Some ideas you believe in your heart, and you can’t let go of. They just make sense to you. There is a certain unassailable logic to them. No matter how or by whom they are challenged, you know you can overcome the objections. Challenges do not deter your belief in how your idea can succeed. But how valuable are they really, in the context of a business organisation? How can you really tell? And what should you do about it?
4 Key Takeaways:
- Intangible assets account for a significant portion of total company value in the modern economy (84% in S&P 500 in 2015).
- Ideas are valuable intangible assets of companies and organisations. Once they are written down, they can be protected as intellectual property
- How can you have great ideas? Master your subject area and if your instincts say that you have a good idea, trust it
- Develop a culture in your organisation to nurture ideas and put systems in place to capture and review team – these are both the CEO’s job.
About Cronan McNamara:
Cronan is Founder and CEO of Creme Global and Founder and organiser of the Predict Conference. Creme Global is a data science technology company delivering the Expert Models data science platform.
Cronan is fascinated by in creativity and innovation and is driven to deliver world class products and services, from Ireland, that make an impact globally.
In his spare time Cronan enjoys playing competitive tennis and spending time with his family
Contacting Cronan McNamara:
By Cronan McNamara
The mention of intangible assets in the question places this issue firmly in the context of a business or organisation.
I am interested in exploring the value of ideas in organisations, what they’re worth (if anything), how to capture them, nurture them, execute on them and ultimately exploit them.
Intangible assets continue to be the greatest asset to today’s companies. In 2015 the intangible assets of the S&P 500 companies were valued at 84% of total value.
An intangible asset is defined as an asset that is not physical in nature. Examples of intangible assets include goodwill, brand recognition, copyrights, patents, trademarks, trade names, and customer lists. You can divide intangible assets into two categories: intellectual property and goodwill.
Well, what about ideas? Are they intellectual property or goodwill? Well both, actually.
Ideas can come from the goodwill of your team, your suppliers, your customers, partners, stakeholders and others. Without goodwill, it is unlikely ideas will be forthcoming let alone acted upon.
According to Wikipedia: Intellectual property (I.P.) is defined as a category of property that includes intangible creations of the human intellect, and primarily encompasses copyrights, patents, and trademarks. It also includes other types of rights, such as trade secrets, publicity rights, moral rights, and rights against unfair competition. Artistic works like music and literature, as well as some discoveries, inventions, words, phrases, symbols, and designs, can all be protected as intellectual property.
I.P. can be protected in law, for example, patents, copyright, trademarks and confidentiality clauses in contracts.
An idea becomes more tangible once it is written down in a white paper, a discussion document, an algorithm or software code. Before it is written down, it is essentially the goodwill of your team and once It is written down, it becomes the confidential information of the company – protected by contracts, copyright and sometimes patents.
The act of writing it down is important from both legal and value-creation points of view. But the value was essentially there all along, however, before the idea is written down, the risk is that the value can walk out the door.
Writing things down also forces people to think about the idea, elaborate on it and gives others the opportunity to extend them and provide feedback.
“Ideas are cheap, execution is everything.”
Investors often spout the phrase “ideas are cheap, execution is everything”. These are the very people who will refuse to sign an NDA for a startup pitch while at the same time insisting that they love to be in the investment game because of the opportunity, learning and new ideas (those very new ideas the startup was pitching that they could happily pass on to their existing investee companies).
But of course, execution is critical. On the flip side, execution without (good) ideas is also counterproductive! Some ideas essentially have no commercial value for any number of reasons.
According to Peter Theil in his book Zero to One, it is important to realise that we live in a power law world, where 80% of your rewards are likely to come from 20% of your efforts. How do you choose which ideas to pursue and put your efforts into when the decision could be so critical and the opportunity for success of various competing ideas is so unclear?
If you are planning to invest the next 10 years of your life in an idea, or if you are an investor planning to invest 10’s of millions of Euro in an idea. How do you know which are the ones to go for?
How to have great ideas
- Master your subject. Spend 10,000 hours studying your area of interest and your instincts for ideas should improve.
- Stay curious.
- Combine two distinct things that you are passionate about.
- Copy others, but do it better or with a different slant or philosophy.
- Be lazy – anything that you get frustrated by because it is non-value-add and you find yourself doing repeatedly could be a candidate for automation or a new company.
- Be a contrarian to have great ideas. A key question from Peter Thiel is: “What important truth do few people agree with you on?”
- Take advice from Jeff Bezos: focus on things that won’t change in the long term (i.e. 10+ years)
- You can protect an idea with a patent. Ideas can be patented. Do not disclose it or it will be novelty destroying.
Do the opposite of a Lean Business Startup, i.e.
- Risk boldness rather than triviality and incremental improvements
- Have a vision and a plan – even a bad plan is better than no plan (rather than just stay lean and flexible and incessantly respond to the market)
- Try to make the competition obsolete rather than iterate and compete
- Sales matter just as much as the product. Don’t just focus on the product and underestimate sales.
- Listen to feedback, but market research can be over-rated. If you feel strongly enough about it, stay true to your idea and vision.
Get great ideas from your team:
- Articulate a clear vision and strategy so that your whole team can understand it. This will allow them to put ideas in the context of the company’s mission.
- Develop a culture of open dialogue and that you value ideas with the staff in your business (especially customer-facing staff). Provide coaching and mentoring in coming up with and capturing ideas.
- Put a system in place to capture good ideas in a backlog of ideas. We use JIRA for this and capture everything in a separate backlog for review.
- The CEO should take responsibility for reviewing and prioritising this list on a regular basis.
- Use Service Design workshops to unlock hidden value and ideas in your organisation. Write down the outputs of all meetings.
Don’t use Google’s 20% time
- Google used to let any staff member work 20% of their time on any idea they like. This has essentially been cut because (I think) there was not enough structure, strategy and vision behind it.
In our modern knowledge-economy, where intangible assets dominate companies’ balance sheets, ideas do have significant value as intangible assets. These ideas, however, need to be captured, curated and exploited in order to realise that value. This is the job of the leadership of organisations.
You will find some that you believe in your heart, and you can’t let go of. They just make sense to you. There is a certain unassailable logic to them. No matter how or by whom they are challenged, it does not deter your belief. If the leadership in your organisation do not share your belief in those ideas, then perhaps it’s time to leave and start your own thing.
Some big ideas you know in your gut will form the basis of your life’s work. They are valuable and they are the ones you pursue.