During a recent talk to a group of civic leaders about entrepreneurship and the Atlanta Tech Village, I mentioned that almost all successful entrepreneurs aren’t successful with their first idea. Meaning, success either came after a failed venture or after a pivot to a new idea. The common story of an entrepreneur coming up with an innovative idea and succeeding on the first try is a myth.
After the talk, one of the civic leaders eagerly came up and told me that his son was a successful entrepreneur that started a distillery and made it work on the first try. Biting my tongue, I nodded, smiled, and thanked him for attending the talk. At that point, I realized I hadn’t emphasized enough that I was talking about innovative businesses that invent a new product or solution that’s never been done before. Replicative businesses are ones that entrepreneurs create in an existing market with an existing type of product or service that has a number of direct substitutes. A local distillery is a replicative business.
One of my favorite quotes for civic leaders is “the majority of new jobs created over the next 10 years will come from businesses that aren’t even in existence today.” Yes, new replicative businesses will create a number of jobs but new innovative businesses will create many more. Creating a successful innovative business is 100x harder than creating a successful replicative business.
When talking about entrepreneurship and job creation, make sure to distinguish between innovative and replicative businesses.
What else? What are some more thoughts on the idea of distinguishing innovative businesses from replicative businesses?
3 thoughts on “Differentiating Between Innovative and Replicative Businesses”
What are your thoughts on companies that take a precedented model and apply it to a new market? For example, how Spokefly is “Uber for bikes.” The model exists, but the model in that market is new. Is that repetitive or innovative? I’d say it’s both.
Innovativing is fun and makes one enjoy going to work everyday to change the world. Replicating is just work.
Worth considering two other classes of companies; derivatives. ie. a plugin that sits on top of AirBNB, and platforms. ie. big data platforms that depend on new co’s to create models on their foundations. Good topic of conversation.