Many new entrepreneurs (and plenty of battle-hardened ones) believe that all they need is one brilliant idea. If they come up with the idea for the next Google, Facebook, or Apple, they’ll have it made and be on easy street.
Nothing could be further from the truth.
Why? Your ideas are worthless. So are mine. In fact, every idea is worthless.
That’s right, the valuation of your idea comes out to be a whopping $0. Nothing, nada, zilch.
So if the value from a business doesn’t come from the idea, where does it come from? Execution.
Derek Sivers has an excellent way to think about the true worth of your idea (you can check out his original blog post on the topic here). Basically, ideas have no value in and of themselves. Instead, ideas are a multiplier. The better the idea, the higher the multiple. If you want to figure out how much your business is worth, multiply the quality of your idea with the value of your execution.
A good idea (multiple of 10) combined with the value of good execution ($100,000) will give you a business in the $1,000,000 range.
Here’s Sivers’ breakdown:
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
Obviously, these numbers are not empirically based at all. And remember that we always overestimate the quality of our ideas. Brilliant ideas only come around a couple times during a decade.
Did Feacebook, Apple, Google, and Microsoft all start with brilliant ideas? Absolutely. But the reason they’re all billion dollar companies today is because of the brilliant execution.
This applies to all ideas, large and small. Everything from an idea for an industry shattering business to an idea for a better email subject line. Obviously, as your ideas get smaller, they also get easier to execute. But they still depend on execution.
What does this mean for you?
The next time you come up with a great (or brilliant) idea, you’ve only just started. Now you need to build it, test it, and grow it. For big ideas, this takes years of effort.
Honesty time: your idea probably isn’t as good as you think it is (this applies to all of us). Just because you think it’s a great idea doesn’t mean the market place will. This is why the value is in the execution and not the idea. So test your idea, validate it, then try to build it into your ultimate vision.
The better you get at executing, the faster you’ll be able to test and grow ideas. From there, it’s only a matter of time until you do come across that great idea that truly makes an impact.
Some people have a wealth of ideas but can never seem to follow through. If this describes you and you’re committed to getting to the next level, you either need to get better at execution of find someone who is. Either way, the key to success is combining your ideas with great execution.
What about patents and licensing fees?
If you know what you’re doing, you could register a bunch of patents on your ideas and then license them out to companies. Once you’ve secured the deal, you’ll collect royalty checks for as long as your idea is still useful or legally required.
But here’s the thing: not only do you need to secure the patent, then you need to actually sell it to somebody. In other words, this business model still depends on execution. You’ll still need to take the quality of your idea and multiply by the value of that execution.
If you have a great idea and combine with a great patent attorney and salesmanship, you’ll be making a lot of money from your ideas. But the value with be coming from the execution of this strategy, not the actual ideas.
Bottom Line: A brilliant idea only becomes a “billion dollar idea” when combined with brilliant execution. Also, the idea is the easy part. Most people get hung up on the execution.