You can’t outspend the big guys — but you can outsmart them
Marriage and innovation share more than you’d think — mainly the same mistakes, repeated confidently.
This article is the first in a three-part series on innovation, where I’ll look at the challenge from different angles.
Expandable rods and a Sophoclean tragedy
On a hot summer evening in 2009, I was dragging myself through an exhibition hall in Shanghai. Jet-lagged and drained, I felt about as energetic as a marathon runner at the finish line.
At one booth, I spotted a man showing a curtain rod to a visitor. What I saw made the tiny hairs on my arms stand up: the rod was extendable – you could change its length.
My fatigue gave way to excitement. My company didn’t sell such rods, but the idea of extendability looked like an elegant solution to many long-standing problems in my industry.
In my imagination, I was sweeping competitors off the board with that expandable metal thing like King Arthur wielding Excalibur. We reached the deal, and six months later, the first shipment of our custom-designed, extendable products arrived at our warehouse.
Sophocles may have been a master of Greek tragedy — but I’m afraid even he couldn’t have captured what my team and I went through over the next year.
That elegant solution? Turned out to be expensive, not quite the elegant breakthrough I imagined, and a bit too radical for our customers. Our sales teams worked miracles but couldn’t overcome the customers’ skepticism.
Believing in your product is important, but revenue, not faith, pays the bills.
I used to stop by the warehouse, stare at the dust-covered boxes with the product, and wonder: what exactly did I do wrong?
At the time, I had no idea. Now I do. I approached innovation the way big companies can afford to — but the way smaller ones absolutely shouldn’t.
Three approaches to innovation
Have your parents ever given you a reindeer sweater for your birthday when you were secretly hoping for a new phone? That’s exactly how some big companies tend to innovate.
When I work with my clients on innovation strategies, I highlight three ways to innovate:
- The Reindeer Sweater Method.
- The Feature Factory Method.
- The Nearcasting Method.
The Reindeer Sweater Method
The creators of the Humane AI Pin — a screenless smartphone meant to “save the world from the tyranny of screens” — met while working at Apple. Apparently, that’s where they mastered the Reindeer Sweater Method.
On November 17, 2023 — six months before the device’s release — I wrote that I didn’t believe it would be a hit.
I was wrong. It turned out much worse.
The Humane AI Pin barely made it to market. After raising $230 million in funding, the project was sold to HP in January 2025 — for just $116 million. The product itself wasn’t even part of the deal.
The device didn’t work perfectly — but that’s not what killed it. It simply didn’t solve a single real customer problem. It turns out that the world wasn’t exactly suffering from too many screens. No one was eager to give up video, maps, or selfies in exchange for a monochrome projection onto their palm.
The founders could’ve figured that out in a week — if they’d just talked to users. But instead, they assumed that once they developed their “reindeer sweater,” customers would be thrilled. It didn’t happen.
Back in 2009, I did the same thing: I came up with a product first — and only then started looking for a market and customers. I could’ve spent a month on customer interviews and prototyping. Instead, I confidently jumped into building the product — with zero doubt it would work.
But while Humane’s founders paid for their mistake with their dream, big companies don’t even flinch. They can afford expensive failures. Kindle Fire didn’t kill Amazon. Apple Vision Pro won’t kill Apple. That’s why the Reindeer Sweater Method — aka “throw everything at the wall and see what sticks” — works just fine for them.
So proceed with caution next time you see a book called “Innovate Like Amazon” (or Apple, or Meta, or Microsoft…).Unless you have generous investors — or current profits with eight zeros — one innovative misstep might be enough to sink your ship.
History isn’t written by those who never made mistakes — but by those who could afford them and stay afloat.
The Feature Factory Method
Tech companies often use the feature factory method, especially smaller ones.
They keep tweaking their products by implementing whatever idea happens to come to mind.
It’s somewhat similar to The Reindeer Sweater Method — but instead of building whole new products, the Feature Factory approach focuses on minor, incremental fixes.
They’re cheap to build and easy to roll back.
They don’t bother with market research or customer interviews. Instead, they keep tweaking, patching, polishing — then ship the changes and ask users, “So… what do you think?”
But that ease of release can be deceptive. Each new “feature” might be cheap to build — but dozens of pointless ones can quietly drag the whole business down. And yes, customers do get annoyed by constant updates.
This method doesn’t really work for companies that make physical products. A car maker can’t change the shape of the windshield every day just to see what happens.
Coming up with new features all the time can feel exciting — even fun. But it’s a lot less fun to watch your customers leave because they wanted a stable, reliable product — not an endless stream of innovations.
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The Nearcasting Method
In theory, both methods make perfect sense. You can’t fully understand a product’s fate until it’s finished and out in the real world, selling to real customers. But the cost of being wrong is just too high. Humane Inc. lost its business. Smaller companies lose something else — frustrated customers who get tired of updates they never asked for.
My 2009 mistake cost me both money and the time I wasted on a dead-end project. So, ever since the “expandable rod” case, I have always started with the customer.
When I help companies look for breakthrough ideas using the Nearcasting method, we begin with customer interviews.
Of course, we don’t ask silly questions like “What do you need?” We talk. We observe. We dive into their workflows and study the details.
It always gives us a wealth of insights, which drive everything that follows.
Then, we move forward using a method that’s similar to the well-known backcasting approach — but with a twist.
Here’s what we do:
- We define a target future — a vivid picture of the future world where users successfully solve the problems they’re facing today.
- We create user scenarios: build visualizations, and keep refining the target future until it becomes tangible and real.
- We identify the gaps between today and that future.
- We design a backcast path — a step-by-step evolution of the product.
- If the complete solution is five years away, what needs to exist in year four? Year three?
- We pick entry points and define the MVP.
- What can we launch right now to start moving toward that future?
What makes the Nearcasting method different is that we never treat the target future as fixed. With every iteration — every prototype, every product version — we refine, adjust, and sometimes even rewrite it completely. And that’s how it should be. Our knowledge of the world and our users is always incomplete.
This method helped a trading company develop a new paid forecasting service for its clients.
A logistics company used it to cut bulk transport losses by 10%. And a fitness chain created a unique “flexible schedule” for group classes — and boosted membership sales.
You probably don’t have an innovation budget like a Fortune 100 company — but you can outsmart them by understanding your customers better.
Conclusion
When we dream of a happy marriage, we often picture the perfect partner. But that’s the wrong approach — because it’s selfish.
Both life and business are value exchanges — something I often write about in this newsletter. The rules of value exchange are simple: first, you create value and offer it to others. Only then can you expect to receive value in return.
A better question to ask when trying to find the perfect partner might be: “What do I need to develop in myself so that my ideal partner would actually want to be with me?”
Innovation works the same way. To be continued.
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