Co-author of the bestseller Freakonomics, Steve Levitt, took the stage at the World Business Forum to share stories about tax fraud, passing gas, and prostitution. This was definitely not a typical economics discussion, but a great storytelling experience. He expressed how some of the best ideas in business today are also the simplest ones.
“The best ideas are the simplest ones, and after you hear them they’re totally obvious, yet they evade us for years and years and years. You don’t have to be Albert Einstein or Stephen Hawking to have great ideas. You just have to think and keep your eyes open.” ~ Steve Levitt
He said the problem most businesses have is that they don’t make time to step back and think about things like academics within the organizations.
“As an academic, I do nothing,” Steve said. “I am in the classroom 60 hours a year. Other than that I can do whatever I want and can think about ideas. In most workplaces, people have jobs to do and that gets in the way of thinking and creating innovative ideas.” One company that bucks that trend is Google, which encourages employees to spend 20 percent of their time on new ideas. This has led to Google Maps and other tools for the company.
Also, academics dedicate their time working on one question incredibly well. In business, people have hundreds of questions to answer by the end of the week. With that much volume, it’s hard to answer each question well. In some cases, just an answer is sufficient.
Levitt said he is jealous of businesses because they have their own data to work with. “Businesses create their own data,” he said. “As an academic I have to sit back and wait for it.” While businesses have a lot of data, many companies tend to make big decisions without feedback or metrics in place to learn about what they’ve done. He recommends that for every decision, companies should answer the question, “in a month, will I know if that was a good decision or bad decision?” Otherwise the data is just data, not insight.
The most striking difference between academics and business in Levitt’s view is that academics come from a perspective of “I don’t know,” he said. “Meanwhile, the phrase “I don’t know” is the least common phrase in business. It seems that everyone’s job is to pretend they know the answer.
He challenged the audience at Radio City Music Hall to repeat the phrase to themselves at least once a day, and to also encourage employees to do it. Once they say it, it allows them to step back and experiment with new ideas. “If you can never admit you don’t know the answers to questions, you can never get better.”
Something I found interesting and brave (to say the least), was that he left the audience with brief personal story. A story about his meeting with a call girl (for business purposes), and how he advised her to raise her fee with no adverse impact on business. She just needed to take a step back and think about it.
Take a moment to step back and look how you can simplify your innovative passions. How would you do it and how would you help others simplify their goals?