The Idea Chart

About once every year I find myself re-reading Getting Real, the first book by 37Signals from 2006 about their software development process. There’s so much good stuff in there. I could probably do multiple posts on each chapter. Anyway, one thing that caught my eye when I was flipping through recently was this “idea chart” in Chapter 6 by Derek Sivers, one of the many “experts” they reference throughout the book:

Be An Executioner

It’s so funny when I hear people being so protective of ideas. (People who want me to sign an nda to tell me the simplest idea.)

To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.

Explanation:

* 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.

That’s why I don’t want to hear people’s ideas. I’m not interested until I see their execution.

Ideas are worthless. The best entrepreneurs I know have executed very basic business ideas with extreme precision over long periods of time. How they separate themselves from the competition, and how they innovate, is simply by being consistent and using their data and their experience to improve their product/service. Hell, look at us – Detailed Image is arguably the simplest most vanilla business we’ve attempted, but it’s undoubtebly the most successful. Assuming there’s a market for your idea (there almost always is if you’re scratching your own itch), the idea itself becomes of very little value. It’s the execution of said idea that matters. It’s your passion. It’s your work ethic. It’s your consistency.

Reminds me of that post I wrote last year: Consistency = Success = Happiness?.

16 comments on The Idea Chart

  1. Aaron says:

    Awesome, hilarious and right on point all at the same time. There are people I know that are always saying well what about this idea or this idea. Who cares pick one and execute.

    • Adam McFarland says:

      I think that’s the #1 thing I notice from people who really want to start a business but never do. They’re overly caught up on coming up with some idea that’s never been done before. If you just get started – on any idea – you learn so much more.

      • Rob says:

        When I hear friends say this it makes me pretty sure they’ll never start a business. Especially when it comes from the ones who are also in well paid stable jobs, with mortgages but are waiting for “the right time”.

  2. Tim says:

    Sometimes I think 37signals are off their rocker and other times they are spot on, this is one of those times! I totally agree, while ideas are important, they are often far less important then most people think they are. Having seen a certain degree of success in business I am in this situation from time to time, one of the best cases of this is so humorous it’s worth sharing. A guy I did not know well told me he had a great idea for a business, I say “ok what is it?” And just like Derek Sivers said he was really cautious didn’t want me to steal it, after a few weeks he finally caved… It was an all in one washer/dryer!!!! It really broke my heart to tell him that that already existed, didn’t sell well and how the hell were you going to create such a device with a degree in music? Most business ideas I hear are terrible, I could continue with some of the funny stories, but instead I’ll share something that may help readers of this blog – do what you do! Meaning, don’t try to be something you’re not, that’s probably the most common mistake I see with entrepreneurial ideas, I’m not a surgeon and don’t pretend to be, thus I don’t waste away my time thinking up better ways to perform surgeries. That’s not to say you shouldn’t continually learn, but every person has strengths and weaknesses, focus on areas that revolve around your strengths.

  3. Rob says:

    This is a great topic. It seems to me that it’s mostly the non-entrepreneurs that think that it’s all about the idea and not really about the execution. I was having an argument recently about the facebook/winklevoss debacle and they were saying how the brothers should have got more because it was their idea. Even when I pointed out that the did f.a. in terms of execution, and oh, hey, what about myspace, friendster etc. etc.? That’s pretty much the same idea but not executed as well.

    If there was real value in ideas there would be an ideas marketplace. I don’t see one.

    @Adam – just because an idea is simple doesn’t mean it’s not brilliant. DI/ecom in general isn’t the most groundbreaking idea, but that doesn’t mean it’s a bad idea (clearly).

    @Tim – I’m in the unfortunate situation of having ideas that I don’t have the knowledge to execute (mostly programming knowledge), but I’m working to correct that.

  4. Tim says:

    @Rob – Programming and for that matter the implementation of technology, software and other applications is a never ending rat race! Simply stated no one can be the best at it or know every option out there, not to mention there are typically countless methods of accomplishing the same task. Continually learning better ways to use technology is a never ending exercise, the best way I keep up with it has by having as large of a network of tech geeks as possible, we all have our own networks and share our latest findings with each other – unfortunately that’s less applicable when it comes to programming.

    What I was alluding to in my original post was not pushing you past your comfort zone, I was saying to keep your ideas in your area of expertise. I was pitched a Energy Fruit Beverage deal by a Gym Teacher friend, I was pitched an e-commerce company idea by a friend who’s going to school to be a nurse(the e-commerce site was not in that field) I was pitched a pizza shop by someone who’s never worked in a restaurant and has never held a job for longer than a year…. and the list goes on and on. I hate to come across as arrogant or a know it all, that is not my intention, when it comes to running a business there is so much that needs to be addressed regarding the business itself you can not be busy learning the trade at the same time it’s a recipe for disaster. You must be a master of that area before you can seriously consider making it a business of your own. Another way of looking at it is, you wouldn’t pay someone to go to college to learn a skill, why would you invest even your time in that person learning a skill… what are they bringing to the table?

    If someone came to me and said, “I’ve got a great idea for a pizza shop” and this person had 5-10 years restaurant experience I would have a very open mind to hearing his ideas, clearly this person knows their industry and the pizza/food won’t be the problem, they need business help – that’s a different situation.

