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Cover of 'Why not'

Why not

Barry Nalebuff, Ian Ayres

Everyday ingenuity for all problems

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Description

Innovation doesn’t require advanced technology. Practical solutions to everyday problems, American ingenuity-style, are often simple refinements of daily life. As Einstein said, "The whole of science is nothing more than a refinement of everyday thinking." Good ideas are all around if we take time to notice.

The myth is innovation requires genius. While Edison and Einstein were unique, most innovation happens gradually, built on existing knowledge. Guidance helps creativity. We must question assumptions, think critically about deficiencies, imagine improvements. The spark comes when we connect a solution to a problem. With an open and curious mindset, we can find innovations in the familiar by refining everyday thinking.

Table of contents

01

New thinking approaches

Most new ideas are not completely original themselves. Instead, commercial innovations typically combine existing problems and solutions. The key is knowing when and how to apply two fundamental innovative thinking methods. First, identify problems people experience and relate to them personally. Note the inconveniences and irritations others ignore. Rather than accept the status quo, decide to address the problem, beginning an iterative cycle.

Once a problem emerges, observe current self-directed solutions. Though imperfect, these establish a practical foundation for refinement. Enhancing what people already do enabled numerous successful products and services. Still, this approach has limits. Consumers with scarce resources tolerate minor hindrances. Enhancements risk diverting attention from unfamiliar but superior solutions. Two techniques overcome these obstacles:

Consider an ideal solution for a customer without budget constraints. Though impractical due to cost, this thinking encourages bold ideas possibly amenable to cheaper alternatives. For instance, Howard Hughes bought a TV station to view films on demand, while consumers now achieve similar utility more affordably with VCRs and DVD players.

Identify systemic inefficiencies and share benefits equitably. For example, Blockbuster’s revenue sharing deals with film companies addressed limited new release availability. Sometimes subtle problems warrant reversing direction to apply existing solutions. Two methods facilitate this:

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02

Four instruments for resolving dif­fi­cul­ties

Mechanism #1 – no limits – final result

Observing how customers use or misuse products can uncover new applications, but this method often overlooks those without the means to innovate. An alternative strategy involves imagining solutions for an exceptionally wealthy individual with no financial constraints. This "ultimate solution" mindset can lead to creative ideas that, while initially unrealistic, can be adapted into affordable and accessible options for the general public. For instance, to avoid unwanted late-night calls, a wealthy person might employ a 24/7 personal staff, but a practical adaptation for the masses is an automated phone system that filters calls after hours.

Similarly, instead of hiring an assistant to manage the complexities of mortgage refinancing, a more accessible solution could be loans that automatically refinance based on certain criteria. Appointment reminders, too, can evolve from personal assistants for the wealthy to automated or web-based services for the general public. This approach encourages thinking beyond the limitations of typical consumer constraints, fostering innovation that might not otherwise emerge. By first envisioning solutions for those with unlimited resources, it becomes easier to adapt these high-end solutions into practical, standardized offerings that benefit a wider audience, expanding the realm of possible innovations.

Mechanism #2 – internal examination – where is discomfort?

Incentives aimed at shaping behavior often miss the mark by being too narrowly focused, leading to unintended consequences. For instance, auto insurance premiums that don't account for mileage inadvertently make low-mileage drivers subsidize those who drive more. A more equitable approach would be to charge insurance based on miles driven, possibly through fees on tire purchases or at the gas pump, though this might require government action to implement industry-wide.

Similarly, car theft prevention measures like "the club" only displace theft to unprotected vehicles, whereas systems like lojack help catch thieves, benefiting everyone. To encourage the use of such systems, government-led incentives such as tax breaks or insurance discounts may be necessary. In advertising, charging rates based on viewer engagement could motivate advertisers to create more entertaining content. Airlines, too, could be encouraged to provide a better customer experience by standardizing flight times and focusing on baggage delivery rather than just plane arrival times.

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03

Thoughts on practical application

To implement an innovative idea successfully, you need more than just a good idea - you need buy-in from others. Trying to start a new company to launch an untested concept is risky. In most cases, your best bet is to sell your innovative idea to an established firm with the resources to develop it.

That means you need to become skilled at persuading decision-makers to get behind your ideas. Here are some tips: - Rather than get frustrated by limits on your authority, focus on what you can do to create change. Even small steps forward are progress. Don’t let a lack of decision-making power stop you from taking action where you can.

- Come up with a brief “elevator pitch” summing up what you want to achieve. While no short phrase can do justice to a complex concept, a clear and succinct message can capture attention and introduce your idea. The more clearly you can explain your reasoning, the more impact even a short pitch can have.

- When presenting an innovative idea, try to connect it to things your audience is already familiar with. Business leaders are more likely to embrace ideas that extend existing offerings than radically new concepts with no proven market. Tailor your pitch to your listeners’ current knowledge rather than making them learn a lot of new terminology.

- Carefully consider who to pitch and when. Sometimes it's more effective to build support elsewhere first rather than approaching top decision-makers directly. Learn to judge when it’s better to lobby for change before pitching an idea versus making a case on its own merits.

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