How Do You Know You Have a Good Idea?
You don't. And neither do the biggest corporations in the world
As you evolve that great idea, it changes and grows… Every day you discover something new.
It’s that process that is the magic.
Were desktop computers a good idea?
At the Palo Alto Research Center (PARC) in Silicon Valley there is an exhibit — something of a museum, really — that displays some of the most famous and successful computer technologies ever invented.
The graphical user interface (GUI).
The What You See Is What You Get (WYSIWG) word processor.
They were all invented by Xerox Corp at PARC in the 1970s. So…
… why did Microsoft and Apple become the most valuable companies in the world, and not Xerox?
The History of Xerox
The history of the Xerox Corporation has some strange parallels to the history of the desktop computer.
The idea of making photocopies was first patented by Chester Carlson, who pretty much had a prototype of his photocopying technology working back in 1938. For five years, he tried to get somebody to buy it.
IBM wasn’t interested. General Electric wasn’t interested. They didn’t think it was a good idea, and they couldn’t imagine a market for it.
Finally, a Rochester, NY company called Haloid Corporation got curious. Back then, Rochester was a technology hub that revolved around the spectacular success of Eastman Kodak company. This company made film, chemicals, and cameras cheap enough for the masses.
In other words, Rochester was for photography what Detroit used to be for automobiles, what Silicon Valley became for semiconductors, and what Seattle is now for software. It was a locus of new ideas, innovation, inventors, and their startup and spinout companies.
Joseph C. Wilson was one of those entrepreneurs who grew up in Rochester. He inherited little Haloid Corp from his father, but by the time Wilson had staked his future to “electrophotography” and renamed it “xerography,” the old Haloid name didn’t do justice to Wilson’s ambitions.
So Wilson founded Xerox.
In 1959, Xerox came out with its first plain paper copier, and the idea all the bigger corporations didn’t like made Xerox into a Fortune 500 global Goliath.
Wilson, who was evidently a man who could recognize a good idea, stepped down as CEO of Xerox in 1968 (prior to the founding of PARC) and died in 1971. It’s possible that something about the Xerox ability to recognize and capitalize on good ideas died with him.
Success Requires Recognizing Good Ideas
Although Xerox has been widely ridiculed for missing out on profiting from the desktop computer that they practically invented, it’s not like the Xerox story is unique. There are plenty of great products and companies that have been founded only after bigger corporations said it was a bad idea.
The key to the lasting success of any organization is its ability to assess the quality of new ideas.
What we can learn from the history of Xerox, Microsoft, and Apple is that every organization must have a method for generating, identifying, and assessing new ideas. Ed Catmull wrote about this in his book “Creativity Inc.” In this book, he described the way the writers and directors at Pixar (and later Disney) would share, vet, and improve upon each other’s ideas.
Catmull contends that every Pixar movie ever produced was crap when the idea was first conceived. He says it only became good after multiple rounds of revision.
Ken Iverson (former CEO of Nucor, now the largest steelmaker in the United States) describes an analogous approach to knowledge sharing in his book “Plain Talk.” When Nucor was growing really fast, plant managers had the freedom to experiment with new technologies or management programs in their own facilities.
Iverson would get all the managers together to share their experiences so they could talk about what was working and what wasn’t. The result was an environment of creativity, innovation, and new knowledge creation that allowed the best ideas to grow.
The ultimate source of all business value is new knowledge.
At Apple, the method of assessing the quality of new ideas may have been Steve Jobs, and the climate he fostered for creating, identifying, and assessing good ideas. He famously never held a focus group or a marketing study. Instead, he said, “We knew the iPod was a good idea because we all wanted one.”
Since Jobs’s untimely demise, what great new ideas has Apple brought to market? A watch? Wireless headphones? A cheap, plastic knock-off of the iPhone?
Jobs used to say “What I do all day is meet with people and work on ideas.”
Without Jobs, the Apple idea machine is broken.
What Companies Get Wrong About Idea Validation
There are hundreds of articles on validating ideas for startups. In addition to Steve Blank’s advice to have 100 conversations with customers (good advice), lots of authors suggest writing blogs, sharing on social media, and doing primary and secondary market research. The premise that motivates this advice is that you don’t know when your ideas are good. You have to test them with colleagues and customers.
But I’m telling you that the whole concept of “idea validation” is wrong, because your goal should be to improve your idea, not validate it.
Don’t go looking for someone else to validate your idea. Look for the few people you can trust to help you improve it.
Think of your idea as a hypothesis that can’t ever be validated. As Elon Musk says, “You should take the approach that you’re wrong. Your goal is to be less wrong.”
Every conversation you have, every demo you deliver, and every protoproduct that you sell is an experiment in testing and improving your hypothesis.
That doesn’t mean you have to please everybody. Some people just don’t have or don’t care about the problem that you’re trying to solve, and that’s OK.
Maybe your idea just isn’t for them.
To be a successful entrepreneur, one has to bet against the consensus and be right. — Ray Dalio, author of Principles
How does your organization assess the quality of ideas that go against the consensus?
The answer to that question is the difference between wealth and bankruptcy.