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Finding Unseen Opportunities

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How can we solve problems differently than we do currently? Is there a way that will allow us to think differently? Is there a way to see unseen opportunities we can chase? And how do we know what we pursue is innovation at all?

Lately, I have been reading and re-reading Charlie Munger’s “Poor Charlie’s Almanac” and listening to Rory Sutherland’s podcast, O’Behave, which is about behavioural economics. And somehow ideas of these two men clicked in my head. And I came across some interesting ideas that might be useful in a daily design decision making process.

One of the central questions I was trying to answer is, how can we solve problems differently and see if what we found or solve is innovative?

The current process most of us use is a straightforward one. Define the problem, do research, and find solutions during the discovery stage. Then you design prototypes, you test it, and you build it.

But then I read what Charlie Munger (vice chairman of Berkshire Hathaway) wrote, and his approach seemed interesting to me. It looks like a “preventing system” or thinking in reverse.

 
The way complex adaptive systems work, and the way mental constructs work, problems frequently get easier to solve through “inversion”. If you turn problems around into reverse, you often think better .
— Charlie Munger
 

You must think in reverse

Indeed, many problems can’t be solved forward. And that is why the great algebraist Carl Jacobi so often said, “Invert always invert.” And that’s also why the Pythagoreans thought in reverse to prove that the square root of two was an irrational number.

It is not enough to think problems through forward. You must also think in reverse, much like the rustic who wanted to know where he was going to die so that he’d never go there.
— Charlie Munger

How to apply it?

Munger gave a great example of how this thinking can be applied in many ways. For example, you may ask yourself “How can I help India?”. Instead, you should ask “How can I hurt India?”. So this way you will see which actions will lead to a bad end so you can initially avoid them. This way you will have one of your answers to your central question.

And if given proper thought, it can be applied to product design or business overall. “How can I improve our product?” well in this case we should ask ourselves “How can I hurt our product?”. And your answers may be:

  • By deviating from the vision

  • By adding too many features to it

  • By making incremental changes

  • By listening to the wrong customers

  • Sacrificing functionality over beauty

This is an entirely different perspective of looking at things. It gives a different context — a reversed one. So you seek good judgement mostly by collecting instances of bad judgement, then you think over ways to avoid such outcomes.

 

Test counterintuitive things

Munger’s approach is one, but sometimes you want to solve a problem by bringing something new to the game. So while listening to Rory Sutherland’s podcast, I came across an interesting idea he shared. He said that we must test counterintuitive things because your competitors aren’t.

When you test counterintuitive things, that’s when you have a chance to discover small stuff that makes a big difference for your product or company. It’s a much more valuable discovery when you find out something counterintuitive, rather than when you confirm something obvious.

Human beings tend to believe that only big things have a significant influence and smaller ones don’t (the same case I mentioned in my article — Why Small Teams Win And Big Ones Fail). So this way we look at big incentives more than at small ones. We are not looking at little things that have a big effect in comparison with bigger ones. Why? Because they are counterintuitive. And that took a while until it clicked.

 
The little things might turn out to be the big things. Make the ordinary, extraordinary. Find the hidden value. Our job is to make the new familiar and the familiar new .
— Rory Sutherland
 

But then a reasonable question would be — if I apply everything I just read, how do you know that you have designed something innovative? (unless you have been doing incremental changes) How can you indeed make sure that what you have found is something that is going to make an impact?

Innovation changes behaviour

Another interesting insight Rory shared is the definition of innovation given by Stewart Butterfield’s, co-founder of Slack. And it is the best definition of innovation I’ve heard so far. He said that:

 
Innovation is meaningful only when it changes the human behaviour.
 

The only useful metric for how successful innovation is, it’s the extent to which it changes behaviour. No little innovation has altered behaviour a lot, and not meaningful innovation has changed behaviour a little. So when you design something clever, but there is not change, this means it’s an invention. It may be something smart, but if the behaviour remains the same, then you did not innovate.

 
Eugen Esanu