[From Unsplash]
Good morning,
In Experimentation Works: The Surprising Power of Business Experiments, Stefan Thomke, a professor at Harvard Business School, explains how Amazon’s Jeff Bezos looks at experimentation. Bezos’s statement “your margin is my opportunity” is well known. His willingness to experiment is not that well known, but equally important. For Bezos, Thomke writes, “the business logic for tolerating, even inviting, failure came from the outsized economic returns of winning.”
He quotes from a letter Bezos wrote to shareholders in 2016: “Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold.”
Thomke goes on to add: “Business experimentation has become part and parcel of how Amazon makes decisions, through a process Bezos calls ‘the unnatural thing of trying to disconfirm our beliefs.’ After all, humans strongly prefer evidence that confirms their pre-existing beliefs. But such confirmation bias gets in the way of making decisions about innovation, an arena in which most ideas don’t work. So it should not have come as a surprise when, partially in an effort to kick its experiments up a notch, Amazon acquired Whole Foods about fourteen months after Bezos wrote the letter. Industry observers felt that its physical supermarkets could become laboratories for radical experiments. Correspondingly, share prices of competing grocery chains plummeted after the announcement. Amazon’s reputation for fearless innovation was fuelled by such radical business experiments—so-called big swings—and, equally important, the tens of thousands of smaller and disciplined experiments that have led to a highly optimised user experience in its web store.”
Keep experimenting.
Have a great day.
NSE’s old war horse
Now that the stock market regulator, the Securities and Exchange Board of India (SEBI), has cleared the deck for Ashish Chauhan to take over as head of the National Stock Exchange (NSE), all eyes are on him. Twenty-one years ago, he was part of the founding team that had set up the exchange which is now under investigation for a malpractice known as the co-location scam. Chauhan was written off as an also-ran by market veterans, but this reading of Chauhan is totally off, writes Santosh Nair on Moneycontrol.
“Earthy, geeky, with tousled hair that lent an air of an absent-minded professor, Chauhan nevertheless was politically astute and ambitious even back then, according to those who interacted with him in those days.
“And he could be a hustler too if the situation required it. In 1994, a team of engineers from the US had flown down to India to set up NSE’s technology infrastructure. When a plague broke out in Surat around that time, the engineers insisted on flying back to the US immediately. Chauhan is said to have convinced them to handover their passports for some embassy process and then delayed returning them on some pretext or the other till the work was completed.
“He was well-liked by his team, and Chairman RH Patil too was supportive, but Chauhan was kept at bay by the rest of the senior management, who undermined him frequently, allege NSE insiders.”
The insiders Nair writes about include Ravi Narain and Chitra Ramkrishna who are now under scrutiny. They edged him out and “once Patil retired in 2000, Chauhan found himself out in the cold and quit soon after.”
While there is much cleaning Chauhan has to do, there may be other cards as well he may play. We can’t wait to see just what ace he may deal next.
Dig deeper
NSE undisputed leader, but Ashish Chauhan has problems to fix (Moneycontrol)
Explained | What is co-location scam (Deccan Herald)
Age is just a number
Conventional wisdom has it that people ought to prepare for retirement in their fifties and begin ceding ground to the younger generation by the time they cross sixty. While this notion is now under scrutiny in many parts of the world, albeit in hushed tones, Arianna Huffington, the founder and CEO of Thrive, challenges this notion in no uncertain terms.
“(W)hat I’ve learned as I’ve gotten older is how much we can gather steam as we gather years. That’s certainly been true in my case. I founded my first company when I was 55, and continued building it well into my 60s. I founded my second company when I was 66—one year after the traditional age of retirement. And now, at 71, I’m leading a company that has just raised a $80 million round of Series C funding led by Kleiner Perkins and Owl Ventures. I work with many amazing ‘30 Under 30s’ while doing the most meaningful work of my life! And with this new funding, we’re in a position like never before to accelerate our growth and impact and double down on our mission to end the stress and burnout epidemic.
“Living a life of well-being and resilience and being able to continue building our dreams as we get older are deeply connected. When we take care of ourselves and take the time to unplug and recharge and find joy in the journey, we can prove F. Scott Fitzgerald wrong and create deeply fulfilling second, third and fourth acts for ourselves.
“The literal definition of ‘retire’ is to withdraw, to retreat, to go into seclusion. But if we take care of ourselves, that’s hardly an apt description of ageing. When we prioritise our well-being, these can be years not of retreat and withdrawal, but of expansion and engagement, whether personal, professional or both.”
Dig deeper
We can build our dreams at any age
Exponential thinking
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Warm regards,
Team Founding Fuel
