I am a member of the NextNY mailing list which is a group of New York folks that talk about tech business and entrepreneurship. A recent conversation and actually a persistent theme in that group is that in a startup, an idea is worth 1% and execution is worth 99% or some other highly disproportionate ratio.
I take issue with the concept.
Here’s the problem with the formulation. It belies a misunderstanding of what an actionable “idea” really is. A good idea is almost never some light bulb moment that occurs where you realize some insight that no one else has seen. In truth there are few of those. Very, very few people are that smart or that lucky. Great actionable ideas are really a collection of much smaller ideas, weaved together in such a way as to create something useful unique and compelling. There are few actionable “aha” moments.
In other words, to me, coming up with great actionable ideas requires lots of perspiration, iteration, and ideation. However, once you have an actionable idea that has been achieved through this process it is worth *way* more than 1%. I would say getting to this point is worth easily 50% and perhaps well more than 50% of the value of your enterprise. Actionable and truly compelling business ideas are incredibly valuable. And most people that say otherwise probably don’t have them. For example if you open up a shoe store on Amazon, there is likely no “idea” there. But if you have developed a set of insights which allows you to develop a cost effective and safe hovercraft, that is certainly a valuable idea.
The problem is that people confuse the idea creation process with the execution process. They are different. I think one can, at times, blend the idea creation process with the *development* process, but there are important distinctions. When development is just execution of some defined idea, that is not idea creation. That is part of execution.
On the other hand, when the development process is part of the ideation process, you have set the stage for an environment where real creativity is possible. But in order for this to work, the development process must be more interactive and less goal-oriented. Great ideas come from having a bit of a “lab-like” environment in the early stages of your process. This is because exploration is almost always required to achieve a great compelling concept. Few of us has the ability to see with clarity a really useful idea from the beginning of the process, which is why iteration and stepwise refinement is so important.
This leads to what I think is a very important issue in the idea development process. There are lots of people who strongly suggest that you should do your development in public. It is part of the “release early and often” concept. But I also believe that this concept is not effective in developing great ideas because it is limiting. The minute that you get real customers involved, their needs become much more pedestrian. They will yell loudly about things that may be important to their use of the product, but they will rarely yell about some new game-changing concept. In fact they will resist radical change and rethinking because it messes with their now committed workflow. And now you are comitted to supporting them.
To be clear, I am not saying that a mediocre idea can't be a good business. But good businesses are not all great ideas.
So as I see it, if you want to do something great, you should strongly consider whether you have enough meat on your conceptual bone before you decide to release publicly. Because when you get users involved, it is the equivalent of putting the saw and the screwdriver down and grabbing the sand paper. There will likely be few additional big ideas after that point.
And so the point of all of this is that I feel few people really respect the process of creating big ideas. Compelling idea creation is hard and it is incredibly valuable. And as I see it, the “release early and often” meme is a reflection of a broad-based acceptance of incrementalism, in lieu of real creativity. In truth some of these incredibly popular concepts may be behind the incredible slow down we have seen in real innovation in the tech economy in the last decade.
16 comments:
Hank, you're absolutely right.
As a graphic designer, I have recently experienced the point of, and I quote, "I feel few people really respect the process of creating big ideas. Compelling idea creation is hard and it is incredibly valuable."
Last week a guy approached me after weeks of talks, asking me to do his logo overnight, but he wanted to pay about $60 for all that work.
I strongly believe that we need to educate ourselves and our customers about the creative process that runs behind whatever we do. Otherwise, it appears that doesn't have any value at all...
Great post!
Well, 90% of startup ideas suck, is the problem, and 90% of the remaining 10% are ripoffs of other ideas, so what do you expect. Oh, look, another social bookmarking site, what a great idea! Seriously, after the first dozen or so, you'd think people would give the concept a rest....
Now, in writing, as in a number of other fields, ideas are essentially worthless, and execution is everything. As Woody Allen said "Eighty percent of success is showing up".
But this is not necessarily true in the real world of science and technology or the fake world of startup entrepeneurship. In the former world, you need a good idea to begin with, and in the latter case (with some rare exceptions) you're not ever really planning to execute anyway, so all you really need a superficially plausible idea and the sales pitch to go with it.
Anyhow, I think that if you are wandering around looking for an idea, you have a problem. It's one thing to let a thousand flowers bloom, it's another thing entirely to spread out a field of manure and hope that something grows out of it.
Do real work on something productive, and get an idea while you're doing it; don't thrash around tacking web 2.0 or web 3.0 or whatever is the flavor of the day onto yet another unmonetizable service that no one really cares about except possibly some gullible VC someplace you might be able to fleece.
So to accomplish something that's both new and interesting, what you need is an honest-to-god profound idea plus the execution to carry it through.
I rarely read NextNY for this very reason. It is a bunch of poorly thought out nonsense written by a bunch of bored kids.
Has the author of that thread ever started and successfully run a company? I bet not.
Hank I'm shocked that you would even give this space on your blog.
anonymous,
Regardless of the source, I think that this is a common meme and so worthy of discussion.
Well said Hank. I've been in too many situations where users grasp on to a poor execution and vice versa where users are floored with well thought out and well implemented ideas.
