This article was originally published on Forbes.
We live in the age of information. Just as Peter Drucker predicted, society has rearranged itself, and the Western world, in particular, is now marked by its transformation into a “knowledge society.” The most powerful countries driving that change, meanwhile, are increasingly becoming “knowledge economies”: economies in which growth is dependent on the quality, quantity and accessibility of information rather than the means of production.
The germinal seed of this process is entrepreneurship. Great entrepreneurs, from Andrew Carnegie to Bill Gates, have innovated and pushed society forward in its never-ending search for greater prosperity and the alleviation of suffering. These are big thinkers — people who can conceive an idea, find the individuals to bring it to life and then take it to the rest of the world.
As the knowledge economy grows, however, suffering and poverty still exist. We must ask ourselves one question: What are we missing? Is it the idea or the execution?
Innovators globally lodged some 2.9 million patent applications in 2015, which represents a 7.8% increase from 2014 and a sixth straight year of rising demand for patent protection, according to the World Intellectual Property Organization (WIPO). The rate of innovation has been accelerating, in large part thanks to the diffusion of academic institutions and a rapidly growing population.
I’ve heard some dismiss new ideas as “distractions that cost money.” Indeed, in the era of the ubiquitous think tank and zeitgeist nonfiction like Malcolm Gladwell’s The Tipping Point or Cass Sunstein’s Nudge, there is a kind of idea fatigue, brought about when grand designs fail to lead to tangible change.
But the real question is why do some ideas fail and others succeed? Was it actually the wrong idea, or was it a problem with the execution? In my experience, it can be either and sometimes both — as in a bad idea poorly executed. (Let’s try not to do that too often.) In any case, it’s critical we understand what went wrong and why.
Let’s give the entrepreneur the benefit of the doubt and assume the original idea wasn’t completely ridiculous, but perhaps flawed somehow in its first incarnation. Should one give up? Try it again and again and hope for a different result?
How about trying a different formulation of the idea and rerunning the pilot? If that fails, try another iteration. Failing often, cheaply and quickly is what many companies do as they try to bring innovations to the market. In this paradigm, failing is actually perceived as a good thing, as you are fearlessly trying out different formulations of the basic idea and eliminating those that don’t work.
By all means, fail then, but remember that failing in and of itself is not the most important thing; learning from failure is what counts, as it prevents you (most of the time, unless you forget why you failed) from repeating your mistakes. Of course, learning from failure has to mean from your own failure — it will be less painful and less costly if by someone else’s. And never forget you can also learn from another’s success and emulate it. Do not be too proud to admit that someone else took your idea and did it better. Keep a close eye on the competition in your field and where others are succeeding or failing.
Now, let’s talk about execution. Poor execution can sink any idea, good, bad or half-baked. But a great idea can survive poor and even appallingly bad execution — for a time, that is, until the competition wises up and does your idea better, cheaper and faster. Trust me on this. At FINCA, we have lived through both.
When John Hatch and I created FINCA International, we had one of those simple but great ideas: Give small loans to those who need them so they can lift themselves out of poverty — combine limited capital with a huge pool of underutilized labor, in economists’ parlance. We made thousands of mistakes along the way as we figured out the “how” in doing this, but our efforts disrupted the financial services market and gave way to a movement that improved the lives of hundreds of millions of people.
As we continued the journey and scaled our operations to more than 20 financial institutions on five continents, innovation became less critical, and superb execution took precedent. We had to hire really good people, and train, motivate and manage them well. We went through several upgrades to meet the growing competition.
Great execution comes from great, well-trained people working together. For other nonprofits and entrepreneurs, the key to fixing something when it goes wrong is getting the correct intel about the problem on a timely basis. This is harder than you would think, given that the human reaction to a problem is usually, “I will solve this; I just need a little more time!” So, make sure you have a tight implementation plan with clear milestones. If these are missed, you can ask why and take corrective action on a timely basis.
Ultimately, good execution is, if anything, more important when people’s survival depends on it. Take Puerto Rico after the hurricane as an example. People died because power wasn’t restored, leaving hospitals without the means to treat people with life-threatening injuries. Poor execution can, in fact, prolong the life of the wrong approach since it’s unclear whether or not good execution would have produced a different result.
Today, with the entire financial sector being disrupted by the fintech revolution, our competition is 360 degrees and has us surrounded. Innovation has come back. Superb execution can hold the fort for a time, but it is not enough. We must add new tools to our arsenal while raising our game on the basics: great, motivated people and a laser-like focus on our customers’ well-being. If we can do that, we will remain relevant and play a major role in getting to the end vision — which for us is a world without poverty.