Ideas, Founders, And The Second Order Of Thinking

Most entrepreneurs are understandably very possessive about their ideas because they believe that this is their magic sauce. They have been told that the heart of being an entrepreneur is being innovative, and that successful startups are those which can commercialise a new idea.

Entrepreneurs are focussed on converting their idea into a successful business, which is why they are very reluctant to share it with other people because they are scared that someone else will steal it.

However, this creates lots of problems. For one thing, you fall in love with the idea because it’s yours, and you’re not willing to listen to some of the deficiencies or limitations which it may have. You turn a deaf ear to criticism and aren’t willing to listen to objections.

Why is no one else doing the same thing? Is it because no one else has ever thought of this idea (which is highly unlikely). Or has someone else tried to do the same thing? If so, did it work? And if it didn’t work, then why did it fail? How will you learn from his failures? What will you do differently?

Second Order Thinking And The Founder

You need second order thinking to plan ahead. Frederic Bastiat wrote in his famous essay, ‘That Which Is Seen and That Which Is Not Seen’ –

There is only one difference between a bad economist and a good one: “the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”

This is true of entrepreneurs as well. Suppose you do manage to implement your idea successfully. You need to think how the other companies in your space will respond. How will they compete? After all, you don’t operate in a vacuum, and if you are successful and start making money, the rest of the world will not sit back and allow you to capture the market. They will fight back , and you need to be prepared for this.

Your competition consists of other startups, who will be quite happy to reverse engineer your success; and more established players – the incumbents, who have far more marketing clout and deeper pockets.

You should be aware of some of the hurdles you’re going to encounter, so you can come up with a plan to deal with them. This is not to say that your plan will be perfect, or that your idea will not morph; it just means that it will allow you to be a little more resilient and flexible.

This is why you should encourage people to shoot down your idea and request them to tell you what’s wrong with it.

Why Criticism Works

The problem is that everyone has been conditioned into being very supportive of entrepreneurs. We want to promote startups, which is why we keep on saying things like: “Oh, that’s a great idea!” We don’t want to dampen their enthusiasm – after all no one wants to be a critic.

However, a smart entrepreneur realises that the most value which an outsider can provide is pointing out his limitations. By pointing out your shortcomings, he can help you overcome them, so you do not get blindsided.

[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.