Interview: Barry Nalebuff and Ian Ayres discuss their book "Why Not: How to Use Everyday Ingenuity to Solve Problems, Both Big and Small"

October 24, 2003 Friday
LENGTH: 990 words
Business Center - CNBC

Sue Herera, anchor:

SUE HERERA, co-anchor: Innovation drives the American economy. Yale economy--Yale economist, I should say, Bar--Barry Nalebuff --I'll get this out--and law professor Ian Ayres insists that innovation is a skill that can be taught. And they've written a primer, if you will, on how to get those creative juices flowing. They use examples as diverse as flipped-over ketchup bottles, spinning toothbrushes and the like to tell us how to go about that. Their new book is titled "Why Not? How to Use Everyday Ingenuity to Solve Problems Both Big and Small."

Gentlemen, welcome. Nice to have you with us.

Mr. BARRY NALEBUFF (Yale School of Management): Thank you.

Mr. IAN AYRES (Yale Law School): Hi.

HERERA: It's a fascinating book and it's a great time for the book because the economy is starting to recover. And people, in order to survive the recession, had to start to think differently, but we're not really programmed to think outside the box. We're all kind of thought to think in a certain way. It's hard to break out. How do--how--Barry, how do we do that? How do we change the way we think about things?

Mr. NALEBUFF: I--I think all of us have that capability. And long as you're an optimist and start imagining how to do things differently, you can find solutions to everything in your life.

HERERA: But sometimes it comes out of frustration, correct?

Mr. NALEBUFF: You have to pay attention to all the things that annoy you and not just let them go and become complacent about them but actually think about how they can be solved.

Mr. AYRES: We're kind of the anti-Dilbert against cynicism.

HERERA: But you all have--have really done some of these things. You put it into practice. You haven't just written a book about it. You've actually done it. Y--why don't you give me an example of how you've kind of applied this.

Mr. AYRES: Well, one of our best one's Barry's Honest Tea. He noticed that...

HERERA: Which is a company that you founded.

Mr. NALEBUFF: I did with one of my students. We noticed that all the teas out there were either liquid candy or n--no calories at all. And why isn't there just something with one teaspoon of sugar? And so in fact, we created tea that tastes like tea. And now, five years later, Honest Tea is one of Inc. maga--Inc. magazine's 500 fastest growing companies. We noticed that there was a need for home equity insurance. People's single largest investment is their home. It's highly undiversified and it's highly leveraged. So why not buy insurance against losing money in your home? And we've created a pilot that exists now in Syracuse, New York.

HERERA: Ian, how much of this just comes from being aware of your surroundings and aware of what's going on in--not only in your life, but in people that you know and people that you work with and their frustrations and then learning how to flip it around. 'Cause you talk about flipping things around in the book.

Mr. AYRES: Exactly right. Part of it is paying attention to life's annoyances but part of it's starting with recognizing good things, solutions, and then figuring out where else it would work, or flipping it around, like the--an example is DVDs now often come with a option that you can hit a button and listen to a director's cut with more graphic violence and more sexual content. Well, how about flipping that around? How about a DVD where you hit a button and you could see a PG version of an R movie, an airline version? Suddenly, kids could watch "Shallow Hal."

HERERA: Right.

Mr. NALEBUFF: In fact, that actually came from one of Ian's frustrations. He was on an airplane, seeing the airplane version and saying, 'You know, I don't really want to take my kid on a flight across country to watch this movie. Why not just get the DVD with the airline version?' And suddenly, actually that's being a pretty good business for Hollywood.

HERERA: You know, corporate America has been somewhat--sometimes, anyway--slow to embrace innovation. Unless you're a company that needs to innovate, that needs to create, which all companies do to a certain extent, but if you're in manufacturing and the like, you have to do more of it. How do you get corporations to accept the fact that their employees need to innovate, that their employees might have to turn things around?

Mr. AYRES: It's a tough problem. And a lot of great ideas can't be done by individuals. You need to get an established firm to do it. Often it's going to be a maverick firm on the outside, just starting up in the markets that are often the best place to come in.

Mr. NALEBUFF: But I think actually it's the employees who have the ideas and the question is, how do they bubble up and management learn about what the organization itself knows? That's one of the reasons why we've tried to create an open source movement for ideas. We've built a Web site to a Whynot.net where people can talk about their ideas and critique them and actually figure out which ones are good and which ones aren't so good.

HERERA: It happens to be on the top of your hat.

Mr. NALEBUFF: It does, indeed.

HERERA: Why not? Just a coincidence I'm sure. Gentlemen, best of luck with the book.

Mr. AYRES: Thanks.

HERERA: It was fascinating. Thanks so much for joining us tonight. Yale economist Barry Nalebuff and law professor Ian Ayres. And the book, you should get it. It's got a great group of ideas. Pick it up at the bookstore. There it is, "Why Not?" Great cover, by the way.