Strategy: from ideas to value propositions to business models

Ideas are easy. Ideas are free, they’re everywhere. The hard thing is turning ideas into value propositions that customers want, and business models that can scale.

How many projects do I need to invest in to create the next growth engine?

It turns out, you’d actually need to invest in 250 projects. You start with small bets first, and then gradually you filter out those ideas that don’t work, not based on a beautiful powerpoint presentation but based on evidence from the market. And gradually you’ll get to those that win. So the big lesson here is that you can’t pick the winners. You need to invest in “the losers”.

Where do I take this data from? … If you look at early stage venture investment, which is a great proxy, 65 percent of all ideas fail. 25 percent return a little bit of capital, so you invest 100 you may get 500 back. So where do the outliers come from? It’s from a small number … it’s basically four out of a thousand, or one out of 250 [that provide massive returns].

So if you want growth to happen, you need to create the playground, the boundaries, for these ideas to emerge. You need to allow people to experiment and have projects in parallel, so that you can win. That’s what strategy is about: creating the conditions for ideas to emerge. It’s not “hey this is a good idea, we make a big bet, and we execute.”

There are only a few companies in the world that have created these conditions, and it’s not a miracle or a coincidence that Amazon has grown so quickly, because when you have a leader who says “Amazon is the best place in the world to fail” and he admits that “invention and failure are inseperable twins,” you have a completely different culture for those ideas to emerge.

Alex OsterwalderGlobal Peter Drucker Forum 2018

Stability: Burke and incremental change

Steve Jobs is right about changing the world.

And here’s Edmund Burke with a counterpoint – for society read ‘society’, but also, ‘family’, and ‘your organisation’:

Society is indeed a contract. Subordinate contracts for objects of mere occasional interest may be dissolved at pleasure—but the state ought not to be considered as nothing better than a partnership agreement in a trade of pepper and coffee, calico, or tobacco, or some other such low concern, to be taken up for a little temporary interest, and to be dissolved by the fancy of the parties.

It is to be looked on with other reverence, because it is not a partnership in things subservient only to the gross animal existence of a temporary and perishable nature. It is a partnership in all science; a partnership in all art; a partnership in every virtue and in all perfection.

As the ends of such a partnership cannot be obtained in many generations, it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born. Each contract of each particular state is but a clause in the great primeval contract of eternal society, linking the lower with the higher natures, connecting the visible and invisible world, according to a fixed compact sanctioned by the inviolable oath which holds all physical and all moral natures, each in their appointed place.

Edmund Burke – Reflections on the Revolution in France


The point?

Stability counts. It’s a product of history, built by those who went before us. The strongest systems grow incrementally  and through iteration, rather than flat-out revolution.**

Too much change will leave your team feeling adrift and uprooted, uneasy and struggling to focus. It’s great to get rid of things that cause friction and slow us down, but change too much, too fast, and things get slippery. It can be hard to keep a grip.

We’re just as blind to many of the things that hold us together as we are to the things that hold us back. So by all means, bounce – but don’t break the trampoline.

**Come back another day for tea with Hayek

In their hands

Make something people can use.

Put it in their hands.

See what happens.

If they’re eager to pay – attention, time, money – you’re onto something.

Watch them. Listen to them. Tweak it. Make more of it. See what they think.

If they tell their friends – and if their friends tell their friends – then you’ve got it.

What change do you seek in the world? Who are the people you seek to serve?

You’ve got it when they’ve got it.

You’ll know you’ve got it when you meet someone for the first time, and the thing you made is already in their hands.

What it takes: a body of work

What does it take to develop as a writer, artist, filmmaker, activist, programmer, blogger, teacher, chef, athlete, landscape gardener, leader and manager, academic?

Whatever else you do, you’re going to need a body of work.

My two favourite children (those would be mine – simultaneously the best and most annoying children I know) love to draw. And they’re getting better at it.

This is how:

body of work childrens drawings

They draw pretty often, and they draw a lot. Then they draw again.

They’re far from artistic geniuses, but they have this at least in common with Da Vinci (7,000+ pages of notebooks) and Picasso (something like 50,000 artworks, of which we remember a few).

Do it now.

Be prolific.

Build, measure, learn

This post is a leap from Rule 2 of bootstrapping the non-profit: Do it Now.

This is such a key idea, and so interesting and relevant to Do it Now, that I thought I’d do something about it like, write now.

The idea is that when you’re developing a new business or organisation, there is so much that you don’t know that planning has less value – it will inevitably change when you know more.

Because of this, your focus needs to be on trying things out, working with what you do know – and your best guesses – and testing them out in the real world.

So we get the lean startup cycle:

The Lean Cycle
From Open Classrooms: The Learn Startup (this is supposed to be an embed but it isn’t working for me!)

