Entrepreneur Book Club (pt. 3)

Great entrepreneurs require conviction, especially in the face of obstacles, naysayers and doubters. At Accel, we are inspired by an entrepreneur’s core belief in what they are doing, often despite seemingly insurmountable odds. This is why we started the Entrepreneur Book Club series, designed to provide insights and guidance for both entrepreneurs and the entire startup community.

Today, we dive into The Innovator’s DNA by Jeff Dyer, Hal Gregersen and Clayton M. Christensen, and Hooked by Nil Eyal.

Be sure to read Part 1, where — with the help of Block Shelf — we reviewed Steven Johnson’s Where Good Ideas Come From and Alexis Ohanian’s Without Their Permission, and Part 2, featuring Leaders Eat Last by Simon Sinek, and Steal Like an Artist: 10 Things Nobody Told You About Being Creative by Austin Kleon.


Hooked

By Nir Eyal

Successful technology companies build products that fulfill deep, often subconscious customer desires that lead to a habit-forming usage. Hooked dives deep into this topic, and explores the recipe to build an experience that connects a user’s problem to your solution.

The book explains how triggers, actions, rewards and investments play a key role in the success of habit-forming products like Facebook, Pinterest, YouTube and more. This book is for entrepreneurs, marketers and product teams looking to better understand how to build loyal users by eliciting influential behaviors.

Visit the author’s blog to learn more and purchase your copy of Hooked.

1) Your business must build habit-forming products

As infinite distractions compete for our attention, companies are learning to master novel tactics to stay relevant in users’ minds. Amassing millions of users is no longer good enough. Companies increasingly find that their economic value is a function of the strength of the habits they create.

2) These techniques can be manipulative

As companies combine their increased connectivity to consumers, with the ability to collect, mine, and process customer data at faster speeds, we are faced with a future where everything becomes potentially more habit-forming. Building habit-forming products is a like a superpower. If used irresponsibly, bad habits can quickly degenerate into mindless, zombie-like addictions.

3) Create a hook

The hook is an experience designed to connect the user’s problem to your solution. It’s about connecting the user’s problem to your solution with enough frequency to form a habit.

4) Develop frequency and utility

A company can begin to determine its product’s habit-forming potential by plotting two factors: frequency (how often the behavior occurs) and perceived utility (how useful and rewarding the behavior is in the user’s mind over alternative solutions).

5) Triggers move us to take action

New habits need a foundation upon which to build. Triggers provide the basis for sustained behavior changed. External triggers are embedded with information, which tells the user what to do next. When a product becomes tightly coupled with a thought, an emotion, or a preexisting routine, it leverages an internal trigger.

6) Internal triggers are powerful

Emotions, particularly negative ones, are powerful internal triggers and greatly influence our daily routines. Feelings of boredom, loneliness, frustration, confusion, and indecisiveness often instigate a slight pain or irritation and prompt an almost instantaneous and often mindless action to quell the negative sensation. As product designers it is our goal to solve these problems and eliminate pain.

7) Create a source of relief

All humans are motivated to seek pleasure and avoid pain, to seek hope and avoid fear; and to seek social acceptance and avoid rejection. The ultimate goal of a habit-forming product is to solve the user’s pain by creating an association so that the user identifies the company’s product or service as the source of relief.

8) Don’t overwhelm users with too many choices

More choices require the user to evaluate multiple options. Too many choices or irrelevant options can cause hesitation, confusion, or worse — abandonment. Reducing the thinking required to take the next action increases the likelihood of the desired behavior occurring unconsciously.

9) Make things easier

Any technology or product that significantly reduces the steps to complete a task will enjoy high adoption rates by the people it assists. The ease or difficulty of doing a particular action affects the likelihood that a behavior will occur. To successfully simplify a product, we must remove obstacles that stand in the user’s way.

10) Understand the Six Elements of Simplicity that prevent people from taking actions

Time refers to how long it takes to complete an action. Money represents that fiscal cost of taking an action. Physical effort is the amount of labor involved in taking the action. Brain cycles involve the level of mental effort and focus required to take an action. Social deviance is the extent to which the behavior is accepted by others. Non-routine refers to how much the action matches or disrupts existing routines.

11) Learn from psychology

Most people remain unaware of how heuristics help us make split-second decisions multiple times per day. Psychologists believe there are hundreds of cognitive biases that influence our behaviors. For product designers building habit-forming technology, understanding and leveraging these methods for boosting motivation and ability can prove to have a significant impact.

12) Introduce rewards with variability

Our brains are adapted to seek rewards that make us feel accepted, attractive, important, and included. By adding a factor of unpredictability to your product, you make users more intent on finding a reward. The unknown is fascinating. An element of mystery is an important component of continued user interest.

13) Affirm the freedom to choose

We are more likely to be persuaded to give when our ability to choose is reaffirmed. This disarms our instinctive rejection of being told what to do. When our autonomy is threatened, we feel constrained by our lack of choices and often rebel against doing a new behavior. Maintaining a sense of user autonomy is a requirement for repeat engagement.

14) Understand the power of investment

The commitments we make have a powerful effect on us and play an important role in the things we do, the products we buy, and the habits we form. The more users invest time and effort into a product or service, the more they value it.

15) Have purpose and help others

The most highly regarded entrepreneurs are driven by meaning, a vision for greater good that drives them forward. Align your work with a purpose that provides you with meaning and helps cultivate meaning for others.

