Great ideas that are game changers are hard to come by and hard to spot.
In his fantastic book ‘Where Good Ideas Come From; the natural history of innovation’ Steven Johnson talks about how breakthrough innovations (where someone wakes up one day and goes – wow, let’s make x or y and it succeeds in changing the world) are very, very, very rare. Most of the time if we look too far ahead, it is simply too hard for us to conceptualise what the future would look and feel like. That future is often not possible or likely to be accepted into everyday life – the world simply isn’t ready for it yet. What tends to happen is that we are able to innovate through focusing on what Johnson terms the “adjacent possible”.
Johnson describes the adjacent possible as “a kind of shadow future, hovering on the edges of the present state of things, a map of all the ways in which the present can reinvent itself”. I love that description. It is a great way of helping to manage your thinking about what is actually possible in that ‘shadow future’ of the adjacent possible.
The history of life and human culture, then , can be told as the story of a gradual but relentless probing of the adjacent possible, each new innovation opening up new paths to explore. But some systems are more adept than others at exploring those possibility spaces. – Steven Johnson
Early on in the idea generation process and probing on the adjacent possible, volume of ideas is important to generate enough diversity of thought and concepts to then filter through to quality ideas. Even still, a good idea is really worthless unless it is taken through to execution and creates real value for stakeholders (shareholders, community, government or other). It is easy for one to become a tad cynical in this age of innovation about how likely one is to be able to move through the process of having a great idea to being able to execute well.
How do we de-risk this process of execution?
Wearing the lens of an investor, the earlier in the journey from idea to execution the greater the risk and the more difficult it is to ‘pick a winner’. As an early stage investor you’re really just trying to avoid ‘picking losers’ until you are able to have enough information to pick winners and build a quality portfolio. In saying that I quote Charles Dow, the founder and first editor of the Wall Street Journal who was summing up how experienced Wall Street operators felt in his editorial of 20 November 1901:
The more they actually know, the less confident they become.
But what about for the entrepreneur or the intrapreneur? They don’t necessarily have the luxury of the diversified portfolio, particularly if they are in a startup, small to medium enterprise or running a smaller business unit in a larger organisation. Is success really all about accelerators, incubators, co-working spaces, collaboration, lean startups, hackathons, business canvasses and the like that have become common place and all the rage? Do they really make a difference to our ability to execute and generate high quality investable propositions?
I think there is real value in accelerators, incubators and utilising methodologies like lean launchpad to de-risk ventures and provide a structured approach to thinking about how to grow. It is so easy to create a spreadsheet that shows future revenue growing off the chart with flat lining costs and to feel really good about your imagined future business success…so the questions is…
What does it really take to execute well and generate real value?
To get where you’re going, you’ve got to have a map. Vision, strategy and a solid business model which has been tested in the market, is crucial and requires hard work to execute effectively. Accelerators and incubators help to de-risk this process and the best ones do this extremely well. They disproportionately generate investable propositions which go on to create value.
Success however should not be measured by how many accelerator / incubator programs you get accepted into, how much funding you raise, how many awards you win or how much media profile you gain. That is just a distraction from the real purpose and mission of your venture. It is about how much value you are able to generate for your customers, shareholders, community, stakeholders and yourself. The way in which that value manifests will be different in different contexts. In a commercial context, customer acquisition and retention, cash generation, return on capital and profitability provide good markers for understanding whether you have the ingredients for a long term sustainable business. In a social enterprise context, value will also manifest in the outcomes you create for your stakeholders – this could be improving health outcomes, quality of life outcomes, reducing inequality and many other measures.
So what matters more in execution?
Is it the map you create to execute? Is it speed of execution? Is it about quality and product/service leadership? Is it talent and leadership capability? Is it about collaboration and the team? Is it a bit of serendipity and timing (think MySpace vs Facebook)? Is it about having a big enough market to begin with? Is it about sales and business development capability? Is it about cash flow and availability of capital? Is it about being able to maintain your competitive position in a market through some protective mechanism (think IP, cost structure, efficiency, value proposition)? Is it about being surrounded by a high quality board and advisors? Is it about that visionary leader that is just going to push through and execute no matter what barrier or obstacle is put in front of them? Is it how well founders/entrepreneurs listen and learn? Is it about how much scar tissue and experience founders have?
No doubt that all of these factors are important. One person’s journey will be different to the next. Being aware of the importance of execution and making conscious and informed choices is crucial. Learn to start thinking for yourself and challenging assumptions, long held points of view and your own self limiting beliefs. There is some evidence in the literature about the importance of all of the above factors in driving execution outcomes – some factors will have more importance than others and this will differ based upon your business or venture.
Creating the environment and space for the adjacent possible to bubble up will encourage better and more good ideas. Being aware of the factors and capabilities that influence and moderate effective execution will support you to take your good idea through to execution and value.
Nick founded and leads Chrysalis Advisory, providing Governance, Strategy, Leadership, Culture and Business Development Advisory.
If you would like to have a talk about how Chrysalis can support you to generate good ideas and execute please get in touch.