    • Adam McFarland says:

      Well said Tim. It’s interesting that people so often overlook what they “do” and what they’re good at when starting a business. My *guess* is that most people don’t like their jobs so when they try to start something on the side they try to do something completely different.

      Anyway, great point about learning the trade while learning the business. You’re going to need to learn a million other things, so you really have to know the trade itself inside and out. I think it’s clear with us that SportsLizard, Detailed Image, and LockerPulse are all things that we were really into long before we started businesses around them, and that’s probably why they’re going to be more successful than our client services were or even a Tastefully Driven was, where we bit off more than we could chew in a whole bunch of industries that interested us but we weren’t “experts” in.

  5. Rob says:

    I see what you mean a bit better there, and although I don’t have the skills I need quite now I do have a strong programming background (just more mathematical/analytical than web or database stuff), but I guess that’s not so bad.

    Also a good point about learning the trade at the same time as learning the business. It’s got to be something you’re passionate about. What about learning the trade once you’re more familiar with a business, perhaps as a second business once you’ve acquired those skills?

    • Tim says:

      Programming represents an interesting exception to the rule, it’s continually evolving and at this point there are so many ways to accomplish the same goal it’s impossible to say who’s “right.” Additionally programming is typically a means to accomplish a specific goal, I don’t know anyone who creates complicated code just because they can, they design the code to solve a particular problem, looking at Detailed Image for example, I am quite confident that Adam would have NEVER created this coding if he didn’t have a specific purpose for it. I hope that makes sense!

      The second part of the equation is a very interesting point, it’s kind of where I fit into the equation. While I have an enormously diverse base of knowledge(I don’t like to toot my own horn, but this is one case where I think it’s warranted) my real expertise is the business side of the business. In a post I made a week ago in this blog I mentioned that I have very little to do with day to day operations of my new project, I do keep an eye on what’s going on, but it’s not the best use of my time or in the best interest of our business for me to focus on operations. While for most businesses basic needs I can handle all of the set-up and organization better than an attorney, in this case we are treading in a whole new direction, taking a company in the USA to a national level with people working in a number of States across the country it presents some new hurdles to overcome. I chose to set things up this way because I know as we start rolling out new locations rapidly I simply will not be able to keep up with every detail and I don’t want to get in the habit of doing so now, I need to focus on being 3-6 months ahead of where we are and laying the tracks down so when the train comes through it’s going to make it! Not to mention our business model is less than 2 years old, so it’s hard for anyone to really be an expert.

      • Adam McFarland says:

        Agreed on programming. I looked at it as a means to an end when I started SportsLizard. For each of our projects, I’ve continued to learn what I needed to learn to help us achieve our goals. I rarely learn something for the sake of learning it. Right now I’m really passionate about HTML5 and CSS3 because I see how much they can do for our business.

        I suppose with a web project you can look at it as two “trades” you need to master – the web side of things (programming, web marketing, etc), and the actual industry itself (in our case, detailing and sports). It’s probably OK to be learning one or the other, or some aspects of one or the other, but if you’re taking an idea from scratch with no knowledge of either I think you’re screwed.

      • Rob says:

        @Tim
        I’m intrigued. What /is/ your business model?

        • Adam McFarland says:

          I’ll let Tim answer in full if he gets a chance, but it’s basically a variation of the Groupon model.

          • Rob says:

            Figured it might be something like that. Not sure about only being two years old though, there used to be a company about 10 years ago that did the kind of swarm purchasing to get discount rates. They had an advert with lots of ants in, working together. Wish I could remember what they were called!

        • Tim says:

          Yes we are launching a Groupon like business, and while a group buy site is nothing new the concept of applying it to local services/events rather than the more typical products and making it geo-location based is fairly new. The concept of a daily deal for a group is nothing brand new, but the application in this sense has been around for less than 2 years in America. Additionally, I don’t know for certain, but I suspect the margins for this type of model are significantly higher then those that came before – I was FLOORED when I learned about Groupon’s margins.

  6. Rob says:

    I think that programming is an interesting one – in addition to the reasons above it gives you the ability to craft a product from idea right through to completion. If you wanted to sell hammers for instance, there’s a whole lot of work that has to go into that. Sourcing the right parts, supply issues, inventory issues, production, quality control and repeatability etc. If you were to produce something new and complicated, like an electronic device or a product that required complex machining etc. then there’s a mountain of work to do. With only knowledge and time, a program can be written that acts as a complete product, and you have none of the inventory, supplier or stock-control issues that come with physical products, granted a few other problems, but at least you can get to a point where things can tick along by themselves and you can remove yourself from the mundane work sooner.

    Totally OT there, just something I was mulling over today..

    • Adam McFarland says:

      Totally Rob. On a purely interest level, I’m more interested in physical product design than I am in web stuff. Towards the end of college I tried to get a few products off the ground. One was something developed during an internship, another was with a good friend of mine who was a brilliant engineer. It fizzled out when he graduated and took a job, and then I decided to start SportsLizard. We learned how tough it was to go that route – patents, funding, manufacturing, getting your product in stores, the web side of stuff to go along with that, etc etc. In both scenarios you have to be very good at some form of engineering, but the digital world seems to have much less resistance between idea and success. The barrier to entry is lower, and the time to market is much less (months instead of years).

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