Author Archives: Stephen Shapiro

About Stephen Shapiro

Stephen Shapiro is the author of five books including “Best Practices Are Stupid” and “Personality Poker” (both published by Penguin). He is also a popular innovation speaker and business advisor.

Why Following Someone Else’s Success Can Lead to Your Failure

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GUEST POST from Stephen Shapiro

You attend conferences. You read books. You take training classes. All with the goal of learning strategies from those who have paved the path to success before you.

But what if following in their steps could lead you down the wrong track?

3M talks about its 15 percent rule–a philosophy that allows anyone in the organization to spend 15 percent of their time on something other than the products they are directly tasked to develop. For 3M this is an incredibly powerful strategy. Unfortunately, for many companies that try to replicate this, they often end up wasting 15 percent of their time and money on innovations that add no value.

Why is this?

There are two factors you need to consider whenever you study what someone else is doing:

  1. The underlying context
  2. The undersampling of failure

The Underlying Context

What works for one organization may not work for yours because the context is different.

3M’s culture has decades of experience with its 15 percent rule. There are many unwritten rules that support the concept, enabling it to be a powerful strategy for the company. 3M’s measurements systems are in line with this. Their performance measures enable it. In a nutshell, it is part of their DNA. It is hard to bolt on such a system if you don’t have all of the underlying principles and have it work properly.

There are other forms of context that matter. For example, your business differentiator may impact which practices make sense for your organization. If you look at the insurance industry, although nearly every company is moving heavily into apps and new technology as a differentiator, State Farm has continued to reinforce its personal touch. The company’s advertising rarely talks about technology but rather focuses on its widespread network of agents who are there to help. This has enabled State Farm to gain a lion’s share of the homeowner’s insurance market.

Undersampling of Failure

But there is a more deceptive reason why following someone else’s path to success may lead you in the wrong direction. It is called the “undersampling of failure” (a.k.a. Survivor Bias).

It’s important to recognize that when learning from others, quite often they don’t really know what made them successful. Was a particular “best practice” really the key to their success? The only way to truly know is to find a number of other companies who tried the same strategy. Were most of them successful? Or was the success limited to a small percentage? We see this all of the time. “Hey, this five-step strategy worked for me and it will work for you!” But what if 1,000 other people tried the same approach and failed. Would we ever hear about them? Probably not.

We tend to only study the successes (a.k.a. survivors) and undersample the failures.

Timing can also be a factor. In today’s fast-moving world, studying what someone did last year may be completely irrelevant to what will work today. People teaching you social media strategies may be outdated by the time you hear about them. I’ve had my own business for over 15 years. The approaches that I used in the past to drive my success would be silly in today’s environment.

And in some cases, a first-mover advantage may be the cause. The first people on Twitter had a better chance of making it big than those joining up today. And those who hopped on the Bitcoin bandwagon early on will certainly make more money than those who decide to invest there now.

These concepts are critical for all organizations (and individuals) to understand. We love to learn from others. And we should, because it can speed development times. But remember, replicating is never innovation. In fact, replication without skepticism, can lead to failure.

As I embark on my new column with Inc.com, I start with this article because I feel it sets the tone for everything I write. I will do my best to provide perspectives on how to drive higher levels of ROI with your innovation efforts. But as with any advice, be skeptical. Ask if it is right for you. Ask if it is right for you right now.

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Innovate Like Sherlock Holmes

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GUEST POST from Stephen Shapiro

I am a fan of mysteries. I think they can train the brain to be a better innovator.

I’m currently re-reading the complete works of Sherlock Holmes. In A Study in Scarlet, Holmes provides some great perspectives that everyone should consider.

After Holmes made some amazing deductions about Watson’s current state of affairs, Watson was shocked. When Holmes explained his thought process, Watson expressed disbelief.

Watson: When I hear you give your reasons, the thing always appears to me to be so ridiculously simple that I could easily do it myself, though at each successive instance of your reasoning I am baffled until you explain your process. And yet I believe that my eyes are as good as yours.

