There is a popular notion in the startup and entrepreneurship community that it is not great ideas that make great startups but rather great execution. This is given as the reason for many phenomena, from the fact that investors rarely “steal” ideas from investors that pitch them (they aren’t looking for great ideas, they are looking for great teams that can execute them) to the fact that it often is not the first mover that ends up owning a market (Google didn’t invent the search engine, it just executed much better than anyone before it).
Derek Sivers even goes so far as to quantify this idea. He says that ideas are just “multipliers” of execution. He shows this with the following table:
AWFUL IDEA = -1 WEAK IDEA = 1 SO-SO IDEA = 5 GOOD IDEA = 10 GREAT IDEA = 15 BRILLIANT IDEA = 20 --------- NO EXECUTION = $1 WEAK EXECUTION = $1,000 SO-SO EXECUTION = $10,000 GOOD EXECUTION = $100,000 GREAT EXECUTION = $1,000,000 BRILLIANT EXECUTION = $10,000,000
So, a brilliant idea executed brilliantly would be worth $200,000,000 (20 * $10,000,000) and a good idea with so-so execution would be worth $100,000 (10 * $10,000).
There are even entire companies based on this notion. For example, Rocket Internet is known for taking proven, if not novel, business ideas and executing them in emerging markets. They hire people they believe will be great executors, MBAs, Management Consultants, and Investment Bankers and “clone” companies in other countries.
A question one might then ask is, if successful startups are all about execution, why aren’t a higher percentage of successful startups started by these people that are apparently great executors (MBAs, Consultants, and Investment Bankers)? Why is it that the “popular” startup story (which it turns out is also a myth if you look at the data, see Noam Wasserman’s book, Entrepreneur’s Dilemmas) is about the young college drop out that breaks all the rules and starts the multi-billion dollar company?
The answer comes from Steve Blank‘s observation that startups are not simply smaller versions of bigger companies. Startups are “temporary organizations in search of a repeatable and scalable business model.” MBAs are typically trained in management methods that have been shown to work over the years at large, established companies. Management Consultants have built up a set of tools and knowledge over the years from working with large, established companies. Investment Bankers typically work with companies once they have reached a stage of maturity that is far beyond the startup stage as defined by Blank.
Thus, it’s not simply execution, but the decisions made about exactly what to execute that makes all the difference. The ability to recognize great ideas and/or being able to execute a plan to evaluate the idea and make necessary pivots, not just execute the idea, is the key to startup success.
I often run into entrepreneurs that have ideas that are either not unique, relatively simple, or have been tried before (usually unsuccessfully). When I ask these entrepreneurs what is going to be different with their company, they inevitably say they are going to be more successful at execution. This very well could end up being true, but that fact is many startups fail because the idea simply wasn’t a good one. There wasn’t a market, it didn’t solve a real customer need, and/or the market simply wasn’t big enough to create a truly scalable business. The company failed because they failed to recognize this and pivot, not because the didn’t execute the idea successfully.
This is the execution myth, the idea that any idea executed well will be successful and failure is a simple result of the execution. Indeed, Sivers captures this in his idea multiplier model. An “awful idea” is, in fact, a negative multiplier. If anything, he perhaps gives bad ideas too much credit, even so-so ideas brilliantly executed only have so much potential.