Updated: Mar 30
Photo Credit: NumberHound.com
When asked about his extraordinary hockey success, Wayne Gretzky said:
“I skate to where the puck is going, not to where the puck has been.”
The truth is, Mr. Gretzky missed the majority of the shots he took. His lifetime NHL stats are 17.6% shots made to shots taken. (894 / 5088) The message is, being "The Great One" is something much more than a high shooting percentage. He intuitively anticipated where the puck was going, all the while, quickly adapting as new information updated his understanding....all in a split second!
Venture Capitalists play a similar game. They know, even with the most rigorous selection process, that many investments will underperform, but a single high-flying investment will more than makeup for the laggards. The challenge is knowing which investment will fly and quickly adapting as new information is learned.
Who are creative-divergent thinkers? They are those that connect the dots between “what is” in the present and “that which may be" in the future. In the business context, they are adept at using counterfactual thinking, but in the highly structured context of our current business environment and future market trends. They appreciate the future is probabilistically available. They understand the future is informed by ongoing and rigorous expectations updating. They are both analytical and adaptable.
Business creative-divergent thinkers seem to have a crystal ball. They seem to have an amazing ability when given the chance, to identify and implement new, high-impact, high-margin business solutions. Who are these creative-divergent thinkers? Many of us! When given the opportunity and support, many can help develop the next big thing.
But like Wayne Gretzky, even the best business solution developers miss many of the shots they take. The key is taking shots in an opportunity-rich, supportive business environment. This expected environment is 1) tuned to a highly quantitative understanding of the current environment and future market trends, 2) is risk-taking tolerant, and 3) encourages adaptability. The following are 3 key elements to understand the adaptability necessary for creative-divergent thinkers: (1)
Do you regularly ask “what if” questions? - this indicates how comfortable you are stimulating counterfactual thinking.
How flexible are you with active unlearning? - this indicates your ability to quickly error-correct.
Are you an explorer? - this indicates whether you prioritize exploration (testing) v exploitation.
Our businesses should encourage the creative-divergent thinking that may lead to the next big thing.
An adaptability case study: Netflix and Blockbuster
An on-point example of creative-divergent-based adaptability is the Netflix and Blockbuster video market competition in the early 2000s. In the opening of Netflix's CEO Reed Hastings' book, No Rules Rules, he says:
"Blockbuster is a thousand times our size"
Hastings whispered this as he and his team stepped into an early 2000 meeting with then Blockbuster CEO John Antioco. They were meeting because the little startup wanted to pitch Blockbuster to buy them for $50 million. An offer Antioco flatly declined. Thank goodness for the future of Netflix and the digital industry they have spawned!
Blockbuster was the dominant movie rental business. (Blockbuster’s revenue peaked in 2004 and they filed for bankruptcy in 2010) Netflix was a small upstart that saw an opportunity to adapt how the industry provides movies. The adaptation was from in-store DVD rentals to mail and ultimately to streaming movie delivery. Blockbuster was unable to adapt, even though they had incredible preparation as a giant in the business and they could presumably see the opportunity in the direction of technology (mail was certainly not a new technology, streaming existed at the time, and bandwidth challenges were in process of being solved.)
The real difference is, Netflix was adaptable:
Netflix asked the “what if” questions regarding movie delivery. They believed people wanted more convenience of home delivery (whether mail or streaming),
Netflix was willing to unlearn the current movie delivery model, though, one could argue they didn’t have much to unlearn at the time. Whereas, Blockbuster was unable to unlearn its movie delivery model. They had substantial investment (i.e., inertia) in their bricks and mortar delivery model.
Blockbuster was exploiting their market dominance, with little effective energy given to testing. This was an enabling factor for Netflix’s opportunity to explore and pursue new movie delivery channels.
Ironically, it would seem Blockbuster did not even realize it was in competition with Netflix until it was too late.
"Neither RedBox nor Netflix are even on the radar screen in terms of competition,"
- Blockbuster CEO Jim Keyes, in 2008
an interview with the Motley Fool (2)
We all know how this turned out…. Blockbuster went bankrupt just 2 years after this interview and Netflix has become one of the most dominant media companies in history. Netflix demonstrated creative-divergent-based adaptability!