The most common challenge facing innovation teams is not lack of talent, lack of insight or lack of ideas — it’s lack of optimism. Without it you do not stand a chance. If you don’t believe you can change your market, it will very quickly become a self-fulfilling prophecy.
Opinions vary as to exactly what percentage of start-ups fail, but we can say with confidence that failure is the most likely outcome for any new business. Most rational people don’t go anywhere near start-ups for that reason. That’s the contradiction at the heart of entrepreneurship: companies are founded by people who are simultaneously rational enough to create a viable business but not so rational that they reject the poor odds of success in the first place. This contradiction can only be explained by one thing: optimism. It’s what gives you the conviction to never lose sight of the problem you are trying to solve, and the determination to work through any challenge along the way.
In corporate innovation, the optimism deficit manifests itself in a variety of ways, from under-resourced projects and a constant churn of ideas, to endless stage gates and unrealistic revenue targets. It is entirely rational to be pessimistic about innovation — most projects will fail, especially if the only measure of success is net revenue. But walk into any innovation agency and its consultants will tell you that their clients routinely dismiss ideas that are subsequently realised by other smart people who just happen to be a little more optimistic than they were at the time. Nothing matches pessimism for crappy returns.
One thing we like to do at Paperhouse is to show our clients the major start-ups entering their space, and point out the investment dollars each of these start-ups has attracted. The first response is usually, “Christ, how are we going to compete against THAT?!” The second response is usually to look at the ideas we are currently exploring with a renewed sense that one or two of them might actually present significant opportunities. In this way, the biggest benefit of monitoring start-up activity is not that it tells you HOW your market is being disrupted, it’s that these start-ups offer evidence that disruption is even possible at all — if all those investors are lining up to pour money into the market, there must be some pretty major opportunities to be had after all.
Optimism is a state of mind, but it is also a cultural phenomenon. Some people do seem to be innately more optimistic than others, but even the most optimistic person will struggle in a culture of pessimism. They say you are the average of the five people you spend most time with, and the same goes for innovation: if you surround yourself with people who don’t believe in innovation or in your personal chances of success, you are extremely unlikely to succeed. Their pessimism will become infectious and you will almost certainly start to doubt either your idea or your ability to execute it (and probably both). Instead, build a culture of optimism by surrounding yourself with other optimists.
‘A culture of optimism’ is a useful short-hand for explaining why so much innovation happens in the Silicon Valley. Optimism on the West Coast is totally normalised, because it is hard-wired into the cultural landscape — nowhere else on earth has a higher population density of start-ups, and therefore optimists. And nowhere is this more evident than at YCombinator, the leading accelerator programme for high-growth companies. Here’s how one alumnus, Harj Taggar, described his experience there:
“When you’re having dinner every week with people like Evan Williams [co-founder of Twitter], Paul Buccheit [inventor of Gmail] and Paul Graham [founder of YCombinator], it suddenly dawns on you that there’s actually a chance you can succeed despite stupid odds. Logically speaking you can argue that I’m looking at it from a skewed data point — for each of these success stories there’s a 100 failures, you might say. And you might well be right. The point is that sometimes you just need to forget what logic tells you and just go after something because you want it that bad. YCombinator gives you the belief to do that by placing you in the perfect environment.”
Being an optimist does not mean submitting to blind faith, and it does not mean that you should wilfully ignore the challenges you face or potential flaws in your thinking. It means recognising the difference between scepticism and cynicism. As an innovator, scepticism is your friend: it will challenge your views and help you refine your approaches. Cynicism is your enemy: it will kill your ideas and offer no alternatives, and you must banish it from your world.