Creative destruction

Innovation is uncertain, what does uncertainty mean? Means unpredictable. Unpredictable is unique, that is, there was no one in the past. I understand the uncertainty of innovation as three aspects.

The first one is that we don’t know whether the technology is feasible; the second one is that we don’t know its commercial value; the third one is the uncertainty of the system, culture, and policy.

Let us first look at the technical uncertainty. For example, more than 200 years ago, the production of steel in Britain increased. At that time, a famous entrepreneur named John Wilkinson said that we can use iron to build bridges, and people think it’s no problem. Later, they said that iron was used to build ships. Everyone said he was crazy. Because in 1750, people didn’t know whether something heavier than water could float on the water, so when he proposed using iron to build ships, 99% of people thought it was impossible.

When every new technology emerges, we don’t know whether it will succeed.

The second is business uncertainty. It is technically feasible, but whether consumers and the market will accept this technology is unpredictable. Looking back, in 1985, Jobs was driven away by Apple’s board of directors. Why? Because Jobs produced a computer called Macintosh, the sales of this computer were much lower than expected, so the board of directors thought it was a failure, and Jobs lost his job for this.

The third uncertainty is brought about by systems, policies, and culture.

An expert once said that every kind of innovation will be born in a very unfriendly society, with few friends and many enemies. Having few friends means that few people support it; many enemies means that others are opposing it.

Let me give you an example. Easterners drink tea and Westerners drink coffee. In fact, coffee was shipped to the West a little later than tea was shipped to the West. Coffee came from Ethiopia in Africa. It was first introduced to the Middle East, then through Turkey, to the United Kingdom, and then to the European continent. The first coffee shop in Britain was opened by a Lebanese in 1650.

Other beverage vendors such as beer halls and tea distributors objected, and they took various measures, including requiring the government to issue regulations. The British also wrote a pamphlet, saying that when the British drink coffee, they will become Turks. In December 1675, King Charles II of England issued a decree that, for “national security reasons”, all cafes must be closed before January 10 of the following year. This example shows that even a simple innovation will pose a great challenge to tradition.

Of course, not every kind of innovation will encounter uncertainties in these aspects at the same time, but any innovation may encounter uncertainty in at least one aspect.

It becomes more difficult for innovation to succeed, so we especially need a spirit, which is entrepreneurial spirit. Entrepreneurship can be defined in many ways, and the simplest is not to follow the rules, which is to break the rules.

Entrepreneur decision-making is not scientific decision-making. Entrepreneurship decision-making is not calculating data for you. In that case, it is too simple. Entrepreneurs make decisions based on imagination and judgment, based on what you see but others can’t see, and what most people can’t see.

What most people think is right is definitely not something entrepreneurs do. What entrepreneurs do is something that most people think is impossible or wrong.

Everyone must separate management decision-making from entrepreneurial decision-making. 95% of our companies are management decision-making, and less than 5% are entrepreneurial decision-making, but entrepreneurial decision-making is the most critical.

Entrepreneurial decision-making is not a solution under given constraints, but to change the constraints themselves. As an old saying goes, it is difficult for a clever woman to cook without rice. Rice is a condition for rice, provided that you have pots, fires and other things. However, for entrepreneurs, rice is not a condition of rice. If you think that rice can make money, you can find people who make rice; if you can’t find people who make rice, let them grow rice.

In the end, it is proved that entrepreneurs are successful, not because of their ambitions, but whether consumers are buying it. It is the market that tests entrepreneurs, and this must always be remembered.