Holmes: Quite so. You see, but you do not observe. The distinction is clear. For example, you have frequently seen the steps which lead up from the hall to this room.

Watson: Frequently.

Holmes: How often?

Watson: Well, some hundreds of times.

Holmes: Then how many are there?

Watson: How many? I don’t know.

Holmes: Quite so! You have not observed. And yet you have seen. That is just my point. Now, I know that there are seventeen steps because I have both seen and observed.

As innovators, we need to do a better job of observing, not just seeing. We need to study what is really going on in the market, with our customers.

Unfortunately too often we just see without insight.

This will lead to a predicament that is described later in the story. Holmes is presented with a challenge, and Watson immediately wants to deduce the solution.

Watson: This is indeed a mystery. What do you imagine that it means?

Holmes: I have no data yet. It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.

This is brilliant! It describes a common mistake of innovators. We often get too attached to our ideas, and, therefore, ignore evidence that goes against our beliefs. This is why so many innovations fail.

Too often we twist the facts to suit our theories.

The reason is that as human beings we are subject to confirmation bias; the brain’s processing mechanism by which it finds evidence to support its belief structure. Whatever you believe, you will find evidence to support it, and you will subconsciously ignore anything that refutes it. That’s why we can have such powerful beliefs in spite of evidence to the contrary.

We get too attached to our ideas, and therefore, we introduce innovations that are destined to fall flat.

Or as Scott Cook from Intuit so eloquently said, “For every one of our failures, we had spreadsheets that looked awesome.”

During your innovation efforts, think like Sherlock Holmes. Be sure to truly observe what is going on in the world around you. Use this to gather the necessary data. And, critically, avoid twisting your facts to support your beliefs.

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No Doesn’t Mean No

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GUEST POST from Stephen Shapiro

The other day I posted an article about innovation on LinkedIn. I was surprised to find a comment from someone I worked with at Accenture over 15 years ago. To paraphrase, he said…

No offense, but I remember at a meeting in London trying to demonstrate to you how (a specific software platform) could be a technology model for a social network site I designed for (a company) in 2000. I remember you absolutely annihilated me after for wasting your time. I was only a 23 year old hard working Irishman to London at the time with a head full of vision and innovation but zero resources and contacts except you as my manager. I’ve been very suspicious of any talk of innovation since.

My first reaction was, “Wow, I barely remember that conversation. I can’t believe that someone is still so upset so many years later.”

Although his comment was less about a comment on the content and more about a personal gripe with me, I realized that hidden in it were two important points related to innovation.

1) Everyone is subject to confirmation bias. If I did shoot down his idea, it might have been because I was blind to its potential. It might have been an amazing idea and I couldn’t see it. Our past experiences will always taint our view of what is possible in the future. And of course, I am not immune to this phenomenon.

2) Not all ideas are good ideas. People get attached to their ideas and beliefs and then blame everyone else when they don’t get implemented. The commenter too is subject to confirmation bias. If organizations implemented every idea they received, they would all be out of business. From my experience, only a small fraction of ideas are actually worthwhile.

Scott Cook from Intuit sums it up beautifully, “For every one of our failures, we had spreadsheets that looked awesome.” Everyone can justify their position.

Some believe their idea is the next million dollar concept and that everyone should love it and invest in it. But we know that 70% of innovations fail. And in other cases we shoot down an idea because we don’t think it is good. And sometimes this can lead to a different form a failure, as Kodak learned with the digital camera.

The key lesson is to be rigorous with your thinking. Never assume your ideas are good. And at the same time don’t immediately kill an idea that has potential. Experiment. Prove (or disprove) concepts in the real world. And if you are convinced your idea is awesome and you get a “no,” keep trying until you get a yes. Sometimes a “no” really means “not now.”

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Innovators Ask Questions

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GUEST POST from Stephen Shapiro

Imagine that I am holding a glass of water. Here’s a question for you (you know this one)…

What is the difference between a pessimist, and optimistic, an efficiency expert, and an innovator?

