# How Innovation Happens — Lesson #7: Invest in Experiential Capital
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I've been covering the link between future trends and innovation strategies for 30+ years. I went back through my blog posts, stretching to 2002, to dig out the nuggets of innovation insight I've discovered along the way. This series revisits those stories, tests what still holds up, and turns them into practical lessons for what comes next. "Do things that have a vague objective, unknown potential for success and an absolutely uncertain payback, simply to boost your experiential capital." I've come back to this idea repeatedly in my work because the mindset behind innovation usually changes before the results do. What people notice, question, challenge, and act on determines how ready they are for what comes next. Most organizations understand financial capital. Far fewer understand experiential capital: the stockpile of knowledge you build by doing things you have never done before. The future rarely arrives with a clean business case attached. New technologies, new business models and new customer behaviours usually begin in a fog. If you insist on certainty before you experiment, you guarantee that someone else gets the learning first. Small projects with uncertain returns can be extraordinarily valuable because they build the skills, intuition and scar tissue you will need when the trend suddenly becomes real. Experiential capital compounds. Each experiment gives you a little more confidence about what to do next, and just as importantly, what not to do. So what does that mean in practice? It means challenging the assumption, habit, or hesitation that is keeping you anchored to the present. Here are three places to start. Action Items: Set aside a small budget specifically for experiments with uncertain payback. Measure what a project taught you, not only what it earned. Ask where competitors are accumulating experience faster than you are. Explore the full How Innovation Happens series. Real-World Examples These researched examples show the lesson at work in the real world. Atlassian ShipIt: A 24-hour experiment becomes a product pipeline In 2005, Atlassian began giving employees a concentrated period to work on projects beyond their daily assignments. The program eventually became known as ShipIt. Teams could use the time to solve a persistent annoyance, explore a speculative idea, or build something useful enough to demonstrate to colleagues. The attraction was not just the chance to produce a clever prototype. It was the experience of forming a team, making a decision, building under a deadline, exposing unfinished work to feedback and learning what happened. Two decades later, Atlassian described ShipIt as a continuing company-wide practice with more than 2,000 participants at a recent event. Its retrospective identified Jira Service Management as a product that originated in ShipIt, with co-founder Scott Farquhar involved in the early project. Not every entry became a marketable product; treating the number of launched products as the sole measure would miss the point. The program accumulated a form of organizational capability that cannot be purchased through a conventional lecture on innovation. Employees repeatedly practiced shipping something uncertain while the cost of failure was bounded. Why it matters: Experiential capital is built by the repeated act of trying, testing, explaining and learning, not by attending another presentation about the importance of ideas. Sources: The Sand Motor: The Netherlands lets a coastline experiment teach it Most coastal protection work follows an engineering logic: move sand or build a defence where protection is needed, then repeat maintenance as conditions change. Dutch engineers asked whether they could instead place a very large volume of sand at one point and allow wind, waves and currents to distribute it gradually. In 2011, the Netherlands built the Sand Motor near Kijkduin using approximately 21.5 million cubic metres of sand. The peninsula was deliberately experimental. Government agencies and researchers monitored currents, dune formation, recreation, ecology and swimmer safety over years, learning which expectations were right and which effects needed management. A ten-year review by Deltares concluded that the coastline had widened, dunes had grown, and the project had produced useful evidence for future coastal management. This was experiential capital on a national scale. Designers did not learn only from a model or an expert committee. They created a bounded real-world intervention and allowed nature to produce data that no conference-room simulation could completely replace. The experiment was also not frictionless: it required ongoing observation and careful management of environmental and safety trade-offs. Why it matters: Sometimes the best way to know whether a future system can work is to build a carefully limited version and let reality answer back. Sources:

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Source: https://jimcarroll.com/2026/10/how-innovation-happens-lesson-007/