What Is An Idea Worth?

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.

This article was authored by Hank Williams who is a New York-based entrepreneur who explores the tech marketplace from 10,000 feet at Why Does Everything Suck?.