How questioning assumptions led to 13,000% ROI
13,000% ROI in 2 hours.
This experiment shows the power of questioning your assumptions – too good not to share…
In 2009, Professor Tina Seelig gave $5 of “seed funding” to 14 teams of Stanford engineering students.
They had 5 days to plan. The goal? Make the most money possible in a period of just 2 hours.
They were told to “be entrepreneurial by identifying opportunities, challenging assumptions, leveraging the limited resources they had, and by being creative.”
The following Monday, each team would get 3 minutes to present their project to the entire class.
One team made a 13,000% return on the seed money.
The obvious approach The first team bought inexpensive items at a discount store and tried to re-sell them for a profit. (You can probably guess how well that worked.)
Not getting distracted Another team questioned the value of the $5. They realised it was a red herring. So they set up a stand in front of the student union and pumped up bicycle tyres for $1-a-time. It worked – people paid. They then switched from fixed pricing to asking for “donations,” and their income soared.
Being creative with limited resources Instead of thinking about growing the $5, or monetising the 2 hours, the winning team realised the most valuable asset they possessed was the 3-minute presentation time in front of the class. They sold their presentation time for $650 to a local company that wanted to recruit students (an ROI of 13,000% on the initial $5).
Key takeaways
#1 The obvious approach (which presumably took the least amount of thought) yielded the worst result.
#2 One team was able to ignore distractions, leverage its assets, iterate and boost revenue by understanding customers.
#3 Even better, by taking a step back to understand certain fundamental, but not obvious, truths, the winning team was able to gain an unfair advantage, outperform its competitors, and achieve standout success.
This is a great example of the power of first principles (fundamental truths). I’ll expand on that in my next post.
For now, hopefully this is a useful reminder than sometimes you need to think and act slowly in order to progress quickly. I wonder how that might be applied in our business… and maybe yours?
