How to Innovate at Your Company (without going bankrupt)
Breaking into new markets requires experimentation. But the experiments you run don’t have to break the business.
Balancing risk with reward is a dance every entrepreneur and business executive is familiar with.
Our unpopular opinion?
Betting big doesn’t pay off.
…Except when it does, because sometimes it will.
FedEx founder Fred Smith once bet the company’s last $5,000 in blackjack after a bad sales meeting. He walked away from the table with $27,000 — enough money to turn around the company.
Cool story? Hell yes! Likely to happen to you? Hell no!
Exceptions aren’t the rule. And the brutal truth is that your business probably isn’t the exception. A not-so-official Google search shows that 20% of businesses fail in the first year and 70% fail before their 10th year.
Putting your company in a vulnerable position by making huge bets that could leave you bleeding money isn’t a choice we recommend. (Trust us, we’ve done it.)
Nurturing a business, diversifying your revenue, scaling your team, and investing in new technology — these are all things that require you to make bets.
So how can you spend your time, money, and resources strategically without putting yourself in a position you can’t recover from?
2 Tips and 2 Rules
Here are our two tips and two rules that we follow when deciding whether or not an experiment is worth pursuing:
Tip #1: Don’t confuse opportunity with execution
Opportunity is everywhere, and capitalizing on opportunity is essential for businesses. BUT you must bet on the right opportunities.
An opportunity is simply a chance to try something. In order to turn that “chance” into a tangible outcome, you have to execute. You have to be willing to dedicate resources to see it succeed. If you don’t have the manpower, money, time, or interest to see it through, move on.
Tip #2: Start small
Experiments fail all the time. If you can’t shrug it off if it fails, then it’s too big.
Challenge yourself and your team to develop smaller versions of the same experiment, or wait until your business is bigger and that time/monetary commitment is something you can absorb if it fails.
Our Two Rules for Running Experiments
At Mission, all of our experiments must meet the following rules:
Rule #1: Don’t pull me down
Your experiment should never inhibit the company’s normal business operations. It cannot pull significant time or resources from any employee or from your normal day-to-day.
Rule #2: The impact should be BIG
Marginal cost improvements are great for a company churning out hundreds of thousands of products a day, but for a small business, small changes don’t actually do much for your bottom line.
Saving a hundred dollars a month or getting 10 more views on a video isn’t a worthwhile bet. Instead, invest in experiments with big, measurable upside.
(Pro tip: It helps if you have an “experiment gatekeeper” who acts as a filter for your team. This person reviews all experiments being run and ensures that they meet the above criteria.).
Want more business tips?
Listen to the Mission Daily podcast on Apple, Spotify, or wherever you get your podcasts! Just 20 minutes a day and you’ll learn at least one lesson that you can apply to your life and business.
Thanks for reading!