By: Barry Nalebuff and Ian Ayres

Preface: Why Why Not?

"Discovery consists of seeing what everyone else has seen and thinking what nobody has thought."

--Albert von Szent-Gyö rgyi

On July 30, 2002, Deborah Woods, a dental hygienist in Syracuse, New York, became the first person to buy protection against a market decline in the value of her home. Would you like to be next?

Our point isn't to sell you home equity insurance. Lord knows there will be plenty of people who will do that. We want to get you thinking. Provoke you a little. You can buy insurance against fire, theft, and even a lost cell phone. So how come there was no way to buy insurance that protects the equity in what is typically your single biggest asset--your home? We estimate that home equity insurance could generate annual premiums of $10 billion. Why didn't this product already exist?

There was no good reason. A few of us professors, with lots of help from Neighborhood Reinvestment, Freddie Mac, and even Congress, took the protection of home equity from an idea to a reality in about a year.

Let's try another. Have you ever used a 900 number? Neither have we, but we all know what they are. It's often a bit of a shady business with fortune tellers and sex lines. Yet, underneath it all, there's an interesting idea: a pay-per-minute phone call.

What if we turn this idea around to create a reverse 900 number? Instead of paying per minute to make a call, you would get paid per minute for taking a call. Think how this could change telemarketing. If telemarketers want to call you, make them use a reverse 900 number. That way, you would get paid for listening to their pitch. While they are trying to sell you a product, you can be selling them your time.

Telemarketing is a $500 billion industry. What is the potential business opportunity for the reverse 900 number? Would Gallup pollsters be happy to call from a reverse 900 number to increase their dismal response rate?

Now consider a related problem: e-mail spam. In 2001, 10 trillion e-mails were exchanged. So it wasn't just your in box that was overflowing. Can you see how the idea of a compensated call could also eliminate nuisance e-mail?

The two of us spend much of our professional lives making suggestions. Businesses and governments seek our advice. But the truth is, even without being asked, we still find ourselves dreaming up better ways to do things. We have a passion for clever ideas. It's in our blood. We can't stop ourselves from generating these ideas in almost all aspects of our lives.

We see ourselves as the "anti-Dilbert." While Scott Adams's cartoons are funny, they are also profoundly cynical. We, however, are optimists, perhaps even idealists. We like the line of Calm Fisher, a contributor to halfbakery.com: "Optimism can make you look stupid, but cynicism always makes you look cynical."

We don't mind being a bit . . . unconventional. We took it as a good sign when we discovered that we share an unusual habit. While we're in the office, we intentionally leave our keys in the office door.

Leaving the key in the door, it turns out, is a pretty foolproof way to avoid locking yourself out of the office. It also helps you avoid wasting time looking for keys. We've even started a small trend. The only small problem is that every now and then someone interrupts us to hand us the keys they've so thoughtfully rescued from the door.

Why is this relevant? Because leaving the key in the door is the kind of idea that leads to the European hotel innovation of having a receptacle for the room key card right next to the door. Putting the key in the holder turns on the lights in the room. More important, taking the key out of the holder turns off all the lights. Thus, hotel guests don't lose their keys and the hotel doesn't waste electricity.

There is real pleasure in encountering a simple but elegant idea for the first time--mulling over the pros and cons. We remember getting excited when we first heard about Andrew Tobias's idea of pay-at-the-pump insurance as a way to solve the endemic problem of uninsured motorists. (It's hard to drive without gasoline.)

But even more pleasurable than reading about other people's ideas is to solve problems yourself--to experience, firsthand, the joy of figuring out how to make things work better. This book will teach you simple methods for generating your own ingenious solutions.

Some people have the notion that coming up with concrete solutions for real-world problems is somehow reserved for the experts--that the techniques for innovation are beyond the capacity of the typical person. Baloney. Innovation is a skill that can be taught. And what's more, the potential for innovation is all around us. The problem is that the sense of innovation as everyday ingenuity often gets lost in our high-tech world. That is a problem we aim to fix with this book.

We'll share what we've discovered and what we've learned from others. Our combination of law and business backgrounds gives us valuable tools for both generating and testing ideas. We employ insights from economics, game theory, contracts, and an appreciation for the law of unintended consequences. These tools are especially important when it comes to poking holes in ideas.

Most innovation books are backward looking. With the benefit of hindsight, it is easy to see the great solutions of the past. Gee, weren't Post-it notes a great idea? While we can analyze and second-guess past business decisions, it is difficult to simulate the experience of innovating.

We'd like to put you in Charles Schwab's shoes back in 1973 and let you rediscover the idea of discount brokerage. The problem is that now you can't pretend not to know about discount brokerage, and hence it is almost impossible to recreate the discovery process.

Likewise, if we just looked to success stories of the past, you'd never really know if our approach would have helped come up with the idea in the first place. The good news is that there is a ready-made lab for experimenting. We use the world as it is for our case study.

It's harder to look forward--to see solutions no one is doing. But forcing ourselves to tackle as-yet unsolved problems is a surefire way to show you how our tools can be used to generate solutions that are, well, actually new.

This book will look both backward and forward (and sideways at current solutions in other countries). We'll examine problems solved in the past, look at problems bubbling up in the present, and make some bold and probably wrong predictions about solutions that will emerge in the future.

Of course, we won't always be able to prove that the ideas are good ones. But we're willing to take that risk and let you--and time--be the judge. We don't expect to bat a thousand.

More important than the ideas themselves is how we go about generating and evaluating them. We want to let you in on the ground floor to see how several why-not ideas were discovered. Indeed, our case studies are constructed so that you can beat us to the punch.

A common approach to develop problem-solving and lateral thinking skills is to work on made-up problems and brainteasers. We enjoy solving brainteasers as much as the next person (okay, probably more). We even include a few in chapter 7. But it is even more gratifying to come up with a solution to a problem in which something of real consequence turns on the answer. Simply put, we think it is more fun, more challenging, and more rewarding (including financially rewarding) to solve practical problems than made-up ones. Why not imagine what you would do differently if given the power to change things at GM, the IRS, a health plan, or the phone company?

Why Not? is about problem solving with a purpose. In some cases, the results will lead to improvements in social norms and law. Other times, the ideas will be the seed of a new business.

Of course, you don't have to start a new business to profit from knowing how to innovate. Constantly looking for new and better ways of doing something is both a skill to develop and a way of life. When you start thinking this way, it soon becomes second nature. Indeed, it pays to be known as the ideas person in your organization.

Even when there is no personal monetary benefit, you can join the thousands of others in the open-source movement who solve problems in their spare time and give away the ideas. This "just share it" mind-set is not just for computer programmers. Multitudes share their insights on Amazon.com by reviewing books, and mavens compile lists of favorite books and movies on every topic imaginable. Online communities such as About.com or Epinions.com offer literally millions of product reviews and culture guides contributed by people with passion and often great expertise.

Imagine how good you would feel if you found a way to make it easier for people to contribute to charity, reduce teenage driving accidents, refinance mortgages, or eliminate spam. There is a great satisfaction of having come up with an idea that really works.

We aspire for this book to change the way people think about their own ability to affect the world. Our goal is to make it natural--even expected--for everyone to challenge the status quo and ask, Why not do it this way instead?