Updates

Little Bets got some nice coverage in Forbes today, as the pharma industry wrestles with a culture of BIG bets.  The nature of the long cycle times and illusions of rationality in the pharma industry helps to explain why we (the San Francisco BLKSHP) are having such great collaborations with senior execs @ Genentech about helping them to rethink their development and  processes.  Genentech is making a HUGE difference in the world, yet need help getting away from the overly rational mindsets that block discovery and waste resources — the “illusion of rationality” as per Little Bets: How Breakthrough Ideas Emerge from Small Discoveries.

Here’s the Forbes article: www.forbes.com/sites/davidshaywitz/2012/11/05/is-big-pharma-dangerously-betting-on-huge-fragile-product-shots/

Is Big Pharma Dangerously Betting on Huge, Fragile Product Shots?

David Shaywitz, Contributor

Historically, the most significant challenge small biotechs faced was whether to advance a relatively broad portfolio of programs or whether to bet the whole enchilada on a so-called “product shot.”

As I’ve discussed in context of Peter Sims’ wonderful book “Little Bets” (reviewed here), there is a classic tension between investors, who typically favor product shots (since they own a portfolio of small biotechs), and company management, who appropriately worry about risking everything on one program.

It’s fascinating to watch how the same challenge appears to be creeping up the food chain, and many big pharmas seem to be investing outlandish amounts of money pursuing similar product shots – Sanofi’s recently announced PCSK9 clinical trial is just the latest example.

While no one is suggesting big pharmas are shunting absolutely all of their R&D resources to mega development programs, these companies could clearly fund a number of smaller development programs with the money they are spending on these huge, individual programs. For all the talk about the age of the blockbuster being over, it’s crystal clear that many big pharmas not only remain fixated on blockbusters but feel confident they can identify them.

Mathematically, they clearly believe the commercial potential in these cases justifies the huge development costs and sizable risks, and feel that the potential exceeds that of the multiple other programs they could theoretically be resourcing instead (unless you have an even more cynical view, and believe they are pushing these huge programs because they have so little else worthwhile to fund).

I am struck by the difficulty of prediction, as I’ve discussed both recently, and also several years ago (with Nassim Taleb) here. Advancing a small number of large, intricate programs also seems like a vivid example of the sort of dangerously excessive investment in the highly fragile that Taleb inveighs against.

It will be interesting to see how these giant bets turn out.

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Fuse Corps received a flattering writeup in Inc. Magazine todayPlease send your nominations for the prestigious 2013 fellowship to me so that I can pass those onto the team.

http://www.inc.com/jessica-stillman/use-your-entrepreneurial-skills-to-solve-americas-problems.html

Are you a brilliant, entrepreneurial troublemaker? A fellowship program that pairs business people with local government to actually get stuff done wants to hear from you.

shutterstock images

America may have election fever at the moment, but through all the coverage of the candidates’ proposals and counter-proposals, there runs a thread of cynicism that whoever wins in November, government just isn’t very good at finding and implementing innovative solutions to the challenges that we face. Not nearly as good as the business community in general and start-ups in particular, anyway.

So what if you, as an experienced entrepreneur, could bring some of your know-how and pragmatic, can-do attitude to government (at least at a more local rather than the presidential level) and actually make a difference in American communities?

Fuse Corps says you can. It’s a fellowship program now in its second year that places experienced business people with at least eight years of work under their belts with local leaders who are looking to pair with private sector expertise to find solutions to pressing public issues–solutions that can be replicated elsewhere across the country.

“Fuse Corps takes the top minds in business and in entrepreneurship and places them for 12 months with some amazing and innovative mayors and governors around the country in order to create a space for innovation. The people who can do that, who have been tested in the crucible of getting stuff done, are entrepreneurs,” explains Jennifer Anastasoff, co-founder and CEO of Fuse Corps (other co-founders include entrepreneur Peter Sims, McKinsey senior partner Lenny Mendonca and Teach for America founder Wendy Kopp).

Fuse Corps is careful to match fellows with projects that fit their skills and interests (and geographic constraints). Current projects range from building a private-public partnership to involve Silicon Valley talent in government in Sacramento to improving public education for the governor of Delaware.

“We work very closely with the cities and states to scope out a project that has very clear deliverables for the year. It’s the job of the entrepreneur who comes in to identify, what are the resources we need? How do we get them? What barriers need to be crossed? What do we need to be learning? The way that we support someone is something we call the Civic Leadership Institute,” explains Anastasoff.

With its less than catchy name, the Institute may sound about as exciting as watching paint dry, but the intensive two-week boot camp held in Silicon Valley is actually a main draw of the program.

“We use design theory and a design approach to leadership and management,” Anastasoff explains. “We get type-A folks who have willed their businesses into existence by hook or by crook and we really push them.”

Also included is a series of lectures from Fuse Corp’s high-profile contacts with all the obvious networking benefits that implies–”One of our placements said, ‘I thought that I was applying for a fellow, but what I realized is I was actually getting a full network,’” says Anastasoff–as well as a deep understanding of how government works that entrepreneurs can carry back to the private sector after the program finishes.

