Opinions Drive Innovation, not Data, Says the iPhone Creator
Opinions Drive Innovation, not Data, Says the iPhone Creator
"We need to be data driven", says everyone. And yes. I agree 90% of the time, but it shouldn't be taken as a blanket statement. Like everything else in life, recognizing where it does and doesn't apply is important.
In a world obsessed with data, it's the bold, opinionated decisions that break through to revolutionary innovation.
Data is behind the curve of innovation
The Economist wrote about the rumoured, critical blunders of McKinsey in the 1980s during the early days of the smartphone era. AT&T asked McKinsey to project the size of the smartphone market.
McKinsey, presumably after rigorous projections, expert calls, and data crunching, shared that the estimated total market would be about 900,000 smartphones. They based it on data, specifically data in that time. It was bulky, large, and only a necessary evil for mobile people. Data lags.
AT&T pulled out initially, in part, due to those recommendations, before diving back in the market to compete. Some weren't as lucky. Every strategy consultant in South Korea will know about the rumours of McKinsey sharing a similar advice to one of the largest conglomerates that used go go head-to-head with Samsung: LG. They pulled out of the market, and lost even taking a shot at becoming a global leader in this estimated 500 billion dollar market.
Today, the World Economic Forum shared in a recent analysis that there are more smartphones than people on earth, with roughly 8.6 BILLION subscribed phones.
Opinions drive innovation
The designer and builder of the iPhone and Nest Tony Faddell, shares in his book Build that decisions are driven by some proportion of opinions and data. And for the very first version of a product that are revolutionary, as opposed to evolutionary, are by definition opinion driven. And they're useful for different types of innovation:
- Revolutionary: Complete re-thinking of a certain feature or process, often 10x better than the existing options
- Evolutionary: Step-wise increase in innovation often a 2–3x, linear improvement on the existing options
Unlike step-wise improvement of existing stuff, truly revolutionary innovations simply will not have real data. No amount of customer interviews and research will actually tell you before the product is out.
We shouldn't reject opinion-driven decisions because it sounds "bad", and unprincipled. It's what actually drives revolutionary change.
The iPhone was an opinion
The iPhone's touch screen, according to Faddell, was an opinion. It was Steve Jobs' opinion. All data pointed to a physical keyboard, and not a touch keyboard. Blackberry's physical keyboard was loved by customers. The whopping 25% market share of Blackberry seemed to corroborate the anecdotal experiences of users. And the technology to support a seamless touch screen keyboard was not yet convincing.
If Apple wanted to create a marginally better Blackberry, then taking physical keyboards would've been the right approach. But to do something revolutionary, it's hard to rely on data. Steve Jobs, apparently insisted on a touch screen. And it turns out he was right.
Why do people have an aversion to these types of decisions?
My view is that there are at least two reasons.
First, opinions are cheap. Anyone can have them. You have an opinion. I have an opinion. And deep down, we know that not every one of our opinions are well-informed and rational. We know that they are prone to fallacies, biases, and blindspots. Some places are so averse that they don't value people's opinion the same. Ray Dalio‘s Bridgewater has a system to value opinions based on their track record.
At the same time, opinion-based decisions implies use of power rather than process. At least in the generation and culture I'm familiar with, we have deep aversion to unilateral decision by someone of power in absence of process. Most likely because we've seen the tyrannical nature that comes with that.
Opinion-based decisions have use cases
But especially as someone who continues to launch new products, I tend to agree with Faddell that opinion-based decisions also have their place and utility especially in the earliest versions of the product. But it comes with a caveat: responsibility.
If we have data, let's look at data. If all we have are opinions, let's go with mine.
These are, apparently, the words of Jim Barkle, the former CEO of Netscape. Whether it's entirely true or not, the point stands. Often times for new products, there is no definitive data to show that something will be successful. It'll largely be an opinion-based decision. But why the CEO's opinion?
It comes down to "who is taking responsibility?". I don't really care about the title, but for many founder-CEOs, they are the leader, decision maker, and owners of the outcome. If any one has an opinion, and we're all looking at the same data, the person who will take the responsibility will need to make the call.
In fact, making good decisions is what Andreessen Horowitz looks for in a CEO, and echoed in Ben Horowitz‘s book Hard Things about Hard Things.
Some employees make products, some make sales; the CEO makes decisions. Therefore, a CEO can most accurately be measured by the speed and quality of those decisions.
Naval Ravikant shares this sentiment, and emphasizes the magnitude in impact of someone with 10% better with judgement than others can be tremendous, especially in a highly leveraged position.
Opinion-based decisions drive innovation. But making that call comes with accountability and responsibility, not whim or ego.
But data MUST follow through after an opinion
But that's not to say opinion-based decisions are be-all-end-all. After you act upon that opinion and generate data, it seems more apt to rely on data and process to make decisions.
Faddell illustrates his point with the iPod. In the early days of the iPod, he states that the iPod could not be connected to computers other than a Mac. That was a feature, not a bug. The purpose of the iPod was to get people to buy Mac computers to sync music.
Jobs was apparently adamant to keep it that way. But once the iPod was launched with several customers using the product, they now had data. And it turns out customer wanted to use sync it with computers, especially since the Mac was often too expensive.
Taking action based on data, and allowing iPods to be used with PCs, led to explosive growth according to Faddell, and even led customers to purchase Macs in the end because of the design. In 2006, iPods accounted for over 40% of Apple's Revenue, generating $7.7bn out of the $19.3bn in sales.
Opinions can be wrong. But it's some times the only way to generate the data to have better opinions.
Conclusion
Making opinion based decisions can be a scary thing. I have a theory that indecisiveness, in part, comes from aversion to taking responsibilities. Even on small things like choosing a restaurant for a group, there is fear the food won't be good and you'd be blamed. But now imagine doing that with your career or family or relationships to be 100% responsible. It's certainly an adjustment for startup founders.
And maybe that's why so many of us wait for some perfect data or idea or opportunity before taking a shot on themselves. We want to be right. We want to be data-driven. We don't want to be wrong.
The intuition itself isn't bad. But when we try to do revolutionary things rather than linear improvements, an opinion is all we've got. If you never start, you'll never know if you were right.
Your opinion is as good as any for revolutionary innovation.
Start. Learn. Repeat.
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