The other day I wrote a post about one possible obstacle to be innovative. Today I will follow up with a post discussing the difficulty of turning technical innovations into business.
Since the mid 90:s I have met many people trying to build businesses based on their technical innovations. In most cases they have been funded by venture capital and with a few notable exceptions, everyone have failed. One obvious reason for the high failure rate is probably that they are mainly engineers or scientists with no talent or gut feeling for entrepreneurship. Another reason is probably that venture capitalists are really crappy at judging the difficulty.
When I try to explain the difficulty of understanding the nature of a innovation driven venture I usually draw this diagram.
The diagram should actually be drawn in three dimensions, but I have chosen to glue together market and business logic into one dimension. It is much easier to draw it that way, and I believe the point come across anyway.
The reason that I draw this was that after i while I realized that most of the ventures that I saw fail was in the upper right corner. It was like the concept, product or service was created in a cloud free sky with no strings attached. When slowly the involved people understood that the problem wasn’t an engineering problem, it was usually too late. Most of these failed ventures blamed outside factors like the maturity of the market, but is that really a reason? Wasn’t the reason for failure the initial (lack of) judgement of how difficult and time consuming the task really was?
It is not that it is impossible to start a business on something in the upper right corner, but it is probably exponentially more difficult, require much more creative business talent, and will require exponentially more time and money.
Is this a reason for why engineers are not as good entrepreneurs as economists or laymen? Engineers build their vision around a product or service and more often than not turn up in the top right corner, while an economist or a traditional entrepreneur build it around the business idea and consequently stays in the other quadrants.
