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Math, Poker, and Innovation: How to Keep Big Companies Creative
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Smaller organizations face two key challenges that large organizations don't. One is hunger, as you mentioned. If you're small and not innovating, you're basically going out of business pretty fast. (Nick Jain)
(00:00-04:54)
Nick shares his unconventional career journey—from pursuing mathematics and physics, to working on Wall Street, to becoming a serial CEO specializing in scaling businesses. Along the way, he explains how his quantitative background, love of poker, and experience with high-stakes decision-making have shaped his approach to innovation.
Alex and Nick dive deep into the challenges of fostering innovation in mid- to large-sized organizations. While startups innovate out of necessity to survive, large companies often face two major obstacles:
Loss of Hunger:
- Startups operate under pressure to survive, forcing innovation. Large organizations, however, often sit on vast reserves of cash, enabling them to survive long periods of stagnation. This reduces the urgency to innovate.
- Success can also make individuals and teams complacent, further diminishing the drive for creativity.
The Problem of Bureaucracy:
- As companies grow, layers of management and decision-making processes slow down the flow of ideas. In a startup, cross-functional teams can collaborate instantly. But in a large organization, getting an idea approved might require navigating through finance, marketing, and other departments—adding significant friction.
Nick emphasizes that despite these challenges, it is possible to unlock innovation in big companies:
- Simplifying Communication: Create structures where good ideas can reach decision-makers quickly. Agile teams and direct communication channels are essential.
- Cultural Alignment: Build a culture where employees at every level feel empowered to share ideas and take risks.
- Balancing Creativity and Process: While some bureaucracy is necessary for scale, Nick argues that leaders must find ways to retain the entrepreneurial energy of smaller teams.
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The Three Ingredients for Innovation: Unlocking Creativity in Big Companies
You need some percentage of people in your organization who want to innovate, and the right number tends to be about five to 10%. That’s the bare minimum before you tip over that threshold into being innovative. (Nick Jain)
(04:54-11:08)
Nick explains that not everyone in an organization needs to be an innovator, and that’s perfectly fine. However, for a company to be truly innovative, 5-10% of its workforce should be composed of individuals who actively want to create and push boundaries.
Balance is key: While creativity thrives in certain areas, it’s not ideal for all roles (e.g., accountants and CFOs). For example, “innovative accounting” can either lead to groundbreaking advancements in standards—or disasters like Enron.
Real-world example: Modern accounting standards now allow companies to reflect intellectual property, such as software or drug patents, on their balance sheets—something that wasn’t common a decade ago. This reflects how even traditionally rigid fields can innovate responsibly.
Nick emphasizes that many organizations unintentionally penalize innovation by shutting down ideas or failing to reward success.
- Negative Incentives: In some companies, suggesting a new idea may result in being dismissed or reprimanded, discouraging future creativity.
- Lack of Positive Incentives: Employees who drive billion-dollar innovations often receive little recognition, while the company reaps the rewards. This disparity drives talented individuals to leave for startups or smaller organizations where their contributions are valued.
- Solution: Organizations need to design systems that actively encourage innovation—rewarding bold ideas and ensuring employees feel supported, even if not every idea succeeds.
Even with motivated people and supportive processes, organizations must provide the right tools to make innovation possible.
- Analogy: A world-class runner needs shoes, a gym, and a trainer to excel. Similarly, innovators need access to resources—technology, software, and collaborative spaces.
- Practical Example: Nick compares this to Pablo Picasso needing a paintbrush to create art. Without the proper tools, even the most talented individuals cannot reach their full potential.
- The Communication Gap: Alex highlights how some companies claim to be innovative but rely on outdated communication methods like flat white papers, failing to embody the creativity they promote. Modern tools are essential not just for ideation but also for spreading those ideas effectively within and beyond the organization.
The Bottlenecks to Innovation: Why Big Ideas Stall and How to Break Through
Look, the first issue is, in terms of where large organizations fall down with tools and get bottlenecked: Number one is collecting ideas. If you have 10 people in a room, it’s easy to sit together over lunch or coffee and share ideas. But how do you get them all in one place? (Nick Jain)
(11:08-17:19)
Nick highlights three major barriers organizations encounter when trying to innovate effectively:
Collecting Ideas:
In small teams, brainstorming happens organically, often over casual conversations. But in larger, distributed organizations, collecting ideas becomes much harder. Remote workers, language barriers, and introverted employees may struggle to share their insights. Without tools to centralize and democratize idea sharing, valuable contributions are often lost.
Evaluating Ideas:
Once ideas are gathered, the challenge becomes sifting through them. Organizations often rely on a single decision-maker, such as a CEO or Chief Product Officer, to evaluate ideas. However, this centralized approach creates bottlenecks. Decision-making can be influenced by biases—whether personal or time-related—resulting in good ideas being overlooked or dismissed.
Scaling Ideas:
Even when great ideas are identified, scaling them across a large organization is no easy task. The process requires buy-in, resources, and a clear strategy to ensure the idea doesn’t lose momentum or become diluted by bureaucracy.
The conversation shifts to Elon Musk’s leadership style as an example of breaking traditional innovation barriers. Nick and Alex discuss the rapid pace of product development under Musk’s companies, like X (formerly Twitter), even after significant staff reductions.
Musk’s success isn’t just due to individual genius but also his ability to create streamlined, autocratic decision-making environments. His privately run companies enable quick action, bypassing the layers of approval typical in publicly traded corporations.