“City and state, that’s where stuff gets done, so if you really care about getting stuff done, this is where you should be. If you’re a brilliant troublemaker, we want you,” concludes Anastasoff.

Think that might be you? Check out the Fuse Corps site for more information, including details of the financial support fellows receive, as well as how too apply. But don’t dawdle: this year’s deadline is October 14th.

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I’m very proud to be a part of the Fuse Corps team, a social venture that places some of America’s most talented entrepreneurial leaders in the trenches with a mayor, governor, or dynamic social entrepreneur to discover new approaches to sticky problems.  Sacramento Mayor Kevin Johnson, for example, needed Erika Dimmler, a CNN producer who was tired of reporting on the news and wanted to make the news, to help him bring Alice Waters’ Edible Schoolyard project into the Sacramento Unified School District.

Fuse Corps Fellows act as catalysts to bring together corporate, non-profit, government, and philanthropy groups in new and creative ways – “the politics of entrepreneurship” as Steve Case puts it.  Fellows don’t start by presuming that they have all the answers by looking at problems from a bird’s eye view.  Rather, they begin from the worm’s eye view by developing greater empathy for citizens, their problems and needs, then build up to new solutions.  

Fuse Corps started with an idea from Lenny Mendonca, founder of the Half Moon Bay Brewery, as well as a senior partner @ McKinsey & Company, and many other pursuits.  Since those early days of making little bets with Lenny as a cofounder, it has been nothing short of a joy to be involved, and to put the advice from LITTLE BETS into action to (hopefully) benefit citizens who deserve better leadership these days.  After all, Washington DC is a snake pit that too often sucks the life out of even the most well intentioned people and leaders (the authentic innovator Don Berwick’s resignation letter from his post as Administrator of Medicare & Medicaid will be a historic artifact of this era of institutional corruption).

My Uncle Joe, a life-long truck driver who now earns about 30% less than he did 5 years ago, and yet watches as people like Dick Fuld and Jon Corzine walk away from leading institutions that had fraudulent cultures without any form of accountability, is giving up hope in America, and the American Dream.  This unacceptable.  America was never supposed to be about crony capitalism. It was made great by Emersonian self-reliance and entrepreneurial thinking, grit, craft, and hard work, as well as an appreciation for what Tocqueville saw when he visited soon after the country’s founding — people working together in their communities TOGETHER to build churches, schools, bridges, and anything else they needed to lead productive and (hopefully) happy lives.

And, so Lenny (who is his generation’s John W. Gardner IMHO) recruited me to help get an organization off the ground that could innovate closest to the citizen needs. (As Tip O’Neil famously said, “All politics is local.”) And we were joined joined by Jennifer Anastasoff, a talented person as our founding ceo, and Dave Viotti who took the organization from concept to social venture, and we partnered with Gen. Colin & Alma Powell’s America’s Promise Alliance, and the Points of Light Institute, where we’ve had a terrific collaboration with Ayesha Khana, who leads the Civic Incubator there, as well as Michelle Nunn, their star ceo and her engaged colleagues, and Sonal Shah, who until last year led the White House Office of Social Innovation & Civic Participation.

We were extremely fortunate to receive support from a number of extremely strong advisors, as well as generous angel investors, and from Starbucks Corporation, our founding corporate partner in addition to McKinsey, led by Fuse Corps’ friend Howard Schultz, and a very talented and socially minded team of leaders, who from the outset believed in our vision, and in the need for fresh approaches to tackling vexing social problems.  As Howard said in his call to arms of corporate leaders last year, that eventually became Starbucks INDIVISIBLE job creation campaign, “We’ve lost our humanity.”

Well put, sir.  Rather than remain cynical or helpless, creating Fuse Corps was one of many actions needed to DO SOMETHING about that problem.

And, so while we still have a great deal to learn and figure out, our little bets over the past few years have proven out the significant need and demand for more creative approaches to solving citizen problems.  The four pilot fellows report having life changing experiences, while the mayors and social entrepreneurs lavish rave reviews of working with the fellows.  It’s no surprise, as you’ll see from understanding who these people are when you meet the Fellows here.

They are examples of people we call Black Sheep.

When Pixar director Brad Bird first met with Pixar’s cofounders Steve Jobs, John Lasseter, and Ed Catmull, they had already produced three blockbuster films, yet their biggest fear was becoming complacent. They invited Bird to challenge their normal approaches to doing work.

Bird invited his colleagues to reverse doubts from the technical team that their ideas for their next project were too ambition  us and would be too costly.  Bird and his “black sheep” colleagues ultimately made The Incredibles, an internationally acclaimed film, for less money per minute than the previous film.

As Bird recounted to Stanford Professors Robert Sutton & Huggy Rao and McKinsey Quarterly’s Alan Webb, Bird says,Give us the black sheep. I want artists who are frustrated. I want the ones who have another way of doing things that nobody’s listening to.”

