Innovation vs Execution

by JJ Jiang

In the entrepreneurial world, people often place a halo over the concept of innovation and at the same time undermine the importance of execution. This is understandable because great innovations pushes boundaries and changes lives and yet they are a rarity to come by. In this day and age, it seems like it’s becoming more and more difficult to come up with a true new idea. However, it should be remembered that if without perfect execution, innovations are merely good ideas, which are dime a dozen.

Some people believe only novel ideas are worth being worked on and shuns upon business models that are classified as copycats. These business models are considered second class citizens. Although, this shouldn’t be the case in my opinion.

Many successful businesses that changed lives are not truly original. Google copied yahoo, facebook copied myspace, and all the venture capital firms use similar investing models. There are many other examples. Yet, many of these “copycats” are wildly more successful than the idea originators. Many times this is because the “copycats” brought in different value propositions, but often it is the perfect execution behind the firms that helped them find better product market fit and secure sufficient funding to be there until when the time is right.

A great idea will be wasted in the hands of a bad team, but a good team can turn a bad idea into a great idea. This is the fundamental assumption behind the MVP concepts, test, learn, and pivot. The emphasis here is a good team, which implies great execution.

I understand why Fred Wilson is negative on copycat models. All VC should be, because it is in their interest to encourage innovation in the form of new ideas. If the world were to be filled with only copycats, the innovation cycle would come to a halt and undercut the importance of the VC industry.

Excessive copycatting would create an unhealthy environment for entrepreneurs. If everyone is coping and able to receive more funding than the original, then the idea generators would not have the incentive to innovate. This would not give a new business enough time to incubate and would limit the new business’s chance of survival without proper upside. Imagine if a great innovation, while executed perfectly, is growing slowly in its market. Copycats, with much stronger capital, rapidly imitate its business model and saturate the rest of the market. This wouldn’t leave enough room for the original innovation to succeed.

On some level, this is what Rocket Internet is doing. The Samwer brothers are great in execution with deep pockets. They have become an internet sensation because of their ability to imitate, execute, and exit. This is an empowering business, because it shifted the pendulum of innovation vs execution scale towards execution. It is also powerful because it arguably helped Groupon grow must faster than Groupon would have, on a global stage, without City Deals. However, it remains to be determined if this new form of VC investing would help the industry in the long run.

It is one thing when copycats are individual entrepreneurs who copy an individual business model, but it is another when a powerful firm does this on a systematic and routine basis. This is definitely profitable and lucrative in the short run, but just as over fishing and over foresting without considering replenishing the supply.

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