I’ve been stuck on this notion lately that the value of ideas is increasing faster than the value of execution. I’m reading The Singularity is Near by Ray Kurzweil. Throughout the book, a key concept that the relative value of ideas to execution is tilting more and more towards ideas keeps coming up.
In a chapter on the implications of nanotechnology, Kurzweil forecasts that…
…the value of everything in the world, including physical objects, would be based essentially on information.
Information is the result of new ideas. However, the value of ideas, their ability to produce wealth, is always limited by our ability to execute on them. So while you might have 10 great business ideas, they’re only valuable if you’re able to actually execute on them. Of course, personal capacity is limited. You only have so many resources – time, energy, money, etc.
Historically, or at least since the rise of capitalism, the way to increase the value of your ideas was through hiring and delegation. You could put together a group of people who would execute on your ideas for you. As Bertrand Russell said:
Work is of two kinds: first, altering the position of matter at or near the earth’s surface relatively to other such matter; second, telling other people to do so. The first is unpleasant and ill paid; the second is pleasant and highly paid.
However, as technology improves, our ability to both distribute and execute on ideas is increasing.
Increasing transparency as a result of technology increases the power of good ideas while reducing the power of bad ideas. Blogging, podcasting and social media are all examples of the increasing ability to distribute ideas in a highly transparent way.
I started listening to Robb Wolf’s Paleo Solution Podcast about a year and a half ago. By sitting down, flipping on a microphone or and talking about the his ideas, Robb has created value in the lives of hundreds of thousands of people.
He’s done it by efficiently distributing his ideas. It’s been proved to be truly valubale because of the transparency of modern day distribution channels like social media and blogging (testimonials, transformation pictures, etc.).
Value is only going to be more and more closely related to the creation of actual wealth as transparency increases.
Transparency is important here because the ideas actually have to be useful. If Robb were a fly by night guy spouting stuff that wasn’t true, it would be easier than ever for people to figure it out.
I think of the example of the itinerant “snake oil” salesman in the American West. Because of the distance between cities and lack of technology to effectively disseminate information, he could make a living moving from town to town deceiving each individual town’s members.
The snake oil salesman today is one viral tweet away from being out of business though. This isn,’t totally true of course. There are still lots of industries that are more complex and opaque, but that’s the direction things are moving.
Increasing Execution and Leverage from Technological Automation
It’s increasingly feasible for a very small group of persons with access to technology to execute on large ideas and create tremendous amounts of wealth. In 2010, Google, Amazon and Cragslist were able to generate more than 1 million dollars in revenue/employee.
In a purely industrial or knowledge-based economy, those numbers are impossible. It’s only in the an idea-driven, entrepreneurial economy (powered by the exponential growth in technology and computing) that those kinds of numbers become a possibility.
Marketing automation software is a clear example of our increasing ability to execute ideas.
I talked to someone recently based out of Asia that had used marketing automation software He was able to set up a system that, while he was asleep, could capture contact information and follow-up via email, SMS and phone with his customer base in the U.S.
One clever dude and his laptop can be more effective today than entire marketing departments were 20 years ago.
The Rate of Change in the Value of Ideas is Nonlinear
The increasing value of ideas is being driven by the improvements in distribution, transparency and automation created by computing technology which is, according to Moore’s Law, doubling in terms of computing power and halving in terms of price per performance every 16 months and has been since the invention of vacuum tubes in the 1960′s.
That means that in 16 months from now, all your ideas are TWICE as valuable. Twice! In 32 months, they’re four times as valuable. In 48 months, they’re 16 times as valuable.
This is difficult for us to understand as humans. Our brains didn’t evolve to understand exponential growth.
Ray Kurzweil tells a story of talking with the leading geneticists in the world in the early 1990′s and advocating for the human genome project. They all said that it was a waste of time. That to decode the human genome, that it would take 1000 years.
The smartest, best-educated people in the world, forecasting about their field, predicted it would take 1000 years to complete the Human Genome Project.
It took 10. A complete draft of the genome was done in 2003.
What they didn’t understand was how fast technology would improve.
Even if Moore’s Law and the rate of growth can’t continue on indefinitely, and I certainly don’t understand the science well enough to say whether it will or not, I think it’s almost certain that computing technology will continue to improve fast, at least by historical standard of change.
Impact of the Rise of the Developing World
The increasing ability of technology to increase the value of ideas is compounded by the rise of the developing world to devalue knowledge worker level execution even further than technology alone. Hiring is still a huge leverage point and as the value of human capital in countries outside the West continues to increase, it’s increasingly possible and affordable to hire very smart people who can execute for you.
As we transition from a knowledge-based economy to an entrepreneurial economy and as previously third world countries in Eastern Europe, Asia, South America and Africa continue to develop human capital, there’s not going to be any reason to deal with an accountant or project manager in the West when you can get one in Vietnam for 20-40% of the cost.
Geographical barriers to doing business are falling daily due to improvement in computing technology. A few weeks ago, I sat in my parents house in Mississippi and had meetings with a developer/designer in the Philippines, a PPC consultant in Vietnam, a CEO in Prague, a product marketer in Boston and a General Manager in San Diego.
So the value of ideas accelerating at an exponential rate facilitated by the transparency, distribution, and automation abilities of computing technology. Furthermore, the rise of human capital in the developing world is making white collar, knowledge level work less and less valuable.
The Caveat – A Minimum Viable level of Execution
However, there’s still a clear balance that has to be struck between ideas and execution if our aim is to maximize our ability to produce value (which is getting easier and easier to convert into wealth).