We, The Black Sheep, look around us and see that the old way of working—largely from the top down—isn’t working.  There are men and women in positions of power today who have become disconnected and divided from the people they are supposed to be serving in a way that discourages collaboration and creative energy. The world is desperate for creative change from the bottom up, fueled by Black Sheep.

Bleak as the future may seem, hope should not be lost.  History cycles, thanks to empowered individuals and organizations that opt for change.  American Transcendentalism, Abolitionism, women’s voting rights, Theodore Roosevelt’s progressive “Bull Moose” reform movement in response to the Gilded Era, or the rise of evangelical communities such as Saddleback Church and Willow Creek are several that we admire and study.  The Black Sheep deeply believe that entrepreneurs, inventors, artists, designers, authentic and ethical business leaders, and social change-makers can work across vastly different disciplines to learn from one another, generate creative approaches to vexing problems, and forge collaborations to turn ideas into real initiatives and ventures.

What ultimately bonds The Black Sheep is the belief that authentic and lasting collaborations depend on a spirit of genuine curiosity, generosity, and the pursuit of broader purpose.

In 2011, a group of Black Sheep traveled to Detroit to support local community leaders in their efforts to combat pervasive tobacco addiction among poor black youths.  Video game developers locked arms with branding specialists, product designers, comedians, and advertising professionals to develop new products and businesses in response.  Utilizing a creative approach to problem solving, grounded in the entrepreneurial process and creative methods, community leaders felt empowered to launch new initiatives and products to counter the power of tobacco advertising.

You haven’t seen or heard many stories in the mainstream media, but we were inspired by Detroit’s cultural diversity, artistry, humor, and entrepreneurial bent.  We felt that we were at the center of American rebirth and renewal, and it was thanks to many Black Sheep whose names aren’t familiar (not yet at least).

But the future is arriving now, and this revolution will be improvised.

For more on Fuse Corps here, and consider joining The Black Sheep if you’re interested.  Thank you and let’s DO THIS!

here’s the Fuse Corps press release:

updated 8/28/2012 9:00:00 AM ET

SAN FRANCISCO, CA — Fuse Corps, a non-profit that enlists the nation’s most talented professionals into public service through a mid-career fellowship program, today announced the opening of nominations and direct applications for its next fellowship year. Nominations and applications will be accepted through the Fuse Corps website (www.fusecorps.org) through September 30, 2012.

“We believe our country’s greatest challenges can only be solved by combining the ingenuity and collaboration of the public and private sectors — and that combination is needed most at state and local levels,” said Jennifer Anastasoff, CEO and co-founder, Fuse Corps. “We are looking for candidates with a passion for public service and the motivation to apply their business acumen for the improvement of communities across the nation.”

Starting March 2013, those selected for the Fuse Corps fellowship program will attend an immersive leadership program which draws from the best practices of leading for-profit, public and social sector organizations, including McKinsey & Company, the d.school Institute of Design at Stanford, Points of Light, and Little Bets Labs, before embarking on year-long paid assignments to improve government and communities.

“At a time when the country is desperate for fresh approaches to solve problems and the role of government is openly debated, Fuse Corps addresses the concerns of citizens from the ground up as opposed to following the status quo, top down approach,” said Peter Sims, Fuse Corps co-founder, entrepreneur and best-selling author of Little Bets: How Breakthrough Ideas Emerge from Small Discoveries.

Lenny Mendonca, co-founder of McKinsey & Company’s social sector practice and of Fuse Corps, added, “To spur the growth and renewal of the US Economy takes real innovation and leadership. Highly efficient and effective entrepreneurs and business professionals bring sorely needed help to public sector organizations who, after facing a slowed economy and severe cuts, need it most. From Erika Dimmler bringing a groundbreaking gardens initiative to local schools with Mayor Kevin Johnson to Jeremy Goldberg helping to bridge the important talent gap in San Jose, we are seeing the positive impact Fuse Corps Fellows can have. I look forward to growing this kind of innovation and leadership asset in communities around the country in 2013.”

About Fuse Corps
Fuse Corps is a national, non-partisan, non-profit social enterprise that enlists top business professionals and entrepreneurs into public service through its professional fellowship program — in order to solve the biggest challenges facing communities. Fuse Corps is driven by several of America’s top innovators in the public and private sectors and it has collaborated with McKinsey & Co., d.school Institute of Design at Stanford, Points of Light, America’s Promise Alliance, Teach for America, Starbucks, and Summit, among others. For more information, please visit www.fusecorps.org or follow @FuseCorps on Twitter.

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Writing is editing, many days and hours of painstaking revision and sculpting.  So, it has been an honor and gratifying to learn that Little Bets has been recognized by a number of publications I respect for their best books of the year lists, including The Washington Post, Inc. Magazine, and AmEx OPEN Forum.

The Wall Street Journal also selected Little Bets as one of six top entrepreneurial advice books in an article entitled, “The Best Advice Around, From Those Who Took It,” alongside books like Art of the Start by Silicon Valley maven, Guy Kawasaki, the author and former chief evangelist @ Apple.

