Jorge Combe
DD3 Capital Partners
Startup Contributor

The Creative Process and Innovation

By Jorge Combe | Thu, 04/29/2021 - 13:21

Schopenhauer believed that it was natural for life to swing like a pendulum backward and forward between pain and boredom. I disagree. I think humans get stuck in a comfortable life (boredom) or become addicted to struggle (pain). What you choose to do day by day, and the people you are around, determine who you become, and these characteristics and habits become sticky.

Entrepreneurs become addicted to pain — no pendulum, no boredom, just a simple struggle and pain.  But this pain and overcoming challenges on a daily basis is what paradoxically bring happiness, a state of flow, and personal realization, which in conjunction foster creativity.  

From the outside, creativity seems like magic. We believe people come up with all these new, crazy and outstanding ideas that change the world all of a sudden and without any previous hints. Archimedes’ eureka moment in the bath, Newton’s apple, Fleming’s penicillin. We assign to most of today’s breakthroughs this brief moment of inspiration that “all of a sudden” changes the life of the enlightened and also the future of humanity. We believe breakthroughs are the result of a genius mind and of a moment of inspiration.

It’s not random or luck that most inventions seem to be perfectly timed in human history. Throughout history, most inventions have occurred by two or more people at the same time. Some of the most important examples are Edison-Tesla, Bohr-Einstein, Freud-Jung, Hooke-Newton and Koch-Pasteur. Matt Ridley describes “the overwhelming inevitability in the progress of technology,” where things are ready to be discovered by whomever does the work and goes through the creative process. It is highly unlikely that you will get an idea and a patent and be the first one in a blue sky with nothing similar being done in another part of the world.

At school and in entrepreneurship courses, we are taught that the creative process goes through four phases: Preparation, Incubation, Illumination and Verification. Nothing more useless could be taught at school than this. Whomever tries this process will be sitting in front of a white piece of paper for days and most likely will not have any good idea to work on. A more realistic and workable approach is starting with a struggle, with a problem, a previous failure or something that frustrate us. This is where first principles are applied and having the beginner’s mind to question why things work the way they currently do. The second stage involves frontier knowledge and experimentation, which means learning how things are done in different industries, and gaining insights with knowledge that could be transferred. Then you would need to find your worst critics, people who would challenge any assumption that you would make and introduce new ideas (number counts).  Finally, implementation, testing, failing and working on it again could be the most important phase:

Phase I: Struggle and a constant desire to understand the world. Defining basic assumptions and challenging the status quo. Fact-gathering and embracing the initial struggle. Have a beginner’s mind and question all assumptions.

Phase II: Creativity involves connecting some obscure points and knowledge inside of our brain. The more experience you have in different fields, the easier it will be to identify patterns that can be juxtaposed between different fields.

Phase III: The “aha!” moment: When we realize an important idea, usually it has been in our brain for some period without us realizing it. There is an unconscious gestation process that has been working.  Alpha waves in the brain foster creativity; these usually are produced when you are at low stress levels. Long walks, showers or any other moment when we are not focused on something specific are great for the aha! moment. 

Phase IV: Construction and evolution of the idea. Find your worst critics: those who are sure the idea will never work. Listen carefully to their complaints and negative responses. You do not need to be praised or your ego flattered at this stage.

Phase V: Finally, the implementation loop. Launch, fail, analyze feedback, refine product and launch again.

This five-phase creativity process is necessary for disruptors. In his book Loonshots, Safi Bahcall distinguishes what he refers to as P-type or S-type innovators. The P-type is a breakthrough of a product or idea that is so revolutionary that it changes the whole composition of the industry and demand. The S-type innovators revolutionize an industry through a strategy implementation that can be unnoticeable when separate, but each small innovation and change when taken in conjunction have the same profound impact as the disruptor innovator. Examples of S-type innovations are what Sam Walton did with Walmart or what Bob Crandall did with American Airlines. They did not come up with the idea of supermarkets or commercial airlines, but they came up with an improved model that changed the landscape of the industry.

Unless you are a prolific scientist or have a polymath personality, it seems easier to disrupt an industry by focusing on what doesn’t work and improving it gradually (becoming an S-type). Mexican examples of this type of disruption are Albo versus banks, Jüsto versus supermarkets, Kavak versus car retailers. At DD3 we have taken this approach, and our goal is to innovate real estate financing with a platform that constantly improves the customer journey.  By questioning first principles and long-standing practices, we are trying to redefine how real estate developers finance projects and how we think it should be done.

Our innovation has become marginal gains, small changes and refined execution. We are all pushing the frontiers of what can be done. We are expanding the light in the darkness of the caves. Most companies and humanity sit in the comfort zone without realizing that there are numerous startups working silently and studying the different industries, figuring out how to disrupt and how to challenge and beat the incumbents. There are numerous entrepreneurs who love the struggle and who are looking for ways to break barriers, disrupt and become the next unicorn.

It does not matter what you innovate or create. The race is with yourself. Every inch you gain expands your boundaries.  Every internal struggle you mitigate gives you more dominance over yourself. Every challenge you face helps you realize nothing was as important as it seemed. 

What Schopenhauer did not know is that living through struggle and being resilient becomes part of yourself and a way of living. In the end, is there anything more fulfilling than winning a race after starting in last place, or beating the champion as the underdog? 

Photo by:   Jorge Combe