs, and inventors so core to America’s promise and founding ideals are resilient and inspired. What America needs from its president is to be acknowledged and affirmed for reinventing their own lives, companies, and communities. The solution to America’s ills lies not in the swamp of Washington but in the fields, startups, and small businesses, classrooms, and social entrepreneurs of America.

Obama must listen to and engage with people like Judith Jackson, who leads Youthville Detroit. A deeply humble and authentic leader, Jackson would be the last person to toot her own horn, yet she serves more than 500 Detroit youths a day in a variety of after-school and creative education programs. And if you ask Judith about what she needs, the topic of funding inevitably comes up soon. Raising money is a big part of her job. With the decline of earmarks, Jackson must build out her own ecosystem of supporters and funders, including nice gifts from the likes of singer-songwriter Usher’s foundation. The White House could help Jackson enormously merely by shining a light on stories such as hers, and show how Jackson’s story shares much in common with that of the students at Oral Roberts University who are deeply passionate about using social entrepreneurship to achieve social justice ends, including to combat meth addictions in Tulsa, Oklahoma.

Because we don’t even know the problems, let alone all the solutions for reinventing and renewing America, everyone must be a social entrepreneur. Programs like Fuse Corps, Code for America, and StartUp America are helping to provide the catalysts and energy to focus on entrepreneurial approaches to big problems from the bottom up, including by helping to build the all important ecosystems that support and maintain innovation. That bottom-up approach to change must begin with a deep awareness and empathy for citizens’ problems and needs, something that all too often gets lost in top down decision-making processes.

Those 35 and under in America are extremely entrepreneurial. They have to be—they must invent and reinvent their careers multiple times in just their first few years out of college, and all while managing to repay educational debts. They are well schooled in the prerequisites for invention—tinkering, play, rapid iteration, and resilience through failure.

What America needs now is a Renaissance of creativity, innovation, and entrepreneurship. President Obama may just be able to ignite that flourishing if he makes a sincere effort to tap into the spirit of American community and collaboration that I’ve seen all around the country. He can lead Americans of all races, religions, and persuasions, from students at Oral Roberts University to urban artists and musicians from the other side of the tracks in Detroit, in locking arms and marching together in a shared desire to solve our pressing problems in new and creative ways.

This revolution will be improvised.

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Originally appeared on Forbes: http://www.forbes.com/sites/dorieclark/2012/12/09/how-to-make-innovation-less-risky/

Corporations are clamoring for breakthrough innovation – but in this economic climate, who can afford multimillion-dollar wagers that might not pan out? Enter Peter Sims, co-author of the bestseller True North: Discover Your Authentic Leadership, with Bill George. “Companies have the wrong mindset,” he says. “They don’t experiment well, they bet big, and that’s often a sign they’re going to fail. We’re living in an age where every person needs to be much more creative and entrepreneurial. You have to be able to really get out there and be scrappy, create value, and the way to do it is through entrepreneurship.”

Instead of launching expensive new initiatives, Sims says, companies (and individuals) should make “Little Bets,” the title of his newest book. The goal is to test demand – and then iterate, quickly and cheaply. Sims became a believer in the “little bets” approach during his previous career as a venture capitalist: “Whenever I talked or worked with entrepreneurs who had built billion dollar companies, I learned more from them than anybody I studied with in business school,” he says.

Upon connecting with Stanford’s renowned Institute of Design (also known as the d.school), where he ultimately became a lecturer, Sims discovered that “design was really the method of experimentation, iteration – acting like an anthropologist. It was similar to the way entrepreneurs I had worked with functioned. And I thought, why haven’t I learned to think this way all through my education? I wanted to empower other people to open up creatively the way I had. It was learning by doing, rather than trying to analyze and plan, and that’s a distinctly different mindset than anything else I’d been taught before.”

Corporations’ time in the sun has passed, says Sims – unless they evolve into a new form that embraces entrepreneurial tendencies (a view also shared by Nilofer Merchant in my recent interview with her). “The modern industrial corporation is really well suited to executing on known problems, but it’s poorly suited to executing on discovery, experimentation, and entrepreneurship,” he says.

“We’re going to see a huge devolution of the industrial power structures,” says Sims. “The industrial corporation is facing enormous pressure because it’s not creating nearly enough value. The alternatives are much more collaborative, network-based organizations, more partnerships, and a more entrepreneurial mindset.”

In addition to placing little bets, Sims believes another path forward is through a mashup of “entrepreneurship, social change, and art” (which he’s pursuing with two new projects, the social venture Fuse Corps and the for-profit B corporation the BLKSHP (think “black sheep”). The shift to a new way of doing business, says Sims, is a return to our entrepreneurial heritage: “It’s a healthy cleanse for capitalism.”

What little bets has your company made? And how are you tracking and learning from them?

Dorie Clark is CEO of Clark Strategic Communications and the author of the forthcoming Reinventing You: Define Your Brand, Imagine Your Future (Harvard Business Review Press, 2013). She is a strategy consultant who has worked with clients including Google, Yale University, and the Ford Foundation. Listen to her podcasts or follow her on Twitter.

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