Growing Your Platform
The reason technology is enabling us to create more value is because it allows us to enlarge our platform and create more leverage for ourselves for a lot less money than ever in the past. However, it still takes some money.
Even though it’s less expensive than ever, you still need to be able to buy the technology and hire the knowledge workers. That means that the smaller your platform is, the more value you’re able to create by focusing on execution over ideas.
A rather smart friend expressed it to me as the dreamer vs. the foot soldier.
The dreamer is always talking about the next amazing thing that he’s planning on doing. Every time that you run into him, he has a new project or idea. While it’s likely that a lot of his ideas are good and would be successful if he followed through on them, they aren’t ever executed on and so they never generate any value.
The foot soldier doesn’t have nearly as many good ideas, but in many cases his platform will initially grow more quickly. He’ll have one pretty good idea execute ruthlessly and substantially increase the size of his platform. As one of histories ultimate practitioners of execution said:
“A good plan, violently executed now, is better than a perfect plan next week.”
This doesn’t mean that there’s anything wrong with having a lot of good ideas even when you’re platform isn’t that large (in fact, I’m saying it’s a good thing in the long run), but you’re going to grow your platform more rapidly early on by focus on one or two ideas and executing than by trying to do too many things at once.
Derek Sivers’ post on ideas as a multiplier of execution illustrates this well:
AWFUL IDEA = -1
WEAK IDEA = 1
SO-SO IDEA = 5
GOOD IDEA = 10
GREAT IDEA = 15
BRILLIANT IDEA = 20
NO EXECUTION = $1
WEAK EXECUTION = $1000
SO-SO EXECUTION = $10,000
GOOD EXECUTION = $100,000
GREAT EXECUTION = $1,000,000
BRILLIANT EXECUTION = $10,000,000
To make a business, you need to multiply the two.
The most brilliant idea, with no execution, is worth $20.
The most brilliant idea takes great execution to be worth $20,000,000.
I think as your platform expands, you gain more leverage then there is a lot more (exponentially more) to be gained by shifting farther towards the idea side of the spectrum than the execution one. Because of the rate of technological development, it’s possible to grow your platform and your ability to execute faster than ever.
You want adopt the execution, foot-soldier mindset to the degree that it’s necessary to make consistent, meaningful progress in growing your platform while recognizing that in the long run, it’s ideas that will become more and more valuable.
I think establishing some basic Key Performance Indicators are the best way to monitor this. If you have a clear vision of where you’re going and can work backwards to the point you’re at now. You can set yourself up short-term goals that define what level of execution that you need to be at to get there.
Those KPIs are measures of you short term execution and efficiency. As long as you’re making consistent progress on those, you’re increasing the size of your platform and increasing the value of your ideas and future ideas.
Becoming a Person that Has Good Ideas
If you are executing effectively enough to be making consistent, meaningful progress in increasing the size of your platform and you accept the premise that we’re moving towards a world where ideas are increasingly more valuable then the next question becomes how to become the type of person that has good ideas.
I think the reality is that most people don’t have good ideas (which is not to say they couldn’t, just that they don’t currently). Even in people that do have good ideas, most of their ideas are probably crappy. I’m not sure if I have a lot of good ideas, but I certainly have more good ideas than I used to.
There’s a few different reasons for that I think.
Doing Less Stuff – Via Negativa
By doing fewer things, I think it becomes easier to be successful at those things. For one, it means you have to make a lot less decisions and the decisions you do make have much fewer choices.
I know I’m not as productive when I travel because a lot of mental bandwidth gets consumed just trying to figure out basic stuff. Where do I eat? Where’s a cafe with wifi? How does the subway work?
Neil Strauss talks about his writing process in an interview with Tim Ferriss. When he’s writing a book, he’s extremely methodical. He eats the same meals from 5 different restaurants, writes at the same time everyday, and only meets up with friends on Wednesday afternoons. He’s allocating all his mental power to expressing his ideas in his books.
Nothing of me is original. I am the combined effort of everybody I’ve ever known.
Human beings are miraculously complex systems. One of the principles of the popular workout program Crossfit when it was created was the concept of the black box. You alter the inputs to create the outputs you want, even though you don’t really know what’s happening inside. It’s a black box.
I don’t really understand what’s happening inside, but it seems like as I’ve improved the quality of the inputs in my life – people, books, blogs, my environment in general – the quality of outputs goes up correspondingly.
One of the heuristics I’ve been using is the Lindy Effect – the idea that the longer a biological thing has been around, the more likely it is to survive. In the case of ideas, this means that ideas that have been around a long time are more likely to offer some value than newer ideas. Basically, I read more old books.
Eliminating the “Grey Zone”
Stop Watching Fucking Lost – Gary V.
I’m not sure where the concept of the grey zone originated, but the basic principal is that most people spend the majority of their time neither working or resting, but in a “grey zone” between the two.
In my experience, good ideas typically come to me while I’m either in the middle of trying to solve a difficult problem, doing deep work, or completely relaxing. If someone would only create a product to take notes in the shower…
I’ve found that one of the best ways to come up with more valuable ideas is to widen the scope of what I’m dealing with. This is the cat furniture problem in a way.
We often times falsely constrict ourselves to think within a limited framework when we’re actually capable of thinking much bigger. This is often seen in the Law of the Instrument - if all you have is a hammer, everything looks like a nail.
I am, at best, moderately more capable and skilled than I was 6 months ago, yet I’m working on things that seemed substantially out of my reach 6 months ago. It’s not that I’ve become more capable, it’s merely that I believe those things to now be real possibilities.
So while you can certainly start thinking bigger, it seems that mindset changes at a largely linear rate while technology is increasing at an exponential rate which means we have to learn to think bigger even faster.