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From The CriticsIn the late 1970s, a young Harvard Business School student figured there had to be a better way to crunch mergers-and-acquisitions numbers than manually recalculating them on printed ledger sheets. The grad student was Dan Bricklin, and his quest for a better way led to the creation of VisiCalc, the first electronic spreadsheet. Within five years, all Harvard MBA students used spreadsheet software.
Within a decade, low-cost spreadsheets had launched what Michael Schrage, author and codirector of the MIT Media Lab's eMarkets Initiative, calls "the largest and most significant experiment in rapid prototyping and simulation in the history of business." According to Schrage, it also helped kick off the personal-computer era, spawned the mergers-and-acquisitions boom of the late 1980s and made Michael Milken and legions of Wall Street analysts and traders rich.
Spreadsheets are one example of the simulations, prototypes and models that fill Schrage's newest work, Serious Play. Because spreadsheet software is so well known, Schrage devotes an entire chapter to it to illustrate his core idea: that a company dominates its industry when it designs prototypes quickly and frequently, and when it uses its innovations to continually transform itself and its relationships with customers and suppliers. Microsoft, Boeing, Royal Dutch/Shell, Disney and Netscape all are masters of what Schrage calls "rapid prototyping."
If you crack open Serious Play thinking you'll get a breezy read, you'll be disappointed. Schrage's writing is intellectually dense, though not impenetrable. He defines play as "improvising with the unanticipated in ways that create new value." Companies play when they run simulations to test what changing the shape of a widget will do to the weight of an automobile, or when they model what lowering the price of software will do to sales.
Schrage argues that while prototypes and simulations are valuable in supporting an organization's existing behaviors, they're more valuable when they turn up surprises. After airline industry deregulation, for example, NASA investigated pilot fatigue. Instead of finding that well-rested pilots flew better, researchers were surprised by simulations that showed pilots who'd worked together several shifts in a row responded better under stressful flight conditions than fresh crews.
Prototypes aren't immune to failure. Companies can shoot themselves in the foot by creating elaborate prototypes then ignoring what they've learned. In a classic example from the late 1960s, Sun Oil built an incredibly sophisticated corporate financial model, but it was so complicated managers never used it. Even worse, companies that fail to question the underlying assumptions of their prototypes wind up with products no one will buy.
How does Schrage relate his theories to the Internet Economy? Unfortunately, he leaves it up to them to draw their own conclusions. However, it's not hard to see Schrage's culture of rapid prototyping happening all over the Web. The Web has become the world's biggest prototype laboratory, with companies slapping on features as quickly as possible to gauge consumer reaction, test revenue models and even figure out which business they should be in. [See Schrage's Jan. 31 column "(Serious) Playtime."]
It's also easy to see how the Web has led to what Schrage calls prototype "Christmas trees," products that designers keep adding features to because they can, not because customers want them.
Schrage closes with a few pointers that dot-com companies would be wise to follow, especially if they don't have cultures that support formal modeling or simulation. Before jumping into a project, understand who the beneficiaries of prototypes or models are: customers, the marketing department or the CEO? Don't be afraid to fail. Outline how prototypes will be integrated into commercial products. Above all, play. This is serious advice from a master on the subject.