However, In the context of web startups, the startup only comes into to existence because of their funding source (exluding the garage startups with no funding) and this leads to a massive bucket of crap funded by greed.
It will become more and more difficult as time goes on to come up with a truly great and innovative idea within the web technology/site scope of things. Cost to entry is cheap, and the VC's get what they paid for.
Excellent piece - with lots of quotables! Most new-product businesses, whether existing or startup, are afflicted with half-baked ideas, handwaving and hubris.
There are a very few savants who instantly understand an idea in its infinite subtlety. They are the Mozarts.
More typical is the self-acclaimed "ideas person" who never gets beyond that first eureka moment that seems to have a clarity that belies its shallowness. They can often talk a good talk - enough to raise money - and then dive into a crowded space populated with others with the same shallow idea, building products for a non existent market.
Then in between there is the creative thinkers. They are not savants, yet they are still fairly rare. They have a good nose for the bad concept. It may take them days or weeks and they may need to do market research and user testing before they are satisfied. They will always however spend a lot of time articulating the idea in many different ways, prodding the soft spots. Eventually they understand the nuances and build a product around a rock-solid strategy.
Their product might look the same as many others in the market, but only superficially. What makes their product different may not be visible at all. One company I know has a consumer oriented group-SMS service. They succeed in that crowded space because every new user gets a personal call from the sales team after they sign up. This was (one of the) game changers.
I used to think that the right process alone can achieve a good product. Good process does help, no doubt, but without the intellectually curious mind and good aesthetic sense behind it you don't get the right evolutionary mutations. In fact it takes some insight just to choose the right process for a situation.
I also used to believe that the value of an actionable idea is apparent to all. Truth is that it is hard to communicate this meta-concept. There are many failing businesses who don't even understand that their core weakness is the product strategy. It always looks like its a failure somewhere else. Engineers aren't good enough (actually they don't have clear direction for what they're building). Marketing isn't doing their job (rather they don't have a product that users want and that the media wants to write about). Or their CEO isn't raising enough money (no amount of money will make a bad product succeed).
The idea and the execution are equally important, but the mistake a lot of people make (especially young / first time entrepreneurs) is to not talk about it to anyone claiming its such a good idea that someone's going to "steal" it.
Which is why most people claim ideas are dime a dozen.
Noam Wasserman, a professor at Harvard Business School did some analysis around the "idea premium," i.e. how much extra equity does the founder with the "idea" get. The answer? About 10%. Noam has a great blog with lots of quantitative analysis on topics like this.
http://founderresearch.blogspot.com/2008/06/idea-premium-how-much-equity-is-your.html
having been the one who stated 1% originally ... Hank, how many stoned kids are sitting on how many crappy hand-me-down couches having brilliant ideas that will never, ever see the light of a non-hazy room? How many over eager, under-motivated people have you met in life who are full of alleged opportunities, but never seem to capitalize on them? And as I said on-list, how many people at any given time have/had/are having the same idea? You can have the most excellent idea in the world, but it's useless without a network, without the ability to implement, to execute. Of course you can have the greatest network in the world, only to see that network starve, for lack of ideas -- but an idea, on its own, is the barest wisp of success.
Great Post!
Andrew,
I guess your core point could really be that trivial ideas (which are the only kind some stoned kid could come up with) are worthless. A point which I make in this piece. But real ideas that have involved real thought and effort, not in execution but in creation, are highly valuable. My point is that I think your argument conflates these two things.
A brilliant entrepreneur can make a huge success out of a crappy idea. A novice entrepreneur can ruin a brilliant idea, despite having all the support and opportunity in the world. Obviously some ideas stand on their own, and some ideas have more value than other ideas, but there is a far greater weight to the entrepreneur, or founding team, than there is to an idea itself, when it comes to predicting or measuring success.
"A brilliant entrepreneur can make a huge success out of a crappy idea. "
I think the proof that this is more untrue than true (though not entirely un-true) is the horrible state of entrepreneurship for the last few years. There have been so few acquisitions because startups are just not making money. Its not that everyone is stupid, but that the ideas are not, for the most part, generating revenue. This is not the fault of the economy but because the ideas are, for the most part, just not revenue sustaining no matter how "brilliant" the entrepreneurs are. You can't "trick" whole markets into buying crap.
Hank,
Good question, and I've tried to build some assumptions into what makes a great idea, put some parameters on it, then put it to a vote. Let me know what you think:
http://www.antonybrydon.com/2008/10/whats-an-idea-w.html
I think the cost effective and safe hovercraft you refer to has already been made, see http://www.hovpod.com
Great post, Hank!
I think that the idea could be worth a lot more than than the 1% valuation as well, but I look at it from a different point of view. A great idea, with a good plan behind it, is the product of a lot of work. The planning, thinking, and critiquing, when done properly, can eliminate wasted effort during the life of implementing this idea. A former colleague once used the following rule for testing: one day of test planning is worth (or saves) three days of actual testing by eliminating lost time. If the valuation is based on time and effort, then the time taken to develop a stellar idea would be significantly greater than the 1%.
Thanks for provoking some thought: idea creation and creativity in general are things that appeal to me.
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