A think piece written by Alumni’s Johan Östlin.
Does hard work always pay off? In some cases, definitely yes, in others, not necessarily.
If you look at Noble Prize winners for example, the one thing that stands out that many of them have in common is persistence – as many of have put in a lot of hard work in a subject, despite of being told that their research was a dead end.
The most amazing example might be Barry Marshall who received the ‘Nobel Prize in Physiology or Medicine’ for his discovery of the bacteria Helicobacter Pylori, and the fact that it causes most cases of gastric ulcer. The amazing part of this was that Barry was not only seen as a mad man by his colleagues for pursuing this idea, he was also not allowed make animal trials to test his hypothesis. The only living creature he could legally try it on was himself – so to prove his theory he actually drank a glass of Helicobacter Pylori and, as history has told, got sick of ulcers.
This is one story of how grit (or conscientiousness) is an established success factor for individuals at work. There are indications that this might apply on a group level as well, as a large study conducted by researchers In-Sue, Seongsu and Van Iddekinge in 2015 found that high levels of emotional stability, conscientiousness, extraversion, and agreeableness in the organisation is correlated with high productivity.
High production levels are in turn related to good financial results – so this tells us that organisations with a lot of energetic, nice, stable and thorough employees produce more and are better off financially.
But is it really that simple? If something seems too good to be true, it often is.
To get a different perspective, let’s take a look at Blockbuster, Nokia, and Kodak. All of them once market leaders in their respective field, these companies didn’t have a problem with productivity – what hit them was disruption.
Blockbuster was overtaken by Netflix, and the other two got supplanted by the likes of Apple and Google. Innovative companies that had adapted to a new era. But neither Netflix or Apple were startups, far from it. Apple was struggling for several years before Steve Jobs returned – and what he did when he came back was to practically stop everything that was already ongoing to be prepared to go in full force when the next big thing occurred.
Steve Jobs' success with Apple was partly based on him forcing the organisation to stop doing things, in order to focus on the few things that would make a bigger difference. For the same reasons, one of Google’s eight pillars of innovation is never fail to fail.
Failure is thus an integral part of Google’s success, and there’s logic to this: If you never fail, you probably haven’t raised the bar high enough, right? And they make sure to always learn from their mistakes.
Google may not be known for projects like Google Video Player or Google Answers, but they are known for the success of YouTube and Google AdSense, which was built on the experiences from those failures. And that’s just the tip of the iceberg. Over the years, Google has retired many offerings, either because of obsolescence, integration into other Google products, or lack of interest.
According to Google, the key to innovation is to fail fast. By realising which projects are going in the wrong direction early on, they are able to close them down before investing too much in them and dragging the entire business down.
How do you know which projects to pursue and which ones are bound to fail?
Well, this is not an easy task. Daniel Kahneman won the Nobel Prize in 2002 for showing that one of the cornerstones in economic theory was in fact false: that people make rational decisions. Humans are born irrational.
One of those irrational behaviours is that we tend to complete things that we have invested a lot of time and energy in. It does not make sense rationally, because the time, energy, and resources invested are already gone, whether you eventually reach the finish line or not. From a rational point of view we should instead focus on how much return we will get from the additional investment compared to the current return, in economic terms disregarding sunk costs.
So, from a rational perspective – it’s never too late to give up.
"How effective is your organisation at stopping failing innovation projects?"
The sunk cost fallacy and how to avoid it
In practice, if we have invested a lot in a digitalisation project, the decision on whether we should invest more to complete it should be based on the estimated return in relation to that investment, and nothing else. But in reality, this rarely happens.
It is not unusual for IT projects to cost 10 times more than initially estimated. And most of these projects are not only heavy in cost – they also tend to have very limited effect on generating revenue, as they are rather focused on internal efficiency.
One way to avoid the sunk cost fallacy is to use methods like impact mapping in software development to keep track of all initiatives and the goals they set to achieve. This method is actually very similar to how clinical psychologists work with their clients. The common denominator is solving complex problems, and when trying to do that with no best practice solution available, you will have to test different solutions to find out what actually works and what doesn’t. The best solution might not be the first one you try, but rather several iterations of different ideas, as in the Google example.
So, from one perspective it’s true that productivity comes with grit. But at the same time, to stop doing things or trying to fail as fast as possible fast are apparently also success factors for some organisations.
From my point of view, it all comes down to leadership in the end. If you have an organisation filled with people working hard with what they’re supposed to and don’t stop until you tell them to, you are blessed. But if you steer these people in the wrong direction you have a big problem, because they will carry on tirelessly doing the wrong things. In that case you might actually be better off with a more “difficult” group of people questioning your every step.
If you don’t have a good plan, it might be better to stop and do nothing until you figured it out. Or, even better – to try a lot of ideas that might attain your goals and ensure that you fail fast enough if they don’t.