Category: Business Tips

Why do some smart people make stupid mistakes? Furthermore, why is it that some great ideas go absolutely nowhere while others go on to find fame and fortune?

This is a question that I have thought about before, partly because I touched on it in my recent book, Future Minds, and partly because the issue of why people make mistakes is something I read about in a great book called Why We make Mistakes: How We Look Without Seeing, Forget Things in Seconds, and Are All Pretty Sure We Are Way Above Average by Joseph Hallinan. So here’s a little something on why good ideas can go bad and why intelligent people sometimes get things catastrophically wrong.

Looking back over a few decades of dealing with innovators, large and small, there appear to be five reasons why some ideas make it and others don’t. This is not an exhaustive list. Neither does it take into account factors such as finding a customer need state (or inventing one), financial issues or a host of other things budding innovators need to worry about. This is merely a summary of why some people seem to succeed and others don’t, especially when it comes to making critical decisions about new ideas.

For example, the first reason that many individuals fail to get their ideas off the ground is that they sink too much of themselves into projects. They continue to back fixed strategies well past the point of no return in a futile quest to get their sunken time, and especially their sunken money, back.

In contrast, smart innovators practice fast failure. When projects reach a point off diminishing returns they get out fast to avoid losing even more time and money – and then they start again in a different way. This trait of not letting go or adapting is especially prevalent with sole inventors. These individuals will not adapt their idea, or change their vision, even when doing so might attract investors or make the final route to market much easier.

Sometimes dogged determination and persistence can pay off. Indeed, history is littered with examples of might be called ‘endurance invention’, where individuals struggle for years (often decades) before an idea finally becomes a reality. James Dyson, the inventor of the bag-less vacuum cleaner, Trevor Baylis, the inventor of the windup radio, and Colonel Sanders (KFC) are well-known examples. But such stories are misleading. Most of the time the desire for absolute control over flexibility, kills good ideas stone dead.

At the extreme, sole inventors will not share their ideas with anyone because they fear that their idea will be stolen or misused. This does happen. But no non-disclosure agreement will prevent this from happening unless you are prepared to spend enormous sums of money on lawyers (i.e. much more than the other guy). This is also a very negative mindset. Yes, there are people out there that will rob you blind, but most people will not. Moreover, you cannot do everything yourself. At some point you will have to let go and let others craft and polish your idea, especially if your aim is scale.

What else goes wrong? In my experience, the second reason that good ideas go bad is too much time and money. With small firms austerity and necessity can be the father and mother of invention. But with large organizations (e.g. multi-nationals) too much time and money can be fatal.

Large companies are generally risk-averse perfectionists. They are inherently conservative (often rightly so), but the downside is they often focus too much on the legacy (existing) business and move at a snail’s pace when it comes to anything new. They move so slowly, in fact, that any market opportunity has often expired by the time a ‘perfect’ idea has been developed and launched. I won’t name any names, but most large FMCG firms inhabit this terrain, which is why they are regularly out manoeuvred by smaller, less cash-constrained start-ups.

Linked to this thought is the idea that people behave very differently with things they own compared to things they don’t. If overcommitted individual inventors not letting go is one problem, people in large companies not having any skin whatsoever in the game is another. After all, why fight to the death for an idea if there is no personal financial benefit, or if there is a chance that the support or investment for an idea will be withdrawn once a senior decision maker moves upwards or outwards.

The third reason that good ideas can go nowhere is that our brains are designed to deceive. Essentially, all information and experience gets a ‘tag’ and gets stored away deep inside our heads. However, such information and experience do not sit quietly on the sidelines, waiting patiently to be called up to play when they will be most useful. No. Ideas are connected to other stored ideas deep inside our heads. Normally this isn’t a problem, because we use these stored ideas to make decisions and judgements.

But occasionally these connections let us down. Sometimes memories attach themselves to information that results in false pattern recognition or understanding. We think that we understand a problem based on previous experience when in fact we do not. An example might be Segway. This was a technically brilliant idea, but I suspect that Dean Kamen failed to see what was hidden in plain sight, namely, that the Segway was kinda problematic on the freeway and also the sidewalk.

The fourth reason for failure or mistakes is what’s called egocentric bias. The idea here is that we usually think that we are right. This isn’t generally a problem with sole traders (companies with just one employee) but with corporate teams you can imagine the consequences. Everyone in a team (or corporation) has an opinion about what should be done and spends most of their time ensuring that the opinions of other team members (or departments) don’t prevail. Throw in some alpha-male (or female) behaviour and it’s a wonder that anything ever gets done in some corporations. I suspect that political parties, falling behind in opinion polls, and brands lagging in second, third and fourth places in a category, fit with this too.

Confirmation bias is the fifth reason that things can go from good to bad very quickly. In short, our brains subconsciously seek out facts and opinions that strengthen our existing opinions. For example, if we believe that Microsoft is a bad company then any mistake they make will be used as evidence to support this opinion. Equally, if we think that Apple is a good company then any mistake will go unnoticed or will be quickly forgotten.

