The Chicken Farm bias
By Luc Albinski (MBA ’95)
Two thousand chickens are slaughtered worldwide every second. Most, about forty billion or so, live in factory farms and enjoy an unenviable life most certainly, but not an unpredictable one. An unhealthy, carbohydrate heavy diet is served with mind-numbing predictability for forty-one days. On the forty-second, the chickens are shackled upside down and their throats are slit. For a forced-fed chicken, an intelligent and social bird, the regularity of the first forty-one days creates a compelling sense that next day will be drearily similar to the claustrophobic, overcrowded conditions of days gone by. Each successive day confirms this truth until, of course, the forty-second day does not.
Investors are victims of the same Chicken Farm bias. They believe that the future will not be very different from the past and excessively discount the probability of very different events occurring.
About the Author
Luc is the co-founder and co-managing partner of Vantage’s mezzanine funds as well as being one of the two executive members of the mezzanine funds’ investment committees. Prior to joining Vantage he spent time at several well known management consultant firms, the International Finance Corporation (IFC) and Brait.
He has a Master of Business Administration from the INSEAD business school in Fontainebleau, France and an undergraduate economics degree at the Institute for Political Studies in Paris.
How to Become More Innovative
The 4 DOs and DON’Ts
by Jenny Tyobeka
We know that we all have the propensity to innovate, although some of us are either too demotivated to activate our innovative selves, constrained by organisational barriers, or too ingrained in our ways of acting and seeing the world. Whatever the constraints we face, there is a growing imperative for organisations to find new solutions to old problems and to create new products for emerging consumer demand. As consumer markets become more global, unpredictable and technologically disruptive, the need to innovate has become ever more pressing for differentiation and continued competitiveness.
Differentiation in the presence of intensifying consumer demand uncertainty is a tall order. It is therefore encouraging to know that innovativeness can be learnt, and that it is possible to identify processes and behaviour that promote or constrain it.
Here are my 4 key DOs and DON’Ts to becoming more innovative:
1. Implement an iterative process of discovery to test and validate your assumptions about the consumer problem you are trying to solve; how big it is; and the appropriateness of your solution and business model for taking it to the market
1. Use the traditional, linear, milestone- based stage gate process of decision-making for new product development, where progress depends on achieving the previous milestone.
2. Employ a divergent approach by identifying and testing as many promising ideas as possible
2. Converge on a single promising idea and defend it tooth and nail with consumers, instead of listening intently to their feedback
3. Get into the market as soon as possible with the aim of validating your ideas rapidly as you go along, and iterating based on consumer feedback to reduce uncertainty and costs.
3. Try to manage uncertainty of consumer demand by aiming for desk-bound perfect planning & execution.
4. Aim to learn fast from consumer insights, and fail fast and cheaply by constantly iterating as you progress.
4. Engage in unnecessarily lengthy internal decision-making, locking in ideas not validated by consumers, that may result in costly failure.
To learn and practice an implementable process for innovating in your business, refer to Professor Nathan Furr’s on-line programme, Innovation in the Age of Disruption
Drawing on his own prolific research, numerous publications and interactions with Silicon Valley icons, Professor Furr has ‘nailed’ the innovation process in this programme, making it easy to master and implement, to effect change, in our present highly uncertain, digitised markets.