Investors Dilemma

Long standing, difficult challenges in the market typically aren’t solved by incremental innovation but rather require radical invention: new ways of doing things. 

 Innovation, the process of incrementally improving existing methods is somewhat common.  Innovation yields understandable, easily implementable, quick and small improvements to existing systems.  Innovations are typically iterations in an ongoing evolution of things.  Innovations offer low cost, fast marketing and some moderate revenue generation.  The market is familiar with, comfortable with and readily accepting of incremental innovation.  The investor too, is more comfortable with innovations costs and return process.

Invention is rare, requires time, needs enduring commitment, lives on newly developed talent and is resource intensive.  True invention means new language, new tools, new products, new end uses, new budget and new habits to access the new benefits.  The benefits of invention are typically slow developing but yield but long term growth with extremely high return.  Real inventions are extremely rare and not many of them survive the first attempt.  Not many investors have experience with real inventions, their roadmap and benefits but any investor would love to be a part of one.

The dilemma is investors want the low cost, fast roadmap and quick turn time of an innovation with the long term, high yield and true social benefit of a bona fide invention.

This is a dilemma because the nature of doing something unique, special and of global value, by its very definition, is to do something where there are no established referential customers, budgets, processes, salespeople, manuals, market material and more.  It takes generally 5 years to make a new technology and then another 5 years to begin to exploit the market.  DOS took over 10 years and made its success in years from 10 to 20.  Mac took the same path, made its monetary successes in years 10 to 15.   The reason that this takes this long is because it is special and hard to do.  Once the window is open and the foundation is available, then the company can peak.  This same model of 10 + 5 + 5 (give or take) seems to be the norm for high potential inventions (there are exceptions).  These are also the world’s largest value products that address the longest standing challenges and ultimately lead to the greatest return for investors. 

The investor looking specifically for a large and fast return tends to try to drive the company to short term return opportunities that are not likely able to yield the full financial and human benefit of the invention potential.  Investment is impatient and this is both bad, and in some ways good, as it drives the company to meet demand.  Some investors can and some can’t afford to be patient as well.  

The greater and more sophisticated the invention the greater the need for time, talent, effort and funding and ultimately the greater the need for a sophisticated investor pool.  Unfortunately, the greater the investor pool the more diverse their interests and more demanding the management and communication.  So the bigger ideas lead to the greater opportunity that requires the larger investor pool that leads the the greater investor demand, misunderstanding and distraction.  This is where inventor/investor leadership much emerge.

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