OK let’s make a series of guesses:
Q1: How many songs are available to download online (in 2018)?
Q2: How many were downloaded ZERO times?!
Q3: What’s the percentage of singers that accounts for 50% of total downloads?
Here are the answers…
A1: 80M!
A2: 70M!!
A3: 1%!!!
Oops… That’s brutal!
By the way, one quick sidenote. My music is among the 70M 😏. Click the link to listen to it while reading the reminder of the article 😎.
When looking at those numbers, my mind travels back in time to applied statistics courses. 2 names pop-up right away in my head: Pareto & Normal distribution. But none seems to apply to the above example. What’s going on here?!
Well, we are dealing with…
Price’s Square Root Law
Our friend Derek Price found out that the square root of any total population yields 50% of the output.
Too abstract? Consider the following example. Inside a company, the square root of the total employees produces 50% of the value. In numbers…
- For a 10 employee company, 3 employees produce 50% of the value. Seems fair… 🤔
- For a 100 employees, 10 (i.e. 10%) produce 50%… Ooh! 😯
- For a 1’000 => 32 (i.e. 3%)… What?! 😲
- For 10’000 => 100 (i.e. 1%)… No way???!!! 🤪
- …
Wow, this is scary. What do the remaining 99% do?! 🤔
Back to Price’s Square Root Law… To clarify the difference vs. Normal & Pareto distribution, consider the below charts:
In fact, the 3 laws apply in different contexts:
- If we are in a context where individual differences are not large (e.g. unskilled workers on a production line) Normal distribution applies.
- If technical skills matter, we will get closer to Pareto distribution.
- And if creativity is needed, Price’s Square Root Law applies.
By the way, we are not here to talk statistics but Creativity, Innovation & Novelty. The question becomes…
What is the link with Creativity, Innovation & Novelty?
Creativity is a catch-all term. It is about coming up with new ways or new things. There are 4 possible outcomes. And most of the time, the probability of getting any monetary value is closed to nill… Remember? 1% of the singers get 50% of the downloads…
- Breakthrough: this is one in a million 🙂. But when it does happen everybody hears about it for years. This is what startups are supposed to do. To disrupt industries in terms of a. business model (e.g. Airbnb for renting accommodation), b. product (haash.io for customer support) and c. process (e.g. Toyota with Kaizen, Kanban…).
2. Wasted talent, which is what happens most of the time. Most creativity is at best useless if it doesn’t actually destroy value. Just try to draw a car that is “different” and you will understand how hard it is to come up with something “different” AND useful. Most go down the drain. Remember that 70M songs that never get downloaded? 🙂
3. Me too: This is what most businesses refer to as Innovation but is not. A more accurate word would be Novelty. It’s that thing that is different from the precedent… but with a minimal improvement gap. Most of the time, it does not involve any technological advancement. It’s doing differently with the same ingredients. It is when newness becomes a commodity making it value dilutive.
4. Trash: does it deserve a paragraph? 🤔. No! Does it deserve a picture? Yes! 🙂
Linking to the above text, here is a graph that summarizes the difference between all three concepts based on frequency & monetary value…
How do they work together?
Traps
Q: What are innovation’s best enemies?
A1: Creativity! To be more precise unfocused creativity.
Most companies in business do not die from starvation they die from indigestion — J.V. Knudstorp LEGO CEO
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A2: Comfort! Often times, a breakthrough innovation in the market requires breakthrough innovation inside the company. The products are only a reflection of the internal functioning. According to Jeremy Gutsche, most companies refuse to take the leap because they think they are doing just fine.
If u start feeling comfortable in business, fear those who don’t feel the same — K
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Q: What are innovation’s best friends?
A1: Failure! Recall that 1%? You’d better start early while the company is still doing well. And remember every failure in the market means some (slight) adjustment is needed inside.
A2: Focus! Once you’ve decided on the right idea then relentlessly iterate.
If I had to choose between creativity & intelligence, I would pick resilience 😉 — K
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To sum-up
Innovation = Creativity x Focus (Converge + Iteration)
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For most of us number one enemy of innovation is creativity — K
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I’m as proud of many of the things we haven’t done as the things we have done. Innovation is saying no to a thousand things — Steve Jobs
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