 

Quoting Saras Sarasvathy, a professor @ the Darden School at the University of Virginia, who many including the well-known entrepreneur and investor Vinod Khosla consider one of the most insightful researcheres on entrepreneurship, the article reads:

“This book demolishes the usual excuses entrepreneurs have for not starting a business,” says Saras D. Sarasvathy, an associate professor at the University of Virginia’s Darden School of Business, in the article, adding that the book “shows how ‘doing the doable’ without waiting for a big idea, or guarantees about the final outcome, can lead to amazing breakthroughs.”

(see this Big Think interview with Sarasvathy’s for a great overview of her work and findings)

Thank you so much to The Wall Street Journal for this generous recognition, and to the many people who have championed and evangelized the book. Let’s do this.

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*UPDATE: Tech Crunch runs review of Fuse Corps.

For the past several years, I have had the great pleasure of collaborating with a remarkable group of people to create and launch Fuse Corps, an innovative social venture that will pair some of America’s top entrepreneurial leaders with governors, mayors and community leaders across America to drive meaningful social change. We identify concrete projects in local communities that address a national priority (such as education, economic development or health care). We then recruit and deploy highly-skilled and passionate professionals to help develop and implement innovative and lasting solutions. Here’s a short two minute video with the overview, featuring Sacramento Mayor Kevin Johnson, a dynamic leader who will have two Fuse Corps fellows reporting to him in 2012, including one who will help him drive energy reforms and one to catalyze creative ways to reform the Sacramento Unified School District:

It will be a very prestigious honor to be selected as a Fuse Corps Fellow, and about half of the 2012 pilot 10 fellows will come from sponsoring companies like McKinsey, Starbucks, G.E., McDonalds, and so on. The other half will come from all walks, as applications are open to all. We are looking for creative, dynamic, doers who have a history of catalyzing and leading, with a willingness to get their fingernails dirty in the trenches of America to help renew and reinvent the country from the bottom up.

My cofounders include a diverse and dedicated group of leaders, including, Lenny Mendonca, a senior partner @ McKinsey & Company (& cofounder with his wife, Christine of the awesome Half Moon Bay Brewery), the talented social entrepreneur Jennifer Anastasoff who has vigorously taken on the challenge of being our fearless leader, David Viotti, the former Chief Learning Officer of Sun (US) and Fuse Corps’ chief learning officer, Ayesha Khana, who leads the Civic Incubator at the Points of Light Institute, which will incubate Fuse in year 1 and provide back-end services, Margeurite Kondracke, long time CEO and now senior advisor to General Colin and Alma Powell’s education nonprofit America’s Promise, and the dynamo who is Sonal Shah, who until recently led the White House Office on Social Innovation and Civic Participation.

It has taken a remarkable team effort to get this venture off the ground, and while it has not been easy, it has been endlessly rewarding and fun, and laughter filled, a testament to the team involved, which includes many other amazing people not included here, such as the teams @ the Stanford Institute of Design (the d.school), where every fellow will begin their experience to learn how to think and work like an entrepreneur, and our friends at KIVA, the Aspen Institute, and in education circles, including our first two cheerleaders and advisors, Alan Khazei, the legendary cofounder of City Year, and Teach for America founder and CEO, Wendy Kopp, who needs no introduction.

But at a time when the country (and world) are desperate for fresh approaches to problem solving, as Thomas Friedman and Michael Mendelbaum describe so well in their new book That Used to be US, rather than the status quo top down approach, we hope that Fuse Corps can help provide both positive leadership to help solve citizens’ problems from the ground up, while nuturing a generation of leaders who can think and act differently throughout their lives, and to carry with them an empathy for problems they may not see in their day to day lives inside companies, the military, or any other part of society.

Applications are now open, via the Fuse Corps website.

The best way to predict the future is to invent it, but and that starts with little bets from everyone, so thanks for taking a moment, so please JOIN US and if you could take a look, encourage great people to apply, and help spread the word if you can.

LET’S DO THIS!

This revolution will be improvised. ;)

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Last weekend, I had the chance to connect with singer & songwriter John Legend before his concert with Sade at Oakland’s Oracle Arena.  I met John for the first time 3 or 4 years ago in Los Angeles before he was very well known through our good mutual friend Kweli Washington who has worked with John for years.

Kweli is a great guy, who I know because he was one of the first beneficiaries of Summer Search where I was on the national board until last year, a year-long, intensive youth mentoring and leadership development program for low-income high school students.   In its roughly 15 year history, Summer Search has a great track record of helping students to graduate from highly school (nearly 100%), get into four year colleges ( ~95%), and then graduate (90%+). Kweli was a star story.  He had a great experience with Summer Search that lifted his aspirations and he went from Oakland to Harvard College, and then went onto  become a Rhodes Scholar before he went into the business world and became a consultant at Boston Consulting Group in Boston, and has always been active with Summer Search since.

