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Do I need a new idea to start a business?

The inspiration of an idea leading to a new business
The inspiration of a new idea

Do I need a new idea to start a business?

Aspiring entrepreneurs often ask the question “Do I need a new idea to start a business?” The question raises some interesting issues about the role new ideas play in business generally and in startups in particular.

Type of startups

In my last blog I mentioned that you could say there are broadly two types of startups. Firstly, there is big idea startup (also called the “true startup” by Peter Thiel, the PayPal co-founder). Secondly, there is the “ordinary”startup.

The big idea startup is based on a revolutionary idea that will result in a very big business, which will become a virtual monopoly. The ordinary startup is the run of the mill “me too” type of business, usually found in well established industries. Obviously, ordinary startups are, more common than big idea ones.

A new idea

If you hope to launch the big idea startup, you obviously need to have a big idea. This big idea will usually also be a new idea. But, what exactly is a new idea?

I have been reading a very interesting book by Matt Ridley called How Innovation Works. Please see: https://www.forbes.com/sites/cognitiveworld/2020/06/01/how-innovation-works/#61390e007ea9

In the book Matt explains how business ideas are generated. He also examines the people who have come up with them. Furthermore, he looks at the people who have implemented the ideas.

Matt calls the first group the inventors, and the second he calls the innovators. He notes that sometimes, but not very often, they are the same people.

Matt believes that innovation is a mysterious process. He suggests that the formation of new ideas results from a cumulative effort through the cooperation of associated individuals. Consequently, ideas are passed from person to person with incremental changes being made on the way. Their final form is often dependent on the corresponding advance and availability of new technology.

Moreover, he suggests that nothing is actually completely new and there is seldom a eureka! moment (in the bath or elsewhere), or an apple dropping on a head.

The passing on of ideas

Although Matt Ridley is concerned with business innovation and ideas, the same process in passing on ideas and building on them can be seen in the artistic world. The novel just didn’t appear fully formed in the nineteenth century. It was adapted and developed from what had been written earlier. No single author can claim to have “invented” (or had the new idea) for the novel. It was a cumulative process with authors copying and building on previous genres.

Similarly, in music, although there are many candidates, no one can say who invented rock n’ roll. Was it Bill Haley, Little Richard, Elvis, or Arthur “Big Boy” Crudup?

I’m sure we all have our opinions, but if I had to choose I would go for the Big Boy.

What is a new idea?

If we assume there are no completely new ideas, it doesn’t mean that there are no new ideas in the way we usually understand the term. On the contrary, there are thousands of new ideas generated everyday. There are thousands of ideas that those who have them think are new. Or put another way, thousands of ideas that are incremental but important advances on other previously known ways of doing things. The last description of a new idea is the one I think works best.

This has been succinctly put by the person who said “Better is better than different.” In other words, it is enough to be able to undertake business tasks in a better way (quicker, cheaper, cooler, friendlier) rather than inventing a new way of doing things. If you new idea is the newish way of doing things, this could be enough.

Doing it in the same way

In reality, despite all the focus on new ideas and innovative technology (and the glamorisation of entrepreneurship), millions of businesses start up all over the world without the owners having any new ideas in any sense of the words. These are the ordinary startups that occur in “ordinary” businesses. These include businesses such as retailing, hospitality, small manufacturing and distribution, etc.

Not only are there no new ideas utilised in these businesses, the owners are probably not doing anything in the business much better than their competitors.

These me-too businesses are doing things in the same way as the thousands of other me-too businesses all over the the world. Unfortunately, however, there is a distinct disadvantage in this approach, namely approximately 60% of them will fail within three years

Answering the question

Politicians are often (rightly) accused of answering a question that has not been asked. Not wishing to make this mistake, I will answer the original question “Do I need a new idea to start a business?” in the negative.

However, I suggest that a more relevant and useful question would be “Do I need a new idea to start a successful business?” The answer to this is yes. But only if by “new idea” we mean either a clever adaption of an existing idea, or a better way of implementing the original idea.

And I thank Matt Ridley for helping me to reach this conclusion.

Free help

You can bet your business idea analysed for free by going to:  https://www.freeforumofideas.com/free-help/business-analysis-form/

Further reading

Please refer to https://www.freeforumofideas.com/blog/i-have-a-good-business-idea-but-i-havent-got-an-idea-about-business/

and https://www.freeforumofideas.com/faq/3-how-do-i-know-whether-my-business-idea-is-viable/