Little Bets

Barnholt calls it the tyranny of large numbers, explaining that “there’s a natural tendency to think in terms of bigger bets as you get to be bigger.” … Barnholt recalls, “Around that time, people said, ‘We [HP] don’t even want to look at opportunities unless it was going to be a billion dollar business.’ A billion dollars kind of became a mantra.” They then researched and analyzed the markets, segmented them, and developed products. … “We had all these ideas. And they were all big,” Barnholt recalls, “but they all failed!”

The reason they all failed and the reason they were big is that someone was already there.” To borrow a phrase from Silicon Valley consultant and author Eric Ries, they “achieved a failure.” Their ideas made sense. The technology was great. They executed on their plans well. But they still failed.

HP’s assumptions turned out to be wrong because of what Barnholt calls intangible factors, the realities beneath the surface: the underlying customer problems, needs, preferences, and supporting market dynamics. They were not discovering new opportunities or developing new products, they were relying on the success of competitors to identify the areas they targeted. They weren’t being creative. … “That’s how I learned the importance of making a lot of little bets.”

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