But, true story if you can believe it, Boston Consulting Group is where Kweli and John met and worked as analysts, after John graduated from University of Pennsylvania.  At the time, John’s name was his given name “John Stephens,” which he would change to “John Legend” once he got into music, but back then Kweli and John worked full-time at BCG during the day, and John would go out and perform at night to develop his music career and demo tapes (naturally, a series of little bets to get closer and closer to his aspiration).  John was very active as a leader in University of Pennsylvania’s a cappella singing groups and it was, in fact, one of John’s roommates from Penn, Devo Springsteen (one of my favorite names of all time, formerly “Devo Harris”), who introduced him to Kanye West, who would be instrumental (no pun intended) in helping John to launch his recording career.

Anyhow, from that first interaction with John through interviewing him for Little Bets, through catching up with him a bit last weekend, I have been impressed by his curiosity, insightfulness, and desire to DO SOMETHING with his life beyond just making great music and being a celebrity.  He is also one of the most present people I interviewed, or when you speak with him — you never feel like his mind is elsewhere, he’s very attentive.  It does seem like he would rather not have to do meet & greets and all the stuff you have to do when you’re a star, but once you’re engaged on a topic, he’s all over it, whether it’s a discussion about education reform, or Ralph Waldo Emerson, or religion, or creativity.  He clearly reads a lot because he cites a lot of references, and backs up his points with either empirical research or first-hand insights and observations, all with the intention of GETTING SHIZNICK DONE to make a positive impact.  He’s a public intellectual of sorts.

Take the badly needed topic of education reform in the U.S.  John is on the board of Teach for America, working with one of the most impressive leaders in America, Wendy Kopp, (not to mention a really nice and cool person), and John participates as an activist in causes where he can use his celebrity to either have a voice or to give voice to a movement of peoples trying to change the status quo.  For example, he sang the theme song to the movie Waiting for Superman, entitled “Shine,” one of the most beautiful songs I’ve ever heard, now one of the favorites of teachers all around the country, a reminder of what education is all about — to help people shine.  Check out the video here:

John Legend, \”Shine\”

But while I am a big fan of John’s music, what I admire about him the most is his desire to take his talents, celebrity, and resources to GET INVOLVED in an attempt to do many, many little things to try to make a difference, both in the individual lives of kids around the country as a role model, and to contribute to the public policy discussions and debates.  Just have a peek at this interview with YouTube World View for a flavor:

John Legend – YouTube World View interview

So, there in the bowels of the Oracle arena, my date Laura and I had the chance to meet John before he went on stage to open for Sade, as part of her national tour.  (He lit it up, of course.)  After talking for a few minutes, including about Thomas Friedman’s excellent new book, That Used to Be Us, which I reviewed for Reuters.com last week (and that John was excited to read so I gave him my copy, underlined, dog eared and all, his team was ready to take a picture.  I brought signed copies of Little Bets for John and his team, and later I ended up giving copies to his entire band since they also wanted to read it (funny side story: the John Legend Band tour bus is literally wall to wall with Little Bets books and signed cards thanks to their enthusiasm and desire to help spread the word – God save us!).  But, back to that moment before we took the picture, John showed the same stripes I’ve seen in each interaction for years: the generosity to say enthusiastically, “Hey man, We’ve got to hold the book up!”

And so we did.

John then lit it up on stage, as usual.

With Laura and the band after the show:

The path from Boston Consulting Group analyst to world changing social activist wasn’t an easy one for John (just as Kweli saw John toil to get heard), but John’s courage, willingness to make little bets, and push forward by doing things and following his dreams have paid off.   He’s not only a 9-time Grammy Award winner, he’s changing the world every day has he invents the future, both for himself, and for millions of young people who benefit from his voice, views, and, yes, LEADERSHIP.  It’s what the country is thirsty for and is part of the reason why THIS REVOLUTION WILL BE IMPROVISED

 

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Click here for an excerpt from “Little Bets.”

What is a “little bet”?

Little bets are a way to explore and develop new possibilities. Specifically, a little bet is a low-risk action taken to discover, develop, and test an idea. Chris Rock develops new comedy routines by making little bets with small audiences; Amazon’s CEO Jeff Bezos makes small bets to identify opportunities in new markets like cloud computing. Little bets are at the center of an approach to get to the right idea without getting stymied by perfectionism, risk-aversion, or excessive planning.

How is this approach different from and better than the typical way most people do something new?

We’re taught from an early age to use certain procedures and rules to analyze and solve problems, such as for math or chemistry. There’s an emphasis on minimizing errors and avoiding failure. These skills serve us extremely well when we have enough information to put into a formula or plan. But what happens when we don’t even know what problems we’re trying to solve? In those kinds of situations, engaging in a process of discovery and making little bets complements more linear, procedural thinking.

What research did you do for this book and what did you set out to discover?

I wanted to find out what went on behind the scenes with some of the great achievements and innovations. Most of them weren’t the epiphanies of geniuses, but instead the result a specific type of experimentation. To find the common elements of their approach, I reviewed empirical and neuroscience research about creativity and innovation, interviewed or observed dozens of people about their approach from Army counterinsurgency strategists to agile software development teams, architect Frank Gehry and comedian Chris Rock. I also talked to entrepreneurs who had self-financed billion dollar businesses, experts in the rapidly growing field of design thinking, as well as musicians like John Legend. Last, I interviewed executives inside a range of organizations such as Amazon, Pixar, Procter & Gamble, Google, 3M, General Motors, and Hewlett Packard.

