Why Your Business Needs More Weird Ideas— Part 2
In Part 1 we discussed two kinds of innovation: Disruptive Innovation (D.I.) and Incremental Innovation (I.I.).
We talked about how the majority of companies don’t innovate and the ones who do, solely do I.I.
Meaning, they aren’t taking any risks and everything they do is logical.
I made the case that because of that, they don’t test things that seem illogical but might have tremendous user happiness as an upside.
I closed with my thesis that therefore, I believe there’s huge untapped potential in the way we innovate and that smart people will start to exploit that gap the coming 2 decades.
Enter Part 2.
I believe there are 2 main ways to create economic value*:
Technological Economic Value Creation (TEVC): You can figure out what people want and supply it.
Psychological Economic Value Creation (PEVC): You can determine what you can supply and figure out clever ways to make them want it.
Mathematically speaking, they’re indistinguishable.
Right now the companies that are innovating are solely focussed on TEVC.
But TEVC has two limitations.
The first one is that not all problems are engineering problems. (This is a big idea because this is the religion the startup ecosystem is built on.)
Tinder offers a better alternative than dating websites. But has it solved the fundamental problem of dating? I don’t think so.
Because (from a guy’s perspective) it’s not a problem you can solve with tech.
It’s a ‘’problem’’ you solve with interpersonal skills.
Learning how to flirt, learning the skills to approach strangers anywhere, how to strike up a conversation, creating rapport out of thin air, learning what your values are and how to communicate that, learning to break rapport the right way, learning to read body language and so on...
None of these can be solved with engineering in the same way you wouldn’t try to put on muscle mass with an app.
(But most people would rather do the 15 easy things that don’t matter, rather than the 1 hard thing that does. Which is why we have the supplement industry and Tinder like apps.)
And yet, that’s exactly how you need to position yourself if you wanna get users and raise capital from investors. You need to sell your app as the end all be all.
It wouldn’t be good marketing if you said:
‘‘Look.. this app might get you laid if you spend disproportionate amounts of time on it. But you’d be better served spending that time improving the fundamental problems you have which cause you to need this app in the first place. Those skills will help you not just get laid but will help you form real relationships in your personal and professional life, giving you the freedom to shape your own life.’’
And the second limitation of technological innovation is the physical limitation of human perception.
Eventually, you reach a point where the camera can only get so good, or the phone screen only so sharp before we really can’t tell the difference anymore.
When your technology exceeds the degree to which humans are able to perceive it due to their biological boundaries, you’re pissing away money.
But you could argue that happens well before that perception boundary.
What if you develop a screen that is at 92% of what humans can perceive but that extra 8% has such an aggressively diminishing ROI in terms of extra user happiness vs. cost… then you should really pause to ask yourself if that’s worth it.
Maybe there are better ways to spend that money?
Which brings me to the final part of creating economic value, psychological innovation.
Which we’ll cover tomorrow in Part 3.
*You might be wondering what the difference is between how I described innovation in Part 1 and economic value creation in Part 2. They’re two sides of the same coin. They both describe frameworks for user happiness. But with Innovation (incremental and disruptive) I look at it through the lens of a business. With economic value creation (technological and psychological) I look at it through the lens of the user.