When we ask participants in our business school and entrepreneurship classes what is more important: the business idea versus execution of it, we find that about half vote for the idea and the other half believe it is execution that matters. So is there one correct answer to this question, or does this really depend on the circumstances or situation? You decide…
It’s the Execution that Matters
There is a lot of truth in this. We have heard from experts who say that ideas are cheap and plentiful (just Google your idea and you will be amazed at how many other people have thought about the exact same thing). They go on to say that nobody cares about your idea until it becomes a reality and reality happens with execution. It is also mentioned that a mediocre idea that is brilliantly executed can produce much more impact that a great idea with poor execution. We all know of many examples where this is true.
Venture capitalists or CEOs will tell you that they have lost count of the number of men and women who have approached them with their “great idea,” as if this, in and of itself, was their passport to instant success. Some people become so obsessed with their great idea that they fail to take into account the challenges that lie ahead on the very narrow road to success.
Ideas don’t make you rich. The correct execution of ideas does.
It’s the Idea That Matters
Then ask someone like Ronald Baker, author of the book called “Mind over Matter” about his opinion and this is what he has to say:
Ideas have always and everywhere been more valuable than the physical act of carrying them out.
Ronald Baker does not suggest that execution is unimportant; he points out rather that there is no effective way to implement a bad idea. History provides many lessons from Napoleon invading Russia to countries attempting to implement socialism and communism.
Many of the products that create a modern standard of living are only the physical incorporation of ideas of innumerable anonymous people who figure out the design of supermarkets, the location of gasoline stations, and the million mundane things on which our material well-being depends. It is those ideas that are crucial, not the physical act of carrying them out.
Societies which have more people carrying out physical acts and fewer people supplying ideas do not have higher standards of living. Quite the contrary. Yet the physical fallacy continues on, undaunted by this or any other evidence.” In other words, economic growth revolves around the human mind and its capacity for invention, discovery, and the transformation of ideas into valuable goods and services.
Ideas and knowledge are what economists describe as non-rival assets—meaning more than one person can use it at a time. Contrast this with traditional rival assets, such as land, labor and capital, which can only be used for one purpose at a time, and are subject to diminishing returns.
If I give you my tie, now you have it and I don’t; but when I give you an idea, now we both have it, can expand upon it, test it, and make it more valuable. Ideas and knowledge are subject to increasing, rather than diminishing, returns.
Charles Murray, in his work “Human Accomplishment”, explores some of the world’s most important ideas-inventions that occurred after 800 B.C. until 1950, essentially cognitive (not physical) physical tools for improving the world around us:
- Linear perspective
- Artistic abstraction
- The novel
- Arabic numerals and the alphabet
- Mathematical proof and theorems
- The laws of uncertainty
- The scientific method
All of the above are non-rival goods, meaning we can all utilize them at the same time without their being diminished—your use of the alphabet does not inhibit mine.
These ideas changed the world, creating untold wealth. They were also the contributions of an incredibly small number of individuals—4,002 to be precise, according to Murray. Does this not suggest that ideas are always and everywhere more valuable than their mere execution?
In business, ideas have an enormous capacity to apply knowledge to knowledge, thereby increasing innovation and wealth. Business is about people, ideas, and things, not land, labor, and capital. Yet ideas are not easily measured or quantifiable, so they are not given the resources they deserve by many organizations. Creativity and dreaming take time, which does not enhance conventional efficiency statistics.
How much of your firm’s human capital is devoted to creating and testing new ideas versus merely executing old ones? If you want to create wealth and remain relevant there may be no more important question to answer.