Secret #5: Mad Scientists Need Not Apply
As seen on LinkedIn
In business circles, “inventor” has become a bit of a dirty word. Why?
When I think of inventors, I tend to think of “mad scientists” like Emmett “Doc” Brown, the dad from Gremlins, or Belle’s dad Maurice from Beauty and The Beast: eclectic, optimistic dreamers with a penchant for creating clever, new (if impractical) solutions to life’s little problems. They’re lovable, if not exactly successful.
On the flip side, you’ve got a guy like Tony Stark (aka Iron Man). An inventor if there ever was one, Dr. Stark leaves us with a decidedly different “genius billionaire playboy philanthropist” vibe.
Why is that? Well, leave it to an anonymous Wikipedia user to capture the essence of the distinction as well as I’ve ever seen:
“Invention is the conversion of cash into new ideas. Innovation is the conversion of new ideas into cash.” — 220.127.116.11 (Wikipedia, 2009)
New And Better
Those who’ve been following this 12-Secrets series since the beginning may have noticed that I rarely bring the word innovative into the mix without appending the disclaimer (read: new and better). Here’s why: Innovation has become a grand master among business buzzwords. Like her wicked stepsisters Leverage and Synergy, Innovation has become a boardroom catchall, at risk of connoting everything and nothing at once.
After spending nearly two years working to develop a sophisticated (read: fancy) definition of innovation for my former firm, I’ve since come to settle on a radically simple definition: Something is innovative if it is both new and better. That’s it. New and better.
Every time someone uses the word “innovative,” I’ve trained myself to mentally substitute “new and better” in real time. If the sentence still makes sense, stellar. If it sounds bananas, I tune out and start scanning for the exit (door or icon, as appropriate). Here are some actual examples I’ve noted from just this week:
“Janet has built an innovative (new and better) plan.” -> Right on. Give Janet a raise!
“That Toby is a really innovative (new and better) guy.” -> I think I catch your drift, but…
“Our innovative (new and better) collection of paint colors…” -> Facepalm.
New and better may be a simple definition, but it’s not simplistic. Let’s take a look.
Broadly speaking, there are two kinds of “new” ideas:
1. Objectively New: New-to-world ideas
2. Relatively New: Ideas well-known to some groups but essentially unknown to others
Precious few concepts are objectively new. Truly new-to-world thinking tends to be the product of deep expertise and extreme specialization. PhDs are awarded for fundamentally new work that expands the boundary of human knowledge.
While objectively new work is noble and necessary, it’s also typically costly, complicated and anything but investor friendly. This is a big part of the reason why most of the amazing IP developed at universities struggles to see the light of day. Scientists and academics get their energy from discovery…not business development. More Emmet Brown than Tony Stark.
“The future is already here — it’s just not evenly distributed.”
— William Gibson, author, quoted in the Economist, 2003.
While objectively new ideas move human knowledge forward, the creative application of proven ideas to new problem spaces moves business forward. For example, technologies that are “old hat” to the movie industry might seem downright futuristic to the insurance industry. Tesla has made standard procedures from the tech industry appear revelatory to the auto industry. As a result of Atul Gawande’s 2011 book The Checklist Manifesto, a 1935 best practice in aviation, the standard preflight checklist became a sweeping “innovation” in global health care. To put it succinctly: “One man’s trash is another man’s come-up.” — Macklemore
Venture investors are looking to maximize upside, not novelty. This is why we get excited when we see a business model that creatively cross-pollinates a proven solution from Market A with a problem worth solving from Market B. “Pandora for news.” “Skype for hiring.” “executive coaching for the rest of us.”* If you can convincingly frame your business as “[Known_Success] for [New_Space],” you might be on to something.
The point is this: Your venture doesn’t need to be employing new-to-world discoveries at every turn to be successful. Rather, you need to be novel relative to your particular competition. Arthur C. Clarke famously said: “Any sufficiently advanced technology is indistinguishable from magic.” Mystify your competition.
Is This Better?
“Better” is a measure of relative value. You can’t claim something is better than something else without specifying the specific dimension that you’re measuring.
Is my child better than yours? Most would say that’s an unanswerable (and rude!) question. I’d say that it simply depends on what we’re specifically measuring. Height? Speed? Flexibility? Facial symmetry? Moral fiber? Bass-fishing-success-rate?
I strongly believe that even the most abstract, qualitative attributes can be measured given enough effort and cleverness. In turn, I believe that a venture entrepreneur needs to build their business in pursuit of measurable superiority versus the alternatives they’re out to beat.
Every company stresses their feature-level superiority relative to their competition. We’ve all seen the cheesy two-column table wherein Company A shows how they beat Company B in not one, but in fact five(!) critical features. Never mind that Company B touts a similar chart, only with its own carefully selected five dimensions that play to their own strengths. Everyone will tell you how why their “child” is best, if they’re free to choose their criteria.
This is why your business must ultimately ladder up to a value proposition rooted in the only two global measures that matter to everyone: time and/or money. Superior venture plans lay out a superior customer value prop, concretely described in time or dollars saved. Inferior plans vaguely cite feel-good abstractions.
In the classic book “Freakonomics,” Steven Levitt and Stephen Dubner looked at thousands of real estate listings and learned that blurbs with concrete, measurable descriptors like “granite, maple and 3,150 sq. ft.” regularly priced higher than those with squishy, immeasurable superlatives like “charming, spacious and cozy.” The takeaway: Listings without much going for them retreat to fuzzy qualitative descriptors. Winners cite their quantifiable data. Savvy investors are looking for businesses that are measurably 10x superior to their competition, not “charm.”
Bottom line: We prefer to invest in companies that creatively apply proven ideas to new problem spaces in new ways that are measurably better than existing alternatives. “Better” should be concretely expressible in customer money and/or time savings. We favor companies whose critical research and development is complete, and whose technical ambiguities have been stamped out. We respect, but do not fund, theoretical or exploratory research.