I heard Phil Libin speak at the FT Innovate conference in London. He was a founder of Evernote and now works as a partner at General Catalyst who manage venture capital funds. He explained that when we compare different opportunities there is a natural inclination to select the least bad. This is because the primeval part of the brain is programmed to assess risk and to value the reduction of threat above opportunity. When your ancestors were cavemen it was more important to avoid falling into a ravine than to leap it in the search for food. So when we see two proposals we often discount the one with the greater risks and difficulties. But this can be the exact opposite of what the venture capitalist wants. He wants to find an opportunity which might pay back 500 fold if everything goes right. And the VC does not mind if some of his investments fail fast provided that he does eventually find a big winner. Phil’s advice when considering innovation projects is to ask yourself what could happen with this idea if everything went well and all the difficulties were overcome. If the answer is something huge then the proposal should be moved high into the preferred pile. Of course it still needs critical examination.
In business we tend to take what appears to be the safest route; we find fault first and then dismiss. The natural tendency is to do what Western Union did when Alexander Graham Bell offered them his new invention, the telephone. They turned it down saying that it had no commercial potential.