What about big bets? Why do you focus on little bets?

We all want to make big bets. That’s a Silicon Valley mantra. Be bold. Go big. But I think ingenious ideas are over-rated and that people routinely bet big on ideas that aren’t solving the right problems.  I’ve heard thousands of entrepreneurial stories, some extremely successful, but many mediocre, or not successful.  That combined with the extensive research my team and I did for this book leaves it clear to me that instantaneous ideas are extremely rare, in business, art, science, or you name it.  Just as Pixar storytellers must make thousands of little bets to develop a movie script, Hewlett Packard cofounder Bill Hewlett said HP needed to make 100 small bets on products to identify six that could be breakthroughs. So, little bets are for learning about problems and opportunities while big bets are for capitalizing upon them once they’ve been identified.

What surprised you most in what you found?

How successful people in vastly different fields had arrived at very similar approaches. Story developers at Pixar, Army General H.R. McMaster, and Frank Gehry use the same basic methods and make lots of little bets. They even use similar language and vocabulary – like “using constraints” or “reframing problems”– but they all learned their approaches through their experiences, not in school. As General McMaster said the parallels were almost “eerie.”

Why is it more important than ever to master a “little bets” approach?

We live in uncertain and rapidly changing times that can make us risk-averse, prone to getting stuck. Little bets provide an antidote. For example, Twitter originated out of little bets made inside Odeo, a podcasting company that was going nowhere. After asking employees for suggestions about what the company should do, Odeo founder Evan Williams gave Jack Dorsey two weeks to develop a prototype for his short messaging idea. Twitter was soon born. Another key reason why the time is right to embrace a little bets strategy is unlike previous generations, people now change jobs every few years and, according to researchers, will even switch careers up to six or seven times over a lifetime. That’s a very new way of relating to our work and careers. Little bets must become a way to see what’s around the next corner, or we risk stagnating.

 

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Google has reached a pivotal moment in its history. What can it do to expand beyond its incredible core business, which is now reaching a more mature phase? For insight on how it can develop, let’s look to Pixar.

Pixar is as close to a constant learning organization as there is, with a proven ability to reinvent and a genuine cultural humility. Google’s founders could learn from Pixar’s founder and president Ed Catmull’s prolonged and determined efforts to counter the natural human reactions to success by aspiring to proactively (and honestly) seek-out and solve new problems constantly, recognizing that he doesn’t have all the answers on his own.

Despite an unbroken string of 11 blockbuster films, Catmull regularly says, “Success hides problems.” It’s an insight Google should acknowledge and act on. Google’s leadership admirably tolerates failure on side-projects (and big projects as well), but what Pixar has that Google does not is a culture where the fear of complacency is a strong motivator, where new problems are identified, discussed, and addressed openly and honestly, all of which requires humility.

As David Price describes in his superb The Pixar Touch, Pixar began its life as a computer hardware company. Price writes that Steve Jobs never expected Pixar to be a film company when he bought the company from George Lucas in 1986. Pixar was then the 45-person computer graphics group of Lucasfilms, led by Catmull, whose dream since graduate school had been to make a full-length digitally animated film. The group had developed the Pixar Image Computer, a computer graphics machine that produced high-end visual imaging (such as for MRIs). Jobs thought the technology had breakout potential when he bought it, yet the Pixar Image Computer never found a market.

Jobs also shrewdly allowed a tiny animation division, led by John Lasseter, a former animator from Disney, to make little bets on short animated films (and, later, TV commercials). Shorts would become the company’s vehicle to build the technical and storytelling expertise, as well as the credibility necessary to ultimately coproduce (with Disney) Toy Story in 1995, the first digitally animated feature film.

The 1980s were difficult for Pixar. Steve Jobs deserves enormous credit for his role in funding and driving the company. But, despite Pixar’s small wins with short films, success was far from guaranteed. During this period, Catmull was puzzled by why so many successful companies ultimately failed. “I’m thinking, ‘If we’re ever successful, how do I keep from falling into the traps these companies are falling into?” he recalled in a recent lecture at Stanford Business School.

Catmull watched as companies like Evans & Sutherland, a pioneering computer graphics company, and Silicon Graphics lost their lead. Like Google today, those companies had access to great talent and problems, yet somehow lost their edge and market lead. He studied Toyota the most. Today, Catmull sets the tone for a company culture that is unusually open and honest, resembling Toyota’s aspiration of constant improvement. (Toyota’s current challenges aside, Amazon’s Jeff Bezos is another serious student of Toyota and its processes). Catmull constantly and proactively solicits feedback from Pixar employees, who say that the mentality of constant improvement flows throughout the company.