The pessimist sees the glass half empty. The optimist sees the glass half full. The efficiency experts says, “There’s too much glass (in other words, fire half the people).” And an innovator asks, “Is someone thirsty? Is there a better way to deliver the water? Is water really the best liquid?”

Innovators ask a lot of questions. They get at what is really needed, not just what is requested.

Most employees are good “soldiers,” doing what they are told to do. They are brilliant at executing and getting things done. Unfortunately, being a good order taker usually means you are not a good innovator.

The issue is, people are not trained to push back. They aren’t skilled in asking questions. They’ve never learned to dig deeper or to understand what is really needed and why.

After a speech, a client executive asked me how she could increase the level of innovation on her team. I told her, train your people to ask better questions. They don’t need to “think outside the box.” It is not about creative solutions. It is making sure each person is working on things that matter.

Sadly, too often, employees (and companies) are focused only on solutions.

So, if you want your people to be more innovative, you need them to ask better questions.

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The Power of Purposeful Tangents

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According to a recent Huffington Post/YouGov poll 28% of Americans did not read a book last year. As an author, I find this both disappointing and yet not surprising.

Fortunately most people read.

But is what you are reading enhancing your creativity, or just furthering your intellect?

Most people who read for business purposes focus on deepening their expertise. They read books, business magazines, and trade journals about their topic. For example, if you are finance expert, you most likely read primarily about money. The training classes you take are also most likely financially focused. And professionally, you probably hang out with other people in your industry.

Of course this is valuable. Deepening one’s skills is critical.

However, if you want to be even more successful, try broadening your horizons.

I am a professional speaker on the topic of innovation. However, less than 50% of my personal development time is focused on speaking or innovation.

Learning from fellow speakers and innovators can only take me so far. There are countless studies that show that true breakthroughs rarely, if ever, come from the domain experts. In others words, if I want to be the same as other innovators, learning from them is fine. But if I want to be different/better than other innovators, I can’t learn from them.

I recently signed up for a 6 day magic master class. I’m partly interested in it for the performance aspect; it will improve my speaking skills. Most good magicians do an amazing job at holding the attention of an audience. I am also interested in magic from the “brain science” perspective. Magic exploits various quirks of the brain, and I believe that understanding these helps me be a better innovator. Magic is about making the impossible possible. Let’s face it, most innovation programs have difficulty making the possible possible.

Although I read Harvard Business Review, I spend even more time reading magazines about the brain/neuroscience (e.g., “Scientific American Mind” magazine), psychology, and sports performance. I learn from entrepreneurs who are not involved in either speaking or innovation. And for pleasure, I read mysteries as they seem to strengthen my problem solving abilities.

None of these topics were chosen at random.

In addition to being topics I enjoy, they are what I call “purposeful tangents.” They are related to my areas of expertise, but they not the same.

Do you work in the gas pipeline industry? Learning from others in that field can of course be valuable. But you may gain breakthrough level insights from cardiovascular experts as they too deal with the movement of fluids through a vessel. In fact, there is a group in Houston called Pumps & Pipes; cardiologists and gas pipeline experts who share insights from their respective fields. These are purposeful tangents. They are related.

What are your purposeful tangents? What could you read/study that is similar to your area of expertise, but different?

Of course there are valuable lessons to be learned anywhere. But looking for insights in random places may lead to random value. It is less predictable and may dissipate your energies.

But again, focusing too much on your area of expertise only leads to incremental improvements.

Purposeful tangents can lead to breakthrough learning with a high level of predictability.

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Driving Your Differentiator Down

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GUEST POST from Stephen Shapiro

Imagine you are a company that produces products for consumers. It could be toothpaste or soft drinks. You decide that your differentiator is your marketing.

Given this, you might assume that the marketing department is the most important part of the business.

This assumption would be wrong.

There is no “most important” department in any organization. Each contributes to the differentiator in their own unique way.

To determine how, you need to dig deeper.

What aspects of your marketing sets you apart? Is it really just about your advertising or brand recognition? Or is there more to it?

