Playing the innovation casino.
Playing the innovation casino.
Darrell Velegol, PhD
Do you ever think about your business, your company’s innovation, your investments, or even your life, as playing in a casino? I read a story recently about a tornado, and after the tornado, there was a squirrel impaled to a tree by a drinking straw! The squirrel didn’t wake up that morning expecting that to happen. There are probabilities of many things happening, some awful and some exquisitely wonderful.
In a casino there are odds of winning, odds of losing, and payoffs for winning. You place a bet on a number at the roulette wheel, and you have a 1/38 chance of hitting your number (p = 2.63%). The house keeps 5.26%, so the payoff is 35:1 (b = 35, plus then you get your money back). If you lose, then your entire bet is lost (a = 1). If you enter the casino with $1000, and bet 10% of your bankroll for each of 100 spins, you’ll “on median” leave with $536. So you’ll lose about half. You could leave bust, you could leave rich, but median is $536.
Here’s are two keys with roulette:
1) you RECOGNIZE that you’re actually playing a game of chance in a casino, and
2) you KNOW (or can know and should know) the numbers from above (i.e., p, a, b) when you start!
Of course, while innovation is a “game of chance”, it is a FAVORABLE game for skilled teams. You can increase your skill and so increase your odds of winning. Imagine playing a wheel with 5 numbers instead of 38. You still have to know how much to bet from game to game, but now you could leave the casino with a median of $1247 after 100 spins. About +25%.
Do YOU track your company’s numbers in innovation, so that you know how to play? And if you know the numbers, do you know how to play so that you can win?