Ed Catmull (source: Pixar)

As with Toyota’s methods, what interests Catmull the most, and appears to motivate his actions, is to constantly identify and solve new problems. When Catmull gives a public speech or lecture, what’s most noticeable is that he talks about the problems that Pixar has encountered and the mistakes that he has made. Pixar has, for example, nearly burned-out its employees on numerous occasions. Like every organization, there are also pockets of the company that are extremely resistant to change.

Catmull freely acknowledges through his words and deeds that doesn’t know what he doesn’t know. When delivering a lecture at Stanford’s Computer Science department in April, he compared trying to build a successful lasting company to a constant iterative creative process. “There is a lot about this process which I find mystifying still,” he said, “There’s certain things that I think we’ve got right and certain things we’ve got wrong.”

Outsiders are routinely surprised by Pixar’s cultural honesty and willingness to be challenged. When Stanford professors Robert Sutton and Hayagreeva “Huggy” Rao interviewed Pixar director Brad Bird with Allen Webb, Bird recounted being recruited to Pixar:

“Steve Jobs, Ed Catmull, and John Lasseter said, in effect, ‘The only thing we’re afraid of is complacency, feeling like we have it all figured out. We want you to come shake things up. We will give you a good argument if we think what you’re doing doesn’t make sense, but if you can convince us, we’ll do things a different way.’ For a company that has had nothing but success to invite a guy who had just come off a failure and say, ‘Go ahead, mess with our heads, shake it up.’ When do you run into that?”

Ed Catmull and Pixar have the potential to one-day be the Toyota of American business, a role model for building a constant learning organization. It’s a striking model for Google. What do you think? Is Pixar a good role model company for Google and its founders these days? What advice would you give Google executives at this pivotal inflection point?

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Bob Sutton

Bob Sutton

Originally published on Reuters.com.

It has been damn near impossible to find consistently good and objective insight and analysis from business thought leaders. But Robert I. Sutton, a professor of Management Science and Engineering at Stanford and the Stanford Institute of Design (where we have overlapped), is an exception.

His new book, out now, is his best to date. Good Boss, Bad Boss is food for thought for managers and leaders in organizations large and small. It is packed with insight, lists of “how to” suggestions, and questions for bosses to ask themselves.

Sutton weaves many of these nuggets together with interesting stories in Good Boss, Bad Boss — while building on his last book, The No Asshole Rule, a New York Times best seller.

Sutton draws upon an impressively broad collection of research, including fascinating sociology research from Rob Cross that shows top performing employees are far more likely to have high energy than high IQs. He also gives some space to Frank Flynn’s research about what kind of boss is most effective — competitive, aggressive, passive, or submissive. “Moderately assertive” bosses win. Those bosses are able to strike a balance between managing too much and too little, something Sutton calls “Lasorda’s Law,” after the former Los Angeles Dodgers manager Tommy Lasorda’s style.

Most of the book is organized around insights like these, including INSEAD’s Morton Hansen whose research shows the problems with “solo star” organizational cultures and Amy Edmondson’s research about the importance of psychological safety in order to increase decision-making and creative confidence.

Sutton also quotes from Karl Weick, the legendary psychology professor at University of Michigan’s business school, who taught Sutton: “fight as if you are right, and listen as if you are wrong.”

Sutton laces the observations together with illustrative anecdotes about good bosses like 3M’s William Coyne, Pixar’s Ed Catmull, IDEO’s David Kelley, and Lenny Mendonca of McKinsey & Company – and bad bosses, such as the temperamental Joe Cassano of AIG, whose division lost an estimated $45 billion.

He also shares the best organizational insights and observations he has accumulated over the years such as at Avis, General Motors (a company and culture Sutton has followed closely and astutely), and The Onion. General Motors managers, for example, were distanced from the needs of their customers for years because they got free GM cars, without haggling at dealerships. Meanwhile, writers at The Onion throw out 600 headlines ideas for every 18 that get published — a testament to the importance of creating failure-tolerant cultures.

At times, though, so many insights make the book feel a bit like a cookbook and wind up getting lost in the shuffle.  Sutton’s a good writer, although be prepared to dog-ear and underline your copy to revisit the themes that resonate the most.

The best chapter, though, does just the opposite. Chapter 8: “Squelch Your Inner Bosshole” presents Sutton’s unique contribution to the mountains of leadership and management literature – while illustrating the corrosive long-term effects that toxic and bullying bosses (i.e. assholes) have on organizations, Sutton presents a compelling case for the need for good bosses. In doing so, he coins a new term “bosshole.”

“Bossholes make people sick,” he writes before citing a study of 6,000 British civil servants over 20 years that found that people experienced more heart attacks, angina, and deaths from heart disease when bosses criticized them unfairly, didn’t offer praise, and didn’t listen to their problems.

A Swedish study of over 3,000 workers produced a similar finding. “I would call those lousy Swedish bosses incompetent assholes, as they were bad at getting things done and treated people like dirt,” Sutton writes. Sutton’s blend of rigorous empiricism, humor, passion, and catchy phraseology is both memorable and powerful.

So is your boss a “bosshole”? Sutton provides a 20-item survey here to find out.

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Published originally on TechCrunch.

