Seeing Through the Fog of Innovation

Seeing Through the Fog of Innovation

by Scott Anthony  |   1:00 PM February 25, 2013

The Fog of Innovation — that moment when you realize that the data you need to make a critical decision about an innovative idea just aren’t clear. Unfortunately, the data rarely are.

For most large companies that find themselves lost in the fog, the default answer is to keep studying. After all, a risk that doesn’t pan out tends to have more negative repercussions than risks not taken. But remember: data only become crystal clear when it is too late to take action on that data. And time spent waiting for perfect clarity creates room for disruptive upstarts and hungry competitors.

Notably, there is a group that don’t get stuck in the fog: Venture capital-backed startups. (The do, however, have other issues.) How does a startup do it without all of the analytical horsepower of a large company? It works best when three components come together:

1. Active stakeholders with grounded intuition. Venture capitalists have significant pattern recognition skills related to both startup companies and specific markets. Good ones attract board members and other advisers with complementary skills. Ample experience and a diverse skill set helps stakeholders makes sense of what might not be obvious to others. Decision-makers assessing a market about which they know nothing not surprisingly demand significant proof before making a decision.

2. Quick decision making. At most startups, decision-making matches the pace of discovery rather than being held hostage by the complexities of calendar juggling. I remember distinctly a large company that proudly told me about how it got all of its most important executives to sit on an all-powerful innovation board that met every 90 days. “What if,” I asked, “the day after a meeting, the team discovered its strategy needed a wholesale revision?” Silence.

3. A scarcity mentality. Nothing focuses the mind like a dwindling bank account. Venture capitalists almost always stage investment in companies. Investment capital isn’t tied to an annual budget cycle; it is tied to estimates of what it will take to address key assumptions.

The military too faces the need to make decisions when information isn’t clear. (In fact, the idea for this blog post came while watching the Academy Award winning documentary on former Secretary of State Robert McNamara called The Fog of War.) One doctrine taught to Marines is the so-called 70 percent rule. The goal is to get enough data so that you are 70 percent confident in your decision, and then trust your instincts. If you have less data, you are making a close to random decision. If you wait until the data is perfect, the opportunity to make a decision that has impact probably passed you by.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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