Alex and Nick agree that focus is critical for successful innovation. Despite Musk’s breakneck pace, his teams still operate with a clear vision, which allows for both volume and quality in their product improvements. Public companies, constrained by boards and external stakeholders, often struggle to maintain the same level of agility.
Beyond Eureka Moments—The Frameworks Driving Big Impact
Good innovation tends to, on average, happen thoughtfully. The best innovation doesn’t come from eureka moments in the shower. (Nick Jain)
(17:19-23:41)
Nick explains that leaders with significant decision-making power, like Musk, can act quickly—sometimes for better, sometimes for worse. For example, Musk’s rapid layoffs at Twitter were possible only because of his centralized authority, a stark contrast to public companies like Google, which face constraints from boards and shareholders.
Alex introduces a simple framework for prioritizing innovative ideas:
- High Impact Potential:
Does the idea have the potential for 10x growth in areas that matter most, such as user experience or operational efficiency? - Cost to Create:
Balancing resources against expected impact is essential. Even good ideas may be shelved if their economics don’t work. - Risk Assessment:
Alex notes the importance of infrastructural investments to mitigate high risks, even if they don’t directly deliver 10x returns.
Nick expands on Alex’s framework by adding a critical element: probability of success.
The speakers challenge the popular narrative of sudden flashes of genius being the root of innovation.
Research shows that "aha moments" are rare and usually the result of extensive, deliberate effort. Nick points out that while the final piece of the puzzle may seem like a revelation, it’s the countless hours of hard work beforehand that enable such moments.
From Ideas to Impact: Why Crowdsourcing and Experimentation Fuel Innovation
People use their intuition to override evidence. That’s a really bad framework for making decisions. (Nick Jain)
(23:41-31:02)
Nick explains that individuals build pattern-matching skills through education and life experiences. For example, expertise in physics or carpentry comes from immersing oneself in those fields over time.
Organizations can amplify innovation by leveraging prediction markets and crowdsourcing, gathering small pieces of insight from diverse contributors. This collective intelligence often outperforms individual decision-makers in accuracy and relevance.
Nick highlights two common reasons why innovations fail:
- Ignoring Collective Feedback:
Organizations often disregard valuable input from employees and customers, favoring the intuition of senior leaders. This top-down approach can lead to poor decision-making. - Becoming Overly Attached to Ideas:
Even when an idea seems promising, its ultimate test is how the market responds. Leaders must remain objective and ready to pivot if an idea doesn’t succeed.
Every new idea should be treated as an experiment. Failure is part of the process, and success often comes after multiple iterations. Nick cites Rovio, the creator of Angry Birds, as a prime example. Despite failing with many games, their persistence paid off with one blockbuster success that defined their legacy.
The Communication Code: How to Share Big Ideas in a Distracted World
(31:02-38:39)
Alex points out that too much emphasis is placed on the quality of the idea, while its communication and distribution often take a back seat.
Companies frequently present ideas in a "me-focused" way, failing to consider how customers will perceive and act on them. Many AI startups create buzz with flashy messaging but lack a strong product foundation, leading to unsustainable success.
Nick highlights that even in B2B contexts, businesses are ultimately communicating with individuals. Companies often forget that their messaging must resonate emotionally and practically with people, not organizations.
Successful communication comes from trying different approaches, analyzing the results, and iterating. Whether it’s webinars, white papers, or podcasts, businesses should test what formats and styles work best.
Short, engaging content often outperforms longer, in-depth formats. For example, a concise four-minute video explaining a product feature resonated better with customers than a detailed hour-long webinar.
While short summaries are preferred for immediate consumption, the existence of more detailed materials builds trust and credibility. Customers want to know that in-depth resources are available, even if they don’t engage with them right away.
How to Make Ideas Stick: The Art of Innovation, Communication, and Experimentation
We’re used to dealing with information in the information age—where we’re used to 12-second Vine videos or 30-second TikToks. Or, as you pointed out, we’re just overloaded with so much information that we have to budget our time much more consciously than we did 20 years ago, when we’d sit down for an hour and actually watch an hour-long TV episode. (Nick Jain)
(38:39-43:41)
The type of content people need can depend on their stage in the buyer journey, their device, or even the time of day. Alex highlights that the simple models we once used to understand content consumption, like the funnel model, don’t apply as neatly anymore.
Nick stresses that running experiments is crucial for discovering the next best thing. Without testing new approaches, whether in product development or marketing, businesses risk falling behind.
Alex argues that traditional models like the adoption funnel don't capture the complexity of how people engage with content or ideas today. Different people need different types of information at different times, which means businesses must adjust their approaches accordingly.
The challenge in communication is providing both high-level overviews for decision-makers and detailed resources for those implementing the ideas. The key is ensuring the content is accessible without sacrificing the depth necessary for informed decisions.
While coming up with great ideas is important, the real challenge lies in getting those ideas to stick and be implemented effectively within organizations. Alex and Nick emphasize that aligning teams around these ideas and iterating through experiments is essential for long-term success.
Check the episode's Transcript (AI-generated) HERE.
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Author
Experience-focused Leaders is the #1 Multimedia Podcast! We talk to senior business & tech leaders about the experiences that move forward organizations, customers and society at large. True to form, we mix audio, video, web and eBook formats to turn these authentic conversations into personalized nuggets you'll remember & use.
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