Why Innovation Is Beginner's Luck

Matt Kuttler founded, built, and sold a promotion products company, PhoneCard Express. Now he is running another business of his own invention, the office supply company Rick Jamieson built and sold a successful accounting company. Now he is busy reinventing the automobile service industry as chief executive of ABS Friction. Mike Michalowicz started a successful technology integration firm, then built and sold a data forensics company.

Dig into their backgrounds a bit, and you'll see they have the very thing you don't look for when you hire your leaders: inexperience. Each and every time, they started a business in an industry they knew almost nothing about. And therein lies a lesson for you.

You like to hire people who know everything about the way business is done in your industry. You hire consultants that way: "Can you show me a case study that demonstrates how you have solved this problem before in our industry?"

You hire employees that way: "I see here on your résumé, you have been working in our industry for quite some time. You must know Bill, Judy, and Ralph. Those guys are brilliant."

You create RFPs that way: "Please list other companies in our industry for which you have solved similar challenges."

You even choose your learning that way. You tell your employees: "Folks, I want each of you to go to at least one industry conference and to join at least one industry round table."

Getting Hit from the Blind Side

And then the unthinkable happens: You get blindsided by beginner's luck. Somebody who knows nothing about your business comes along and has the audacity to completely reinvent it.

ITunes (AAPL)? Beginner's luck. NetFlix (NFLX)? Beginner's luck. eBay (EBAY)? Beginner's luck.

Twitter, Cirque du Soleil, and Mountain Equipment Co-op are examples of companies started by people with no industry experience. So were personal finance and scores more we could mention, from Amazon (AMZN) to Zipcar.

You could almost hear the things that people in the music, movie rental, and auction business (just to pick three examples) were saying when iTunes, NetFlix, and eBay came along. "What are these people thinking? Don't they know about the existing rules, the channel headaches, the legal hurdles, the technical hurdles, what's been tried before and failed, the demands of the sales agents, the way our products and services are purchased, the demands of our customers and their customers?"

Uh, no, they didn't. And neither will the competitor who will seemingly come from out of nowhere to upend your industry. And that is your takeaway.

The Myopia of Experts

"You can't read the label when you are sitting inside the jar." This is how we like to describe the myopia that comes with being an expert. And odds are you are a myopic expert. That makes you vulnerable to people who come into your industry from the outside, and it limits your ability to come up with revolutionary new products.

One solution? Think of intentionally infusing a bit of beginner's luck into your program. Here are a few ways you can do it:

Stop hiring leaders from your industry. Ask recruiters to look for a specific problem-solving ability instead of industry experience. Find leaders who have created the results you want in a unique way. For example, if you are faced with disintermediation issues—and all service companies are—look for experts who have tackled disintermediation. It's likely better that they know nothing about sump pumps or whatever your business is, because it will enable them to solve your problem and challenge your paradigms. Beginner's luck.

Infuse outside experts with the details of your challenge. Every aspect of the innovation process can be enhanced by reviewing it through the eyes of pros from outside your industry ("beginners"). They will see things you don't see, get you excited about ideas you may pass over, and keep you from making the mistakes they've made trying to solve a similar challenge.

"Parallel engineer." We like to encourage this politically correct form of stealing. Send your peeps to conferences, educational events, retail establishments, other businesses, etc., that have nothing to do with your business. Have them talk to the experts there about your problems. Ask those experts to solve it, and tell them the craziest idea wins the prize. In effect, you are liberating them to look at your challenge through the ideas of a beginner.

Ask the newbies. Your newest hires and the youngest people in your firm carry with them what resembles a look of confusion. Frequently, it is actually the fleeting glow of a new idea desperately trying to be born. Ask them what they see. Ask them how they would solve the problems. Desperately try not to cut them off or offer your "expert" opinion. They just may give you an idea that will make you a hero.

Using these techniques will result in competitors viewing you as a little bit crazy and a-lot-a-bit lucky.

P.S. Know of a company started by people with no relevant experience? Send us a note, care of We're compiling a list (and will figure out what to do with it at some point).

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE