IT E R AT I V E
C A P I TA L
Financial capital, human capital, intellectual capital and social
capital are tremendous resources for entrepreneurship and
value creation. But the endowment exponentially
supercharging tomorrow’s growth investments can best be
described as ‘iterative capital.’ Iterative capital is the best
currency in the world for rapidly researching, developing and
evolving ideas into innovation.
Iterative capital – not unlike like ﬁnance or talent – is a factor
of production that’s both platform and process for creating
‘investable iterations’ for designing and building innovative
products and services. Iteration is the medium for innovation.
Iteration ain’t information. Digital media - Microso Excel,
Catia, Google, Google Sketch-up, JMP, Facebook, Amazon’s
S3, etc. - empower more people to build more versions – more
iterations - of their models, prototypes and simulations per
unit time. e bandwidth and velocity of ‘versioning’ are both
Just as niily, virtual models living as stress-testable bits in
Monte Carlo simulations can quickly and cheaply morph into
physical prototypes for real-world exploration - and vice versa.
In other words, we’re stinking rich and getting richer. It
gigahertz so good! ese trends are innovation’s great friends.
Value creation’s ‘schwerpunkt’ has shied from ‘bits’ to ‘its.’
‘Its’ will be what the sharpest, keenest and most creative
entrepreneurs will be investing to invent the future. Just ask
Larry or Sergey or Jeﬀ. But never forget that capital is but an
input: having a lot of money doesn’t make you a smart
investor; having access to a bevy of brilliant people doesn’t
make you a brilliant manager. Similarly, being a wealthy
‘iterative capitalist’ doesn’t inherently guarantee an impressive
ROI - Return on Iteration. So how will individuals and
institutions creatively leverage this new wealth? Who will be
the Warren Buﬀetts of ‘Iterative Capital’?
A researcher at MIT’s Sloan School, Michael Schrage uses models,
prototypes and experiments to explore the behavioral economics of
innoation. He is the author of Serious Play.