For example, maybe it’s your scientifically proven marketing claims that set you apart – “Our laundry detergent cleans whites 50% better than the competition.” For marketing to promote these facts, you of course need to have an R&D team that can create these products. Although (in this example) R&D’s primary role is to support the company’s marketing efforts, this does not mean the marketing function is more important. Everyone is equally important. For example, packaging becomes critical for highlighting claims. Product distribution may impact how a package is displayed on the store shelf. Technology that supports the acquisition of intellectual property may play a major role, as will the lawyers who secure the IP.

But maybe your marketing is not about scientific claims but is instead about clever promotions. Your products target a younger demographic. Therefore you create competitions that appeal to these individuals. Product development now shifts from creating the “best” product to potentially one that responds to consumer suggestions (think Mountain Dew flavors created by customers or M&M colors voted on by customers). Manufacturing needs to get in the act of making sure these new flavors/colors can be produced. The technology that runs competitions and sifts through consumer recommendations quickly and efficiently will help facilitate the customization.

Of course, recruiting makes sure you hire the right people for all of these “marketing” roles. Training makes sure that the critical skills are in place. And so on.

The key is to cascade your differentiator down to every individual.

It is critical that you innovate where you differentiate. But differentiation is not a department or function. Each employee in every department directly contributes to your differentiator. In order for them to know how to make the greatest impact, your differentiator needs to translated in a way that helps individuals prioritize their work.

Innovation is everyone’s job. But everyone should not be innovating everywhere.

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Innovate Where You Differentiate

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GUEST POST from Stephen Shapiro

Although some innovation experts say that you want “everyone innovating everywhere,” I believe this is bad advice.

Instead, make sure that everyone is working on innovations that are of strategic importance. You don’t want employees innovating everything. You want them to innovate where you differentiate. That is, focus your energies on those capabilities that set you apart from the competition and make a difference to your customers.

One company that has done this exceptionally well is the financial services firm, USAA. They only offer services to members of the military and their families. Their mantra is to serve those who serve our country. Given the unpredictable and often transient nature of those in the military, being ‘easy to do business with’ is critical. Their differentiator is world-class customer service. They define innovation as “anything that makes the lives of their members better.”

This clarity helps them focus their innovation investments to produce unprecedented results.

In fact, year after year,  USAA gets top ratings for customer service. For example, a recent Temkin Customer Service Ratings puts them at the #1 and #2 positions in customer service of any company in any industry.

What about you?

  • Where do you differentiate?
  • On which list would you like to be #1?
  • Does everyone in your organization have a clear understanding of this differentiator?
  • Is this used to prioritize your innovation efforts?

When you “innovate where you differentiate,” you get everyone laser focused on what matters most to your organization. This gives you consistently higher ROI on your innovation efforts.

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Bring Me Better Problems

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GUEST POST from Stephen Shapiro

In life and in business, we are often told, “don’t bring me problems, bring me solutions.”

From my perspective, this is bad advice. I want people to bring me bigger and better problems.

Or, as the fortune cookie I got recently implied (see below), if you don’t focus on the right question, the answers/solutions may be useless.

Unfortunately, most people continue to work on solutions to problems that don’t matter.

Here are some questions that will help you prioritize your thinking:

  • Are you focused on what is important…or on what is urgent? Many people are “firefighting arsonists,” creating urgency in everything, even if it is not critical. A short-term mentality prevails. Make time for the important investments that will pay long-term dividends.
  • Are you investing energy on activities that provide exponential returns…or linear returns? Most people rarely look for what gives them leverage. Look for partners and business models that enable you to scale your solutions.
  • Are you working on what you actually can change/influence…or on what you wish could be changed? Not everything can be changed. Just because you are frustrated does not mean you should try to fix something. Trying to change others, for example, is a losing proposition. Instead change your attitude towards them.
  • Do you appreciate the differences in others that complement you…or on the differences that annoy you? Contrary to conventional wisdom, opposites do not attract. We tend to focus on what we don’t like in others, instead of seeing how those attributes might actually be beneficial to us. But diversity, when viewed through the right lens, can be extremely valuable.
  • Do you develop solutions that the world will value…or what you value? Some of my artist friends don’t want to “sell out.” Basically this means that they don’t want to create what others want and would rather do what they want…and remain poor.

