World - People innovation Technology
A Pirelli magazine issue 2 / 2016

HOW ARE
WE CHANGING
THE GAME

Once upon a time, people got rich selling stuff. But now that stuff has got so cheap that you can get a decent T-shirt for €5, the most valuable currency of our time is ideas. Two young North Americans stranded in Paris on a snowy evening in 2008 had trouble getting a cab, and came up with an idea for hailing taxis by smartphone. That’s now Uber. But the ideas frenzy goes way beyond business: every day there are new startups, new art fairs and new social media. Even chefs now describe themselves as “creators”.

Much of this is wishful thinking. In truth, only a very few people have genuinely new ideas. So how do they get them? Sometimes the new idea springs from a new technology. Uber came out of the smartphone, just as Google came out of the world wide web, while Galileo saw that the earth revolves around the sun only because he had made himself a powerful new telescope. But that doesn’t answer the more basic question: which kinds of people tend to have new ideas?

It’s rarely the folks at the top of society, senior executives in suits. After all, most people climb slowly to the top by learning the conventional wisdom of their time and then teaching it to others. Often this is a noble function: think of the head of a medical school, for instance, disseminating best practice on how to treat heart attacks. But these people are usually too well-trained, too immersed in what has been thought before, to come up with something earth-shatteringly new.

Instead, innovations usually come from outsiders. These are people who look at an established field with fresh eyes as if they have just landed from Mars, and say, “I’ve got a new way of doing this.” You see it in the sciences: Einstein thought up the theory of relativity when he was working not as a physics professor but as a clerk in the patents office in Bern. Francis Crick was a professional physicist, until he belatedly entered the field of biology and co-discovered DNA. And much the same pattern holds true in business.

Think of some of the most innovative entrepreneurs of recent times – Bill Gates, Mark Zuckerberg, Steve Jobs – and they have something surprising in common: they all dropped out of college. They were smart young people who had no interest in absorbing the conventional wisdom or pleasing their elders. In fact they tended to think that their elders were old fools barking up the wrong trees. Moreover, these people were willing to take risks: most college dropouts who think they know better than anyone else end up empty-handed.

Sometimes, the innovative outsider is older. Henry Singleton was an academic mathematician and engineer. He programmed the first computer on the MIT campus, could play chess blindfolded, and developed a guidance system that’s still used for aircraft today. Only after academia did he go into business: he was already in his mid-1940s when in the early 1960s he became ceo of a conglomerate called Teledyne. He then spent decades massively outperforming the stock market: if you had invested $1 in Teledyne in 1963, it would have been worth $180 when he retired as chairman in 1990.

Singleton appears in William N. Thorndike Jr’s book The Outsiders, an analysis of eight brilliant outperforming ceos who according to Thorndike all had something in common: to outperform, by definition “they needed to do things differently than their peers”. And to do things differently, it helped to have come from a different place. None of Thorndike’s heroes had climbed the usual corporate ladder before becoming a great ceo: Katherine Graham got there as a widow, Warren Buffett as an investor who had never run a company before, Bill Anders as a former astronaut, and so on. These people came from Mars – in Anders’ case, almost literally – and saw new things.

None of this is to say anything against corporations, or conventional paths such as going to business school. Once you have a good idea, then a corporation run by a traditional chief executive who knows the conventional wisdom is probably the most efficient institution ever invented to execute it. But if you want to find an idea, best to ask a kid wearing a hoodie who hasn’t worked five minutes in your industry.

SIMON KUPER

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