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Why entrepreneurial optimism might miss new products


About the process of creating new products

Why entrepreneurial optimism might miss new products
By Ronn Levine

A colorful graphic depicts a runner in a starting position with banana peels under his feet. A cartoon shows two men from the Middle Ages walking by Stonehenge when one says, “It’s a pity they had to stop work on the new mall.”

The article accompanying these images focuses on entrepreneurs, startups and new ideas. It was written by James Surowiecki in a recent New Yorker magazine (It's just one page.) I read it a day after a great discussion emerged on the SIPA Listserv about new products and how easily they can get derailed. (Any employee of a member company can be on the Listserv. It’s relevant and easy.) Yesterday’s best lines for easy derailment include:

- We'll have an intern do it (think social media);
- It's not compatible with our technology or culture;
- We tried something like that a while ago;
- Why would anybody buy that? It's already available for free;
- Who’s going to do that?

That so many ideas get shot down easily plays against what’s thought to be the traditional nature of entrepreneurs as risk takers. But Surowiecki would argue otherwise. He writes that although the 18th-century Irish-French economist Richard Cantillon coined the term “entrepreneur” as a “bearer of risk…studies of entrepreneurs find that, in general, they’re as risk-averse as everyone else. Only when it comes to starting a business are they daring. And that’s because the fundamental characteristic of entrepreneurs isn’t risk-seeking; it’s self-confidence.”

He cites studies that say that not only are entrepreneurs overconfident “in their ability to prevent bad outcomes” and to succeed, but also in predicting their own life spans. “Entrepreneurs may recognize that, in general, starting a business is risky,” Surowiecki writes. “They just believe that their innate skills will win out.”

It’s funny that when it comes to new products, we would let risk and easy excuses trump these "skills." Although Surowiecki makes fun of today’s “fail fast, fail often” mantra—he cites FailCon, a conference about the power of failing—I think you tend not to notice failures as long as there are successes. I recall ESPN making a big deal out of their new “Chatter” line—kind of Twitter by phone. Now they’re back to just asking you to tweet—no harm done.

One particularly interesting response yesterday came from John Yurkanin of RigData in Houston. They won a gold SIPAward in 2013 for their mobile app that showed the location and status of all working oil and gas drilling rigs in the United States. It was a huge success and one where someone did risk doing something new. He wrote about the difficulty of trying to preserve full-scale reports when the customer base really wants sound bites. “This is where we have found using mobile delivery a good use of limited real estate and the cannibalization risk reduced.”

The idea of trying to appease the masses was one of the key issues raised, perhaps best put by my colleague here Luis Hernandez. “The corollary to watch out for is the tendency to then pile a ton of additional content or features onto the new product to try and expand the market, thus creating the problem you described of selling stuff to people they don’t really want.”

We’ll buy cookbooks or travel books to get information that we could get free, but are then saddled with extra information that we may not want or need. Would I prefer buying a travel book only on the region I was visiting? Of course. So if someone can send me that digitally, all the better. Though I’ll stand by the traditional postcard as opposed to a digital version.

Surowiecki concludes by saying that entrepreneurial optimism is a good thing—probably more for society than for most companies. Instead of safety in numbers, he’s pushing progress in numbers. Judging by our Listserv discussion, the same thinking should go for new products.