News and The Wisdom of Many Small Bets

March 23, 2009

Innovation in news is always a gamble. In 1858 the “journalist and balloonist” Gaspard-Felix Tournachon placed what was, in terms of his own safety, a very large bet. Cramming an entire darkroom into the basket of a hot-air balloon, Tournachon took the first aerial photograph: a picture of the village of Petit-Becetre.

Tournachon’s motivation was little different from that of today’s innovators, to produce something new and distinctive through the application to technology.

With personal recommendation and sharing of content driving distribution there’s a clear premium on material that earns the remark, “Hey, have you seen this?” Innovation can be one way of achieving that.

But as revenues shrink the logic of large speculative investments becomes harder to justify. So, to borrow a concept from Nicholas Taleb, the strategy now should be to place many small bets.

What do I mean by a small bet? Here’s an example: three days after Obama’s inauguration the sixth most linked to blog post was a 1,474-Megapixel Photo of the event. There were a great many photo’s taken that day but a robotic camera mount costing around $400 dollars delivered one of the most compelling images.

Similarly, ten days before that photo was taken Paste magazine discovered that it’s online Obamicon generator toy was getting more traffic than the magazine.

There is, of course, a large element of success bias here – many experiments will fail – but that’s why it’s important that the bets are small. I’ve read others describe the “small bets” approach as rather like being “an investor in options” but you could also think of it as a system of venture capital too.

So how can organisations successfully encourage small scale experimentation and innovation? Here are some suggestions:

  • Encourage play and experimentation at work
  • Value success more than you fear failure
  • Create communities of innovation that extend beyond your organization
  • Make use of 10% time
  • Cut red tape
  • Be open to ideas from outside

I could have added a willingness to take risks to the list, but it might be better to say that organisations should fully appreciate the risk associated with not innovating. In the past decade we’ve seen initially small websites go on to transform the media industry. Waiting for someone else to build the future and then trying to buy your way back in can be an expensive business.