Stop Predicting, Start Experimenting

April 17, 2011

It’s becoming more and more obvious to me that the real secret of success isn’t in making accurate predictions then acting on them. Instead, it’s in experimenting with various approaches and reinforcing those that seem to be working. Success comes as the result of trial and error and doubling up on the ideas that work, rather than the common belief in prescience and acumen. It also helps to have a good dose of resilience and reserves to face the inevitable crises that strike, seemingly out of nowhere.

Why do I say this? Well, the more I look at the world, whether in business, economics, society, or politics, the less faith I have that someone actually knows what’s going to happen next. Just look at the most recent crisis in the Middle East and North Africa. Who, on January 1st 2011 predicted that the Arab masses would erupt in protest and rebellion later that month? Who saw that this movement would spread and would bring down the dictators Hosni Mubarak in Egypt and Ben Ali in Tunisia? Who saw that a popular uprising in Libya would turn into a civil war and that the Western powers would start bombing the country in support of the rebels?

We can go on with for a long time. Yes, some of you will say that there were voices in the wilderness warning about the impending popular crisis in Arab countries. The same can be said about the warnings prior to the financial crisis in 2007 and 2008. We can say the same about any crisis retrospectively. But, the important point is that few people listen to these voices of doom, and even fewer act on their prognostications.

The more I work with successful entrepreneurs and executives, the more I realize however that their success isn’t the result of predicting what would happen next. Instead, they have invested their resources in trying out different ideas and approaches. One definition of an entrepreneur – and this could be in any walk of life, not just business – is someone who reallocates resources from low productivity areas to higher productivity areas. This is true, but it is also interesting that true entrepreneurs are the people who don’t pretend to know necessarily where the high productivity areas are. They say, “Let’s try this and see what happens.” When they see something working, they add resources and attention to see if it can keep growing and become a major line of business or a major initiative. When the idea breaks through, they pour in even more resources so it becomes a viable line of business.

In other words, successful entrepreneurs have a way of organizing serendipity. They proceed by trial and error, and then reinforce their successful experiments. They don’t try to predict the future, because even if they believed it was possible to do so, they prefer to invest in a system with a higher probability of success, probing and following the path of least resistance.

The business darling of the day is, of course, Apple Inc. It’s easy to look back in hindsight and say that Steve Jobs was prescient and could see where the market and consumer tastes were going. The reality is that Apple has experimented a lot with different products and services over the decades. Everyone sees the iPad now, but remember the Newton handheld computer? It was basically a flop (apart from some die hard fans of the device), but Apple learned a lot from the experience. Remember when Apple introduced the iPhone in 2007? There was no camera and no App Store. They put the product on the market to see what would happen. They might have thought they had a winner, but they weren’t really sure until sales took off and it became the cool device to have. It’s only in 2008 that the App Store came out, and that is what allowed the company to build an ecosystem around the iPhone, which propelled sales and repute. This is a perfect example of the approach I’m advocating here. Don’t predict; experiment.

Much of the literature on business management and strategy says the exact opposite. Books like Built to Last, Good to Great, Blue Water Strategy, and others in the genre are fables. They tell and sell stories about successful entrepreneurs and strategists who were prescient and who had a recipe for success. Unfortunately, most of those recipes either can’t be reproduced or are idiosyncratic to the companies and their leaders, or they are a product of a certain time and place. There is no universal applicability to these models.

On the other hand, trial and error, experimentation, probing for openings, and following the path of success (and least resistance) have a proven track record. This method requires perhaps a bit more chutzpah than trying to follow someone else’s recipe, but it allows one to instead create a recipe for success. Even better, it allows one to develop new recipes as the times and circumstances of the world change.

© 2011 Richard Martin. Reproduction and quotes permitted with full and proper attribution.

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