Tag Archives: business development

Why do New Ideas take Time to Spread ?

HBR Blog posted on Nov 27, 2012 by Samuel Arbesman : 

Just because a new fact or idea seems right, doesn’t mean it will spread like wildfire. Evolution, hand washing in hospitals, the inevitability that personal computers were the future of technology — none of these ideas were accepted immediately, even though they seem obvious today. Change takes time. But why?

The short answer is we’re intellectually stubborn. We don’t always weigh all the evidence before we make a decision, and this is especially true if a change of opinion requires a wholesale overhaul of our worldview. Usually, we’re defensive in the face of change, spouting alternative theories and contradictory data. Although this type of resistance can help keep everyone honest, it can also produce very bad effects.

Just take Ignaz Semmelweis — a physician who recommended doctors clean their hands prior to delivering babies — who was ignored and essentially driven mad by his colleagues’ refusal to accept the truth. But eventually, in the face of overwhelming evidence, the majority will generally accept the new theory, before their recalcitrance becomes too counterproductive.

Shifting from an old view to a new one is never a clean and seamless process. As numerous scientists have experienced, trying to get a new idea accepted is usually a messy process — and a long one. In fact, it could take until the retirement or death of the holdouts and the influx of younger and more open minds for the new idea to become accepted. The physicist Max Planck seems to have summed up the issue with this maxim: “New scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

This seems intuitively obvious. Since science and business are human affairs, we can’t expect the old stalwarts to change their minds when a new idea comes along. We just have to wait for them to die. Seems rational enough.

But here’s the thing: Planck’s Principle turns out to be wrong.

Consider Charles Darwin’s theory of evolution. Several decades ago, a study (PDF) examined sixty-seven British scientists from Darwin’s time and found that only about three quarters of them had accepted Darwinian evolution ten years after On the Origin of Species was first published in 1859. So evolution was not the rapid change we thought it might have been.

Why? If events had unfolded according to Plank’s principle, then young scientists would have rapidly accepted Darwin’s ideas while older scientists would have resisted them. But it didn’t happen that way. Although it’s true that those who accepted evolution were younger on average than those who still rejected it after ten years, age explained only 5% of the variation of acceptance or rejection of this theory. The younger scientists didn’t necessarily accept it rapidly; they accepted it at a rate similar to the older scientists who accepted it, over the course of a decade.

So it turns out we can’t even rely on common sense for understanding how this factual inertia works. This is encapsulated in the work of Duncan Watts, a principal researcher at Microsoft Research. Watts has demonstrated, in numerous studies that explore everything from how certain songs become popular to how marketing works, that we are very good at telling stories to ourselves that sound true (e.g. Plank’s Principle). But when we subject our “common sense” to the rigors of quantitative analysis, it doesn’t always pan out. So while our factual inertia is a big problem, we need to be cautious when we hear good stories about how it actually works.

Clearly, science and business, and others fields of knowledge are not abstract ventures. They’re human affairs, so they’re prone to passions and biases. Scientific discovery, in particular, occurs through hunches and chance recognition of relationships, and is enriched by spirited discussion and debate around the lab. But science is also subject to our baser instincts. Data are hoarded, scientists refuse to collaborate, and grudges can play a role in peer review. There’s a lot at play.

So new ideas take time to be accepted. And how they are accepted is far from common sense. But one thing’s for sure: Don’t write off the old folks. They have a lot to teach us.

Tagged , , , , ,

Creativity & Being Original

There is nothing like original thinking. So does creativity always have to be original content ?

Tagged , , ,

All about Venture Capitalists

In whichever way you are involved in a start-up enterprise of any sort, you know that the most valuable insights and advice come not from your mother but venture capitalists. After all, these guys have seen more business world than you have in the initial stages. These are the guys who can be looked at for value add, who can open doors, help you connect with right people in the industry.

The very basic question : How do VCs come across their investment ideas ? Perhaps the word will resonate often in the post – Network. The well established VCs enjoy a good network. And honestly it helps rather than being a lonely bird. It ain’t series of emails over internet. But a good and healthy network where they know the people they know and entrepreneurs constantly communicating, conversing and where they find out right elements.

Woody Allen quoted, “Life is 90% showing up”. So show up ! When you have the opportunity to communicate, do so by being together in a room. Get to meet in person. They will try to talk to you over phone, skype. But the fact to understand is that they try to experience the magnetism and spark of the founder. And that cannot be well assessed over audio or computer screen.

Be very thorough and forthright about competitive landscape. When VCs know more than the person presenting his own idea or business model, it’s a cause of worry. The facts and numbers should roll off your tongue as fluently as uttering I love you to your girlfriend(wife’s out of picture certainly !).

Personally, if you don’t have any experience, approach them with some real progress. Your start-up should have caught many eye-balls by now. If not, think and work harder.

An entrepreneur-VC relationship is akin to a good marriage. When VCs make an investment, they know that the relationship can potentially last for 8 to 10 years. Hence, to have a good partner is crucial. Therefore, get to know who will be on your board. Earn their respect. Generally, it’s one or two investments annually per partner. So if you  have the opportunity to meet a person, you’ve got to stand out to be that person’s deal for one whole year. Get to know how much investments they’ve made, how many boards they are on, do they miss board meetings, do they send analysts instead of coming by themselves, etc. Equally important is analyzing their investment history.

If possible, get to know where the money is coming from. The fatness of the investment figure determines the ideology and mindset of VCs and Angels right from the start. If the investment is around 1 crore, they will look for scaling up to a certain extent and sell it to big companies for higher returns to as much as 100 crores. That’s that. Quick sale and no IPO. But when the investment itself is  1500 crores, they will swing for the fences and bypass the early acquisition factors as they won’t matter for huge inputs.

All in all, the conclusion is –

  1. Get to the main points
  2. Demonstrate passion and commitment 
  3. Make sure you state the value proposition in a concise & simple manner
Tagged , , , , , , , , , , ,