Resist The Lure Of Cheaper Money. Bet Small While Thinking Big.

Executives eager to finance new, transformative corporate initiatives now that the Federal Reserve has again made borrowing more affordable would be wise to take a beat. The availability of cheaper money doesn’t change the smart calculus surrounding “Big Bets,” which is to think big but bet small.

At face value, this seems counterintuitive, especially in today’s rapidly evolving digital environment, in which those first to market with the next big thing often take home the largest piece of the pie. What onlookers, even in corner offices, often miss is that the vast majority of highly successful innovations are executed within specific frameworks that create clarity by emphasizing strategic planning, commitment to an approach and building the structure of the new product or service—all before making the big investment needed to generate exponential returns.

Among those who have championed this methodology is none other than Jeff Bezos who famously gave an interview to internet investor turned journalist Henry Blodgett, in which he stated, “I don’t believe in bet-the-company bets.” He went on to describe these kinds of “Hail Marys” as something organizations do when they’re desperate and haven’t been innovating internally on an ongoing basis, pressure testing the small bets before they become big.

Bezos embraced this mindset in creating numerous components of Amazon’s business that have since become juggernauts. Amazon Marketplace, Amazon Web Services, Kindle, Prime—they all started with relatively modest investments. Bezos didn’t “bet the ranch” on these, but did conceive a big, guiding vision for each of them.

So how can other executives follow Bezos’ lead, resisting the temptation of cheaper money and the urge to “eat the candy just because it’s free?” It takes more than just the discipline to not overborrow, but also the wisdom to insert urgency and accountability into one’s thinking instead of simply removing all guardrails in an effort to project maximum agility.

And it helps to have at one’s disposal a few advanced strategies that go beyond most approaches to testing business concepts, helping teams collect the information they need as quickly as possible with limited investment so they can truly make good on the “think big and bet small” philosophy.

Such advanced strategies include:

Stack rank project risks and the hypotheses that neutralize them. Too often, teams advancing Big Bets don’t sufficiently analyze the risks and level of risk inherent in each project as well as their anticipated ability to eliminate them, thus increasing the likelihood that their bet won’t pay off. Avoiding this scenario requires leaders to create absolute clarity around the hypotheses counted on for a project’s success, as well as the relative importance of each hypothesis. This can be achieved through a stack-ranking system to ensure high-value risks rise to the top and get the focus they need, while keeping teams from getting bogged down in matters that will have a minimal impact on the project outcome.

Strategically prioritize project testing experiments. Greenlighting the wrong project testing experiments wastes precious time and resources, giving competitors the space they need to be first to market. Teams can determine the optimal experiments to prioritize based on how they perform individually, adding in their ability to target high-value hypotheses, eliminate significant ambiguity and consume minimal investment. This technique offers a way to rationalize and optimize value delivery, offering a playbook for leaders to utilize in addition to their own business intuition.

Seek a high return on testing effort. Rather than simply designing a project testing experiment, leaders should find the fastest—three months maximum—approach to testing, while creating needed feedback via a prototype, proof point, research, etc. The goal is to achieve a high return on experimentation or effort, securing the information needed in order to determine whether to continue with the proposed project. Savvy leaders who champion this highly efficient approach often avoid creating detailed work plans and budgets for each experiment, skipping lengthy exercises that create false precision and instead capturing only highly pertinent information.

Less expensive capital is never a bad thing, but it creates an environment where it is more palpable for executives, especially those with “use-them-or-lose-them” budgets to rush toward transformation programs without requisite planning and strategy. They rush to vague definitions of the problem and envisioned future state. They do not have clarity.

Maintaining a scarcity mindset even in light of falling interest rates and/or available capital offers executives a definitive edge as they’re seeking to stay ahead of their competitors, especially if they embrace a high clarity, experiment-driven approach to transformation that maximizes their organizations’ time and resources.