The relationship between this and Do it Now is that the fastest way make progress – even if it’s only progress in knowing what not to do – is to go through this cycle quickly. One of the best ways of increasing your cycle speed is to take action – now!

Counter-intuitively, the more uncertain a situation it is, the more useful this approach – and cycle speed – can be:

When a project can be approached with a high degree of certainty, the best activity is to plan. As we have high confidence that the plan is likely to succeed, the best strategy is to execute what we know will work well. The focus can therefore be on executing the plan and monitoring progress.

When a project carries a high degree of uncertainty, the best activity is to learn. As any plan would make too many assumptions that would be hard to justify. The best strategy is to increase the speed at which we learn until we have discovered which plan would work the best. The focus must be on learning and discovery and checking any assumptions that we have.

Open Classrooms: The Learn Startup

Bootstrapping the non-profit organisation Rule 2: Do it Now

This is the second in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Rule 2: Do it Now

Do it now. Not later, not next week, NOW. It’s better than later.

In the non-profit world:

Still do it now

Not much to add on this one. A bias to action is critical, and all things being equal, now is far better than later.

This blog is a great illustration – a month and a half ago I committed to shipping a blog post every day for 100 days. I would set the bar low if I had to, as long as I got something done. Every day.  I’m at 60 posts as I write this, and it dawned on me that it would have taken me an entire year to get this far if I’d committed do a post a week.

In Lean Startup terms, doing it now is a key way of increasing your cycle speed. They might be small steps, but you get something done, you can review it, you can do it better next time as you build-measure-learn. See the next post for more on this.

I guess a caveat for the non-profit world is that you need to tread carefully if we’re dealing with vulnerable people.

But do it now doesn’t mean ‘be a bull in a China shop’ – it just means being commited to taking action, to doing the next thing now.

If you know what you need to do next, then it’s easy – do that, or at least do the smallest next part of that that you can.

If you don’t have clarity about what to do next, the next thing to do is to find out. Do some research. Find the name of three papers. Get hold of them. Make notes on one. Email the person who wrote it to thank them. Each one is a tiny push of the boat (or flywheel, if you’re a Jim Collins fan), giving you a little bit more momentum and making it easier tomorrow.

Rule 2 says “I will not go to bed tonight until I have done X.”

Rule 2 of bootstrapping the non-profit

Do it now.

Thanks, Seth.

The meat is on the street

John Wimber, founder of the Vineyard movement of churches, wasn’t renowned as a systematic religious teacher.

Apparently people would ask him “John, when are you going to teach us the deep and crucial stuff – where’s the meat?”

And he’d answer: “The meat is on the street.”

That is, “Go out into the world. You will learn the deep truths of faith by doing it.”

Books, podcasts, blogs are very useful in learning to make positive change in the world. Ideas are wonderful tools.

But we learn our most important lessons by doing – by taking action.

The meat is on the street.


A crappy bridge

I didn’t manage to photograph the bridge, but I’ll post one of a similar bridge next time I see one.

It was a pretty sorry affair over a murky stream, just wide enough for a motorbike. Bamboo slats, no siderails, a strangely drooping curve.

Crappy infrastructure.

But here’s the thing: that bridge is an act of will. It’s there because someone wanted to cross the river, and they made a bridge.

It’s easy to criticise crappy infrastructure in developing countries and not ask this question: who built it, for whose needs?

It’s easy to talk about cultutes of dependency, and there is often reason to. But ask yourself this question:

When was the last time you built a bridge?

Choose what you want

Before I can post about hybrids I need to post about selective breeding. People have been breeding plants and animals for thousands of years. Before modern science all you had to do was:

  1. Choose two plants or animals that you liked.
  2. Breed them.
  3. Repeat for thousands of years.

The results are amazing.

Look at this before and after shot of the watermelon from James Kennedy:

James Kennedy's wonderful watermelon.
James Kennedy’s wonderful watermelon

He has more of these on his website, which I’ll definitely be going back to.

The point for your organisation is this:

  1. Know what you want – vision, values, culture
  2. Choose what you want, and keep on selecting for it
  3. Make it explicit – explain what you’re doing to your team and others
  4. Iterate for days, months, years.
  5. Be fruitful

A word of caution. the wrong type of selective breeding can cause all sorts of mayhem and monstrosities.

The moral of the story: choose carefully, and be on the lookout for unintended consequences.

The valley of crappy data

Joost Wesseling from the Dutch Institute for Public Health and the Environment on the iffy quality of readings from citizen air quality measurement efforts using cheap sensors:

If we don’t do these experiments now, then we also won’t have decent sensors in five years, which is also what we are aiming at.

We have to go through this period where we have crappy data from crappy sensors in order to get better data from better sensors.

Joost Wesseling