Using case studies of successful innovators/leaders to establish best practices

There is a trend to document the cases of successful innovators/leaders and distil best practices of innovation/leadership from the way ‘they’ did it. This is the wrong approach because it documents only those few who did something and succeeded but doesn’t take into account those many that did the same thing and went bust.
Nassim Talib, in his book ‘Fooled by Randomness’ calls such successful people ‘lucky fools’. He defines ‘lucky fools’ as ‘persons who benefited from a disproportionate share of luck but attribute their success to some other, generally very precise, reason.’
In logic, this error is known as post hoc ergo propter hoc i.e. after this, therefore due to this. This can also be called ‘after the fact reasoning’ - whatever precedes the other thing is considered to be its cause. The causality is erroneous and usually gets established only because it suits your purpose. That is rationalization, not reasoning.
Stories about how your Aunt Mary's cancer was cured by watching Marx Brothers’ movies or taking a liver extract from castrated chickens are meaningless. The cancer might have gone into remission on its own, which some cancers do; or it might have been misdiagnosed; or, or, or.… What we need are controlled experiments, not anecdotes. (all in italics taken from Michael Shermer’s book "Why People Believe Weird Things" )
In the leadership field, the fallacy of ideal leadership traits/practices has been laid to rest by the theory of situational leadership. Only that practice is considered right which meets the specific demands of that situation and that group. I suspect the same should apply to innovation too.
Instead of establishing best practices from a study of a few successful people, how about simply installing good think-skills in the innovator/leader?
Back to basics, eh! A little more demanding than copying from case studies but then, it works.

Innovation for the SME Sector

On 6th August, I got an opportunity to address the delegates of the SME Conclave 2009 at the Taj Land’s End, Bandra. I spoke to them on ‘Innovation for the SME Sector’. Just a few days back, I had also interacted with the SME Chamber of India, Chakala, Andheri.

Speaking to several SMEs, I was surprised to find the relatively big players quite uninterested in innovation while the startups were very enthusiastic about it. Frankly, I had expected the reverse. My confusion cleared when, by sheer coincidence, I read a small piece on Prospect Theory by Jeffrey Baumgartner on Innovation Tools, that evening. Prospect theory (Daniel Kahneman & Amos Tversky,1979) clarifies that people are highly risk averse when it comes to potentially increasing their wealth, but risk seeking when dealing with potential economic loss.

So, this was what was happening.

The established SMEs were getting good ROI and were looking to increase their wealth. That made them risk averse and distrust innovation. Why rock a boat that is sailing well enough? On the other hand, the startups were in a phase in which they were only incurring expenditure with no or little income. They were dealing with potential economic loss and hence welcomed suggestions that could change the situation. For them, all change was change for the better.

Innovation does trigger a change in status quo. How much you welcome innovation depends on whether the status quo seemed attractive to you or not.

Of course, whether the status quo would remain as attractive without ‘running twice as hard just to stay in place’ is another matter.