In late April, JP Morgan unexpectedly invited me to a “thought leaders dinner” to discuss the latest goings on in Silicon Valley and digital media. In a private room at the San Francisco restaurant Kokkari, there were about 20 of us seated around a long rectangular table, including venture capitalists from prominent firms, successful entrepreneurs, and a handful of people from J.P. Morgan, including Jimmy Lee, the firm’s well-known Vice Chairman, who sat at the head of the table. (I was, like Kevin Costner’s character in Bull Durham Crash Davis, “the player to be named later.”)

Anyhow, after about an hour and a few glasses wine, Jimmy raised the main question he was curious about: “I want to know from each of you: which company would you go long on and which would you short?” We could pick any timeframe. And, as it turned out, while the long picks varied widely from Amazon to Yahoo!, 12 of the 15 ‘thought leaders’ shorted Google. Jimmy was surprised, virtually astounded: “Wow!” he exclaimed, “You guys are really negative on Google, huh?”

I, too, was surprised. Google has been, after all, the most successful company in recent history (in terms of churning out growth and profits), led by Eric Schmidt, a well-respected CEO. And, we’ve seen book after book about why everyone should be more like Google. I admire Google, its people, and what they have been able to accomplish enormously. It’s astonishing. But the opinions in that room were not based on the company’s past performance. They were based on insights about Google’s future. Below are the reasons people cited for shorting the company (which, interestingly, were fairly diverse):

–Google has experienced a severe talent drain over the past several years, losing some of its most entrepreneurial and innovative people. Although Google’s has high retention rates, Google’s talent challenge is not in terms of numbers, it’s the type of people who are leaving and why they are leaving. The talent drain from Google has been well documented. Venture capitalists in the room (without a vested interest in the companies) argued that Facebook and Zynga are currently considered hot places to work in Silicon Valley. Google has, for example, seen a stream of people leave for Facebook including, more recently, the likes of Erick Tseng, the senior product manager of Android, Google’s critically important mobile initiative.People close go Google say upward management is slowly replacing the company’s early culture of innovation. Entrepreneurial types and thought leaders who feel confined or unmotivated are moving. People will even say that it reminds them of Yahoo back in 2004-2005, not the meritocracy they once joined.

–The company has run out of easy growth opportunities and must now find big chunks of new revenue. With the core search business maturing, Google increasingly seems to increasingly feel the need to make some “big bets.” That is a problem that maturing companies face that CEOs call “the tyranny of large numbers.” Even mobile search, which is seeing impressive growth numbers of a small base, is still too small to make a material difference for the company. The company is obviously trying like crazy to find growth pockets, knowing that mobile is a ways off. The recent $700 million ITA acquisition is a great case in point of how it is going to spread out some medium-sized to big-bets to see what sticks. That is, companies must find bigger and bigger chunks of revenue to maintain growth rates. This problem is documented well by innovation researchers Professor Clayton Christensen in The Innovators Solution, and Jim Collins in How the Mighty Fall.

–The company lacks a coherent strategy, especially in mobile. As Schmidt and other Google execs have stated, mobile is core to future growth. A number of people around the table that night had unique insight into Google’s mobile efforts. They argued that growing nascent mobile revenues will take significant time, especially since there aren’t many sizable acquisition targets available in mobile after Google’s purchase of AdMob. Instead, the recent purchase of ITA Software was an indicator of how the company might make some medium to big bets to see what sticks.

–It’s about people, people, people. Google’s engineering-dominated culture isn’t news to anyone. But As Peter Drucker opined in his landmark book Innovation and Entrepreneurship, “Successful innovators…look at figures, and they look at people.” The company has long recruited people who fit a very specific profile.

Product manager candidates, for example, are told they must have computer science degrees from top universities. But while Google’s core algorithm was a brilliant feat of engineering innovation, a growing chorus of voices question whether it can be sustained. That cookie-cutter approach to people misses important opportunities for diversity and creates glass ceilings for non-engineers, both of which stifle innovation. Cultural hubris, another pattern Jim Collins in particular raises, is of foremost concern. It is often said that at Google the engineers lead engineering, product, and even marketing decisions. But when the company has failed, such as with Google Wave or Google Radio, critics have questioned whether the company really understands people.

For these reasons and more, perhaps the question that “in the know” Silicon Valley observers are now increasingly asking is: Could Google be the next Microsoft? That is, much like Google revolutionized search, Microsoft was a pioneer with its market-dominating operating systems and Microsoft Office. But outside the Xbox, Microsoft has struggled severely to produce new innovations. Deeper cultural problems were hidden by amazing performance and success.

One thing is for certain: it’s a pivotal time in Google’s history. If the company does not put these types of issues on the table, the chorus of short sellers will increase. But with mountains of cash, access to great people and big problems, I see the moment as an opportunity. It’s a chance to reflect, ask some tough questions, openly discuss the challenges, and incorporate some fresh thinking and people, so that this great symbol of global innovation can evolve and grow.

What do you think—are you long or short? Is Google at risk of becoming the next Microsoft or on the verge of a creative explosion?

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