16) Be patient

The process of developing successful habit-forming technologies requires patience and persistence. Building a habit-forming product is an iterative process and requires user-behavior analysis and continuous experimentation.

17) Build for your own needs

Studying your own needs can lead to remarkable discoveries and new ideas because the designer always has a direct line to at least one user: him or herself. As you go about your day, ask yourself why you do or do not do certain things and how those tasks could be made easier or more rewarding.


The Innovator’s DNA

By Jeff Dyer, Hal Gregersen, and Clayton M. Christensen

Entrepreneurship is built upon the belief that one is capable of innovating, but what are the defining attributes that help us understand the most innovative people? How can companies find and retain innovative people for their organization? Unfortunately, there is no formula for this or one’s ability to create groundbreaking ideas.

The Innovator’s DNA examines these questions in summation of a six-year study to uncover the origins of creative and disruptive business strategies and leaders. By focusing on innovative entrepreneurs, the authors examine when and how each comes up with the ideas on which their businesses were built. In short, this book identifies five “discovery skills” that distinguish the most creative executives: associating, questioning, observing, experimenting and networking.

1) Innovative organizations mirror innovative individuals

Innovative people systematically engage in questioning, observing, networking and experimenting behaviors to spark new ideas. Similarly, innovative organizations systematically develop processes that encourage questioning, observing, networking, and experimenting by employees.

2) Creativity is learned, not predetermined

Creativity is not just a genetic endowment and not just a cognitive skill. Rather, we’ve learned that creative ideas spring from behavioral skills that you can acquire to catalyze innovative ideas in yourself and in others. Creativity skills are not simply genetic traits endowed at birth, but they can be developed.

3) Develop your associational thinking ability

Associating happens as the brain tries to synthesize and make sense of novel inputs. It helps innovators discover new directions by making connections across seemingly unrelated questions, problems, or ideas. Innovative breakthroughs often happen at the intersection of diverse disciplines and fields. Put simply, innovative thinkers connect fields, problems, or ideas that others find unrelated.

4) Record every idea

If innovators have one thing in common, it is that they love to collect ideas. The more knowledge, experience, or ideas you add from wide-ranging fields to your total stock of ideas, the greater the variety of ideas you can construct by combining these basic knowledge building blocks in unique ways.

5) Question everything

Innovators are consummate questioners who show a passion for inquiry. Their queries frequently challenge the status quo. Innovators ask questions to understand how things really are today, why they are that way, and how they might be changed or disrupted. Their questions provoke new insights, connections, possibilities, and directions.

6) Be willing to look stupid

Since childhood, we don’t want to be seen as stupid by or friends or teachers. It is far safer to stay quiet, so we learn not to ask disruptive questions. Many people don’t ask questions because they don’t want to look stupid. Everyone sits around playing along as if they know exactly what is going on.

7) Observe

Innovators are intense observers. They carefully watch the world around them — including customers, products, services, technologies, and companies — and the observations help them gain insights into and ideas for new ways of doing things.

8) Change your environment

Innovators are more likely to visit new environments, including traveling to new countries, visiting different companies, attending unusual conferences, or just visiting museums or other interesting places. You should be willing to get lost on a whim and just see where the journey takes you. Engage all your senses as you search the world for surprises.

9) Expand your network

Innovators spend a lot of time and energy finding and testing ideas through a diverse network of individuals who vary wildly in their backgrounds and perspectives. Rather than simply doing social networking or networking for resources, they actively search for new ideas by talking to people who may offer a radically different view of things.

10) Experiment

Innovators are constantly trying out new experiences and piloting new ideas. Experimenters unceasingly explore the world intellectually and experientially, holding convictions at bay and testing hypotheses along the way. They visit new places, try new things, seek new information, and experiment to learn new things.

11) Take things apart

Experimenters love to deconstruct — products, processes, and ideas — to understand how they work. In the process of taking things apart, they also ask questions about why things work the way they do. This often triggers new ideas for how things might work better.

12) Don’t be attached to the outcomes of experiments

Innovators understand — and accept — that the majority of their experiments will not turn out as planned (and indeed may turn out to be a colossal waste of time), but they know that experimenting is often the only way to generate the data required to ultimately achieve success. You must have the courage to fail and learn from your failures.

13) Go trend-spotting

Actively seek to identify emerging trends by reading books, articles, magazines, Web links, blogs, and other sources that specifically focus on identifying new trends and seeing what’s next. Then think about how these trends might lead to an interesting experiment with regard to a new product or service. Figure out a way to creatively conduct that experiment.

14) Innovators have a strong desire to change the status quo

Consider the consistency of language that innovators use to describe their motives. Steve Jobs wanted to ‘put a ding in the universe’. Google co-founder Larry Page has said that he’s out to ‘change the world’. These innovators steer entirely clear of a common cognitive trap called the status quo bias — the tendency to prefer an existing state of affairs to alternative ones. Most of us simply accept the status quo. We may even like routine and prefer not to rock the boat.

15) Cultivate the courage to innovate

You must be willing to embrace a mission for change and take risks to make change happen. Mistakes are nothing to be ashamed of. In fact, they are an expected part of doing business.

16) Learn new skills

Taking the opportunity to learn new skills in different arenas can boost your innovation capability. Developing new skills in new areas is a great way to build diversity of knowledge in your head.

17) Work in small, autonomous and diverse teams

The more radical the innovation project, the more autonomy and the more diversity the project team requires. Disruptive innovation demands a team staffed with folks displaying a broad diversity of knowledge in order to generate more radical ideas.

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