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The Value of an Idea

09.14.2012, Business, Journal, by .

I was having lunch with some middle manager friends of mine at one of the companies I’ve worked for and two of them started to recount a conversation they had with their VP earlier that week.  He was asking them to set something up so that he had a mailbox where he could leave messages that would be transcribed and emailed to him.  Basically he wanted to followup when he was back at the office if he had an idea while he was out for a run or something.  Sounds reasonable, pretty straightforward, nothing to write home about here.  But then one of them mentions “He said he has a million dollar idea every day and he doesn’t want to lose them.” , to which the group bursts into laughter.  Wait, laughter?  I stop for a second and think, “Why are they laughing?”.  Every one of these people was a moderately successful, educated, product development manager with at least a half decade of experience successfully executing on complex projects to justify their 6-figure salaries.  Yet, none of them thinks that it’s reasonable to frequently have great ideas?

Do vs. Don’t

This is one of the experiences that helped me realize what separates those that do from those that don’t.  When you become a student of business (not to be confused with a business student) you build up knowledge through books, case studies, blogs, examples, observation, and often times though the work that you are doing starting up your own company.  After a while you start to see the world differently.  You start to understand why companies do the things they do.  You start to look at company X and realize their potential, even if they currently have $0 in revenue.  You appreciate the beauty of watching a new product fit a market.  You start to think in terms of providing value to a market.  Every day turns into an exercise in “wow, how has no one solved this problem yet”.  The gears turn in your head and eventually you get to a point where you have a million dollar idea at least once a week.  In the past I’ve called this actively thinking and actively thinking is what generates the ideas that feed the engine that drives innovation in our world.

Ideas and Startups

So, if ideas are what feed the engine, then they are valuable, right?  A founder with a great idea deserves to get a big chunk of a company and have other people just execute on all of his visionary ideas while he sites back and waits for his big fat check from Google, right?  You want my opinion?  Not a chance.

Any good startup is going to have a hundred great ideas in their first year alone.  The entire founding team is going to be contributing great ideas every day.  Chances are good that the first great idea, the idea that got the team together and got the ball rolling, isn’t even going to be what makes your company successful.  Heck, in the end it might not even make the top 10.  The problem isn’t a lack of great ideas, the problem is choosing which ideas to execute on, and then executing on those ideas.  Tenacity, resilience, perseverance… these are all the traits that VCs look for when they are investing in a person (notice I didn’t say company).  When it comes to ideas I care less about a person’s actual idea and more about whether they can duplicate that effort.  As we’ve discussed, a million dollar idea isn’t all that amazing.  But, ten million-dollar ideas… compounding on top of each other, backed by a solid group of people who can execute on those ideas–that’s starting to get a little special.  I care more about them understanding how to learn what a market’s needs are, and understanding how to meet those needs, than I do about any particular idea.  You need to continually refine your ideas, continually come up with new ideas, and continually choose to throw out the bad ones.  In fact, choosing to not work on a bad idea is much harder, and arguably more important, than coming up with a good one.  For every truly great idea there are 9 seemingly superb ones that are actually not going to get you where you want to be.  The resources wasted executing on a bad idea, while leaving a good one waiting in the wings, is time that you might as well have spent sitting on your hands.  This is the power of the lean methodologies.

Ideas + Lean = Success

The lean startup methodology advocates for wasting as little resources as possible validating the assumptions of an idea before you start to invest significant resources into fully implementing that idea.  Why take 6 months and spend $50,000 going down the wrong path if you can spend 6 days and $2000 learning not to go that way?  A lean engine (build, measure, learn, repeat) coupled with a steady stream of pretty good ideas will separate the wheat from the chaff and, given successful execution by the project team, will inevitably succeed.

The Takeaway

As an “idea guy”, AKA anyone who isn’t directly building or selling(+markting) the product, your job is not done when you come up with an idea.  You need to also determine how to test that idea in a non resource-intensive way in order to prove its value.  You need to keep coming up with great ideas, as do your fellow execution-oriented cofounders btw, and you need to keep from assigning inherent value to your ideas based on the fact that they were your ideas.  You need to partake in actively thinking so that your output of great ideas is high, and you need to make understand your market so that your output of bad ideas is low.  Finally, you need to let the process work so that the truly good ideas will prove themselves, and the bad ones will fall away.

Thanks for reading, as always feel free to contribute to the discussion.