Now that the Federal Reserve has made borrowing easy again, executives eager to fund new and innovative corporate initiatives would be wise to take a break. Even as cheaper funds become available, the prudent calculus surrounding “big bets” remains: think big and bet small.
At face value, this seems counterintuitive, especially in today's rapidly evolving digital environment, where those who bring the next big thing to market first often get the biggest piece of the pie. Masu. Even if you're sitting in your corner office, what onlookers often overlook is that most highly successful innovations emphasize strategic planning, commitment to approach, and structuring of new products and services. It's about running within a specific framework that creates clarity. Huge investments are required to generate exponential profits.
Among the proponents of this methodology is none other than Jeff Bezos, who famously interviewed Internet investor-turned-journalist Henry Blodgett, in which he said, “I don't want to run a company.'' “I don't believe in the bets I made.” He went on to say that this kind of “hurray Mary” is what organizations do when they get desperate and aren't constantly innovating internally, putting pressure on small bets to test them before they become big ones. I explained that it was something I would do.
Bezos took this idea and created many of the elements of Amazon's business, which later became a huge company. Amazon Marketplace, Amazon Web Services, Kindle, and Prime all started with relatively small investments. Bezos didn't “bet the ranch” on any of these, but he envisioned a major guiding vision for each.
So how can other executives follow Bezos' example and resist the lure of cheaper funds and the urge to “eat candy just because it's free”? You also need the wisdom to build urgency and responsibility into your thinking, rather than simply removing all guardrails to demonstrate agility.
It also puts at your disposal some advanced strategies that go beyond most approaches to testing business concepts, helping your team gather the information they need as quickly as possible with limited investment. You'll be able to truly take advantage of the “think big, bet small” strategy. “Philosophy.
These advanced strategies include:
Build up project risks and hypotheses to neutralize them. Teams that advance big bets often do not adequately analyze the risks and levels of risk inherent in each project, and their anticipated ability to eliminate them, increasing the likelihood that the bet will not pay off. Masu. To avoid this scenario, leaders must be completely clear about the assumptions they expect for the project's success and the relative importance of each assumption. This can be achieved through a stack ranking system, ensuring that high-value risks rise to the top and get the focus they need, while also ensuring that teams are not bogged down with issues that have the least impact on project outcomes. Prevents.
Strategically prioritize test experiments for your project. Green-lighting test experiments for the wrong project wastes valuable time and resources and gives competitors the space they need to be first to market. Teams can determine the best experiments to prioritize based on individual performance, target high-value hypotheses, eliminate critical ambiguities, and require minimal investment. This methodology provides a way to streamline and optimize value delivery and provides strategies that leaders can use in addition to their own business intuition.
Seek high returns for your testing work. Rather than simply designing test experiments for a project, leaders must find an approach to testing in the fastest possible time (up to three months) while generating the necessary feedback through prototypes, proof points, surveys, and more. The goal is to achieve a high return on experimentation and effort. , ensure you have the information you need to decide whether to proceed with the proposed project. Wise leaders who support this highly efficient approach often avoid creating detailed work plans and budgets for each experiment, skip lengthy exercises that create false precision, and instead We collect only the most relevant information.
Cheap capital is never a bad thing, but it can create an environment where executives, especially those with “use it or lose it” budgets, rush into change programs without the necessary plans and strategies. . They rush to vague definitions of problems and envision future states. There is no clarity.
Maintaining a scarcity mindset, even in the face of lower interest rates and available capital, provides a critical advantage for executives looking to stay ahead of their competitors. Especially if you have a clear, experiment-driven approach to change that maximizes your company's profits. Organizational time and resources.
