Saturday, February 17, 2007

People and Ideas

Ideas are a complex concept in today's entrepreneurial world. Many daydreamers find that the idea is the stumbling block that prevents the process from ever beginning. To get an idea of how heralded the big idea is in the country a simple Google search of the term reveals institutes, essays, and scholarly works that have sprouted in tribute to this huge concept in American Entrepreneurship. If you need further evidence, look to the name of the nightly show hosted by Donny Deustch on CNBC. Others however, like Ramit Sethy at iwillteachyoutoberich .com believe that the big idea is not a necessity and in fact the exception to the rule. What they believe is that the greatest impediment to startup success is not the lack of a good idea but instead the lack of ever doing anything at all. They believe that the idea is used as the scapegoat and a cover for procrastination.

Personally, I agree that the idea is not a necessity. Throughout the history of business the examples of company metamorphosis are plentiful; from Virgin Brands getting its beginnings Richard Branson's student newsletter to the Land's End catalog company beginning as a catalog that sold nothing but boat parts. What's not necessarily always noted is that the reason these companies were able to successfully change is that they started with a viable idea and when the true idea for their business did arrive they had already formed a community around their business that would not only accept the change in the product but facilitate the change in the company as well. Branson sold album's cheaply to students and Land's changed to sell clothing to boater's. Essentially their first idea hit their market but it just took them time to find the product that best fit their business and the community it had created. The rapid expansion of the companies came from relatively simple lateral expansion that occurred after that cash had already begun to flow in, even if only slowly.

It seems that while the initial idea is not that important the ability of the company to carve out a niche or draw an audience does matter. Where the list of bad business ideas must be checked at the door then is when it comes to the idea of just jumping in and starting for the sake of doing. Leaping blindly is invariably a bad move in anything but especially in business. If you think you're going to start the next Facebook or Myspace you're going to be leaping into the wrong venture. Unfortunately, in that case your niche is already taken and the communities have already been formed. Often times people may argue that they're really passionate and dedicated and they don't care what anyone says. Those people, would be well advised to take another look at what they're doing. I'm not saying that one shouldn't be dedicated and passionate but perhaps one should steer that drive and tenacity to the place where it intersects with a path of less resistance. In the previous examples, those business and websites have become successful because they got in at the front end of the trend. They didn't try to emulate and compete against large and well established enterprises in their field, the either created the field or served it differently.

Typically businesses are formed on some kind of idea. More often than not, though, that idea is not a new product but an understanding or an insight relating to a community that is in need of a product or service and may or may not know it. These companies succeed by convincing or showing these customers what they need or linking all these would be customers together. Once the community is determined, then the company can go about expanding, growing, and bringing new products to the market (the known content of the daydreams of starry-eyed, procrastinating, would-be entrepreneurs). In the end, it is likely more important to know the community that you want to serve than it is to have an idea of how to serve them. Knowing the needs of the community lets necessity take its rightful place as the mother of invention. In business practice and in business culture people have proven in most cases to be more important than product in determining the success of a company.

No comments: