On the surface, the world’s economy seems to be feeding on ideas and innovation. The flows of value seem biased towards countries where innovative ideas are created while less value flows to other economies that are only reusing old ideas. The argument is usually supported by an abundance of examples: value of computers versus tomatoes, cars versus oranges, smartphones versus t-shirts and the list goes on. We have all heard them. Examples used to validate the hypothesis that innovative ideas drive value. And it seems to fit so well with reality… until you meet a skeptic. Until you meet one of those people in your entourage that loves to pick up on flaws in an argument. When presented with the “innovation” hypothesis, the skeptic would use a variety of counter arguments to invalidate it. One of the strongest is that a big proportion of innovators are “created” in other regions of the world and later move to countries where they can get the money. So creating innovators doesn’t drive value but having the money to attract them does. Another strong one is that most of today’s successful ideas had existed for a long time and had been unsuccessfully implemented until they got proper funding. After a dozen other counter arguments and examples, the conclusion seems to be that the real driver of value is money.
An ingenuous mind would jump on the new hypothesis and love it unconditionally as it comes with a bonus for the lazy: the comfort of blaming it all on not having the money in the first place. Except, the skeptic would come up with flaws to that hypothesis again. “That’s betrayal!” The ingenuous would say. “The skeptic convinced us with the idea in the first place and now they are backing down?”. Well, that is the skeptic’s mission in life: finding problems with the argument, destroying it, building a new one and starting the cycle again; a pseudo-infinite loop. For the skeptic, the idea that money drives value is ludicrous. It would imply that the flows of value have been the same since the creation of mankind (or the evolution of the Homo sapiens if you prefer that) but history tells us otherwise. Economies raise and fall. Ventures raise and fall. And, flows of value are constantly changing. “So, what is it this time?” The frustrated ingenuous would ask. It seems that neither creating the idea nor having the money is the key to value creation. Looking at successful ventures all over the world, it seems like the key is… wait for it… Execution! (not in the sense of killing other people working on the same idea but in the sense of performing actions to reach results)
The ideas behind most successful ventures existed long before the ventures were created. Some were even very well funded and considered very successful before the disruption came along. The disruption is usually a better execution of the very same idea. It wasn’t that the idea was new or that the newcomer had more money. It was about the way it was executed. Now the line between idea and execution is a fine one. One could argue that the disruptor had an “idea” for a better execution. So it is about the idea after all. Except it is not. For the simple reason that if the idea wasn’t executed, nothing would have happened. That is to say if one develops an idea and hypothetical ways to execute, the sum is still worthless. Value is only created if there is actual performance not hypotheses on how to execute. The best ventures are the product of brilliant executors who aren’t afraid to take other people’s ideas, marry them and bring other great executors onboard to get a greater product. They are not idea creators, but rather resourceful, hard working craftsmen that can bring ideas to life.
In a world where information is abundantly available, ideas are no longer scarce. Not even a little scarce. And you know the rule, no scarcity, no value. So the idea is worthless. The availability of money is heading the same way. With the proliferation of venture capitalists, angel investors, incubators, accelerators, crowd sourcing platforms… and the lowering cost of execution, money for the execution of an idea is no longer scarce either. What’s scarce is the executor. And, unlike ideas and money, that would remain so. The reason brilliant executors are scarce is that the quality of an executor is relative to other executors. In other words, if everyone is a brilliant executor then no one is a brilliant executor. They are all the same and the value they create is the same. An executor can only execute better if they develop better characteristics than the others. Scarcity of the executor will thus last as long as humans differ in their characteristics.
So it’s not all about the idea, it’s not all about the money and it’s not all about execution either. But, it’s mostly about execution.
The ingenuous will settle on this for now, until the skeptic finds it ludicrous again.