Too often we invest our time, money, and energy (including mental energy) on things that don’t really matter or don’t produce real results.

By asking a different question you will always get a different answer. By refocusing and reframing, you can do less while getting better results.

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The Value of "Line" Thinking

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GUEST POST from Stephen Shapiro

From my experience, 80% of innovations within most companies are “dot solutions.” That is, innovations are typically developed by individuals from a single domain of expertise. Deep expertise is valued. Dig deep wells.

While spending time recently at 3M, I learned that 80% of their innovations are “line solutions.” That is, multiple domains of expertise are involved. For example, they might blend expertise from adhesives with expertise from abrasives to develop a new solution. Although this may be unusual within other organizations, at 3M, this is the norm. They are masterful at connecting dots.

But is this connected approach valuable?

They shared with me some recent research they’ve been conducting. The results are fascinating.

In a nutshell, they found that…

Line thinkers within 3M – based on the number of patents they contributed to in different areas of expertise – contributed significantly higher financial returns for the organization.

In other words, the people who became exceptionally deep experts and never used that expertise to contribute to different parts of the business were less valuable than those who made contributions to a wide range of products.

The financial impact of line thinking is staggering.

And although this approach is not the norm in most organization, it can certainly be encouraged through shifting the culture to one that recognizes and rewards these types of contributions.

(for more on my perspectives on dot vs line thinking, please read my article from a while back – this is a critical concept for innovation – I discuss it further in “Best Practices Are Stupid”)

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All Ideas Can't Be Good Ideas

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GUEST POST from Stephen Shapiro

The other day I was at Mohegan Sun, which is a casino about an hour and a half outside of Boston. And while I’m there I love to speak with the gamblers because each of them believe they have a system. They believe they have a method to ensure that they win. And they’re all convinced they’ve won more money than they’ve lost.

Well, of course, this is not true. Casinos are not in the habit of giving money out to people. The house always wins. We know this to be true.

Why do people believe that they win more than they lose? It’s something called confirmation bias, and confirmation bias is the brain’s processing mechanism by which it finds evidence to support its belief structure. Whatever you believe, you will find evidence to support that, and you will subconsciously ignore anything that refutes your belief structure. That’s why we can have such powerful beliefs in spite of evidence to the contrary.

It’s very important for innovators to understand this concept, because every person is convinced they have a billion dollar idea. They’ve got the next big idea that’s going to change the world and make them rich. But what happens is their confirmation bias only allows them to see the evidence that supports their belief that they have a great idea. Their brain doesn’t allow them to see all the evidence that proves it’s actually a bad idea.

There’s a reason why 70 to 90 percent of new innovations fail. It’s not because these aren’t well intentioned, motivated, or excited people. But they’re people who, like all people, have confirmation bias. As a result they will subconsciously ignore the evidence that proves that what they think is a great idea, is in fact not such a good idea.

As innovators, as entrepreneurs, as individuals it’s important to recognize this. Now how do we counterbalance this?

It’s difficult for us to find evidence that refutes a strongly held belief. So what we need to do is, when we’re working on something, partner with a devil’s advocate. Find someone who’ll be the contrary point, somebody whose sole purpose is to find evidence that proves your idea is a bad idea.

Now it may be hard to hear what that person has to say. You will want to reject what they have to say. But if you can open up your mind and be willing to hear the contrary points of view, you may be able to refine your product, service, or idea, and come up with something that’s better. Or you may learn it’s just such a bad idea and you shouldn’t invest the time and money in this one. Find a different one.

This is really important for all organizations (big or small) and individuals.

We know that every gambler doesn’t win more than they lose. And we know that every idea is not a great idea.

The question is:

“What are you going to do to make sure that you invest your time, money, and energy in the things that have the highest likelihood of paying off?”

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