Linking this back to innovation, if someone has an idea that they believe in, then any fact that supports the idea will be quickly seized upon, whereas any fact that questions it will be instantly dismissed. Many CEOs suffer from confirmation bias. They seek out people that agree with their opinions and dismiss (literally) those that do not.

Why else do good ideas go bad? The list is almost endless, but it would probably include overconfidence, expediency, conformity, distraction, not listening to customers, listening too closely to customers, distribution issues, pricing, quality, marketing and so on.

5 ways to stop good ideas going bad

1. Be pragmatic. 90% right and in market is better than 100% and not.

2. Think like an upstart start-up. Apply half the time and half the money rule.

3. Walk in the shoes of the final customer. Do the shoes hurt?

4. Say to yourself, maybe the other person is right.

5. Seek out the opinions of disinterested outsiders. Is it still a good idea?

 (article originally appeared in Fast Company)

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Try these seven low-cost ways to boost small-business sales.

(from Entrepreneur Magazine) 

Small changes to your marketing mix can have a big impact — especially if you tap the wealth of low-cost tools available to you online.

Here are seven small marketing changes that you can make now to boost your sales in 2011:

1. Put a Twitter link in your e-mail signature. By including a link to your Twitter page at the bottom of the signature file in your e-mail messages, you can spread the word about your business every time you hit the Send button. “I use Twitter religiously to promote my company and my clients,” says Stacy Kelly, CEO of Mobile Previews LLC, a New York City company that promotes movies and other products by creating engaging experiences that consumers can access on their mobile phones. “I also link to it to help build up my list of followers. The cost is nothing but a little thought power.”

2. Turn the back of your business card into a promo. Can’t afford to advertise in print or broadcast? The back of your business card is advertising real estate that you own, and, best of all, it’s free. By featuring a photo of yourself, a picture of your product, a 10 percent off coupon, or a list of services that your company provides, you can turn your business card into a powerful marketing tool. “That extra info can be a great conversation starter,” says John Fletcher, president of Johnny Agency Inc., a New York City graphic design firm that creates marketing materials for growing businesses. “It also allows you to convey important facts about your business during those precious moments when you have someone’s attention.”

3. Revamp your website. If you’ve already spent the money to build a website, it may be time for a facelift. Rather than spending big dollars to redesign your home page, try creating a series of low-cost “landing pages” to test different ads and offers for your products and services. “Your website is not a brochure,” says New York City consultant David Ronick, co-founder of Upstart Bootcamp, an online school for startups. “Most people today come in through the back door and through blog posts.” Be sure that your site is easy to read — not only for people browsing the web through their computers but accessing your site through their iPhones and BlackBerrys, too.

4. Position yourself as an expert. There’s nothing that builds your brand faster than free advice. Whether you’re a landscaper, a handbag designer or a dog walker, your expertise will have customers knocking at your door offering to pay you to help solve their problems. “The key is to give away thought leadership to build an audience,” Ronick says. Once you find out what works, go out there and replicate it.” One of Ronick’s clients, a luxury outsourced concierge service, regularly tweets about hot, new restaurants, clubs and bars, generating new leads from prospects who need the company’s service.

5. Swap lists with sites that have similar demographics. There’s no reason to pay big money to rent a mailing list when you can get sites that attract a similar audience to let you borrow theirs for free. Ronick says that one of his clients, a site that publishes a newsletter about women in finance, used this technique to build a list of 50,000 subscribers. “They did lots of trades that didn’t cost them anything out of pocket,” he says. “The key is to create great content and give it away for free on the web.” Be careful to respect the privacy of the subscribers whose e-mail addresses are on the lists you swap, or you may get labeled a spammer by your ISP. To avoid trouble, ask the site whose list you’re borrowing to handle the mailing itself and to include a link to your site that their subscribers can click to sign up for your newsletter.

6. Get a vanity phone number. Just because the phone company stuck you with a random number when you signed up for their service doesn’t mean that you’re saddled with it for life. Torya Blanchard, a former French teacher who opened Good Girls Go To Paris Crepes LLC in Detroit two years ago, was looking for ways to bring customers in the door when she found Ring Ring LLC, a company that provides small businesses with vanity phone numbers. Blanchard picked 1-877-PARISCREPES, and her phone has been ringing off the hook every since. “I’ll never give up that number,” she says. “That’s how people know us.” The cost: approximately $25 a month, says Aaron Beals, Ring Ring’s CEO.

7. Test, measure and test again. Just because you’ve found a marketing strategy that seems to be working doesn’t mean that you should blow your entire budget on, say, business cards or vanity phone numbers. Test, measure and test again before rolling out your campaign. Google Analytics will measure your traffic for free and tell you where your site visitors are coming from and which search terms they’re using to find you. “Test every piece of your marketing campaign,” Ronick says. “Once you’ve found the right formula, follow it.”

The bottom line: You don’t need to have a big marketing budget to make a big splash. A tweak here, a tweak there, and soon your phone will be buzzing with new business.