Are you an inventor or an entrepreneur?

Most CEO's instinctively say "both," without understanding the difference or its significance for their business.  

 

Inventors are those focused on solving a specific big problem and striving to discover and develop the one best solution for that problem. They are competing with every other inventor trying to solve that same problem.  In the long run, one particular solution is likely to win out over all others, that solution is likely patentable and it will likely best be scaled by and ultimately sold by a large company that can leverage economies of scale in continuing to produce that "best" solution.

 

Entrepreneurs are more often trying to sell something using a market insight they have to make that sale.  The more customers, the more potential sales solutions, the more insights about what works for a particular customer. Competitively, entrepreneurs rarely patent those insights--they don't want to share them--so they keep them as trade secrets.  They also typically want to be nimble and pivot their sales solutions as their customers' needs change. Because they are approaching the market from a customer perspective, there may be lots of winners, or at least as many as there are different types of customers. 

 

We separate these two worlds into areas of convergent competition and areas of divergent competition.  Over time markets change and may trend from a state of convergence to one of divergence and back.  For example, the original entreprise software market was a convergent market, a market in which every competitor was looking to build the one solution that would occupy our desktop.  So too has been the market for our computing devices, be they Apple-centric, Microsoft-centric or Android-centric.  But the Internet brought us the ability to reach customers individually and opened the door to an enourmous number of divergently competitive "apps."  Each app could be tweaked for a small but specific customer group and be made to greatly delight that group.  The more apps we created, the more opportunities we created for new apps--a model of divergent competition that opened the door for many winners and set the stage for today's Internet-driven world of software and services.

 

Many entrepreneurs and inventors approached the world of clean energy as if it was the same as the Internet world. It was not.  We first had to solve some really tough problems.  In so doing we created a lot of inventive companies, but put them into a convergent competition situation where only the best solar panel, wind turbine, battery or electric vehicle would win.  That world meant a much smaller number of winners, it meant big advantages to those with capital and with the ability to scale; it meant you either had to be a big company or become one very quickly.

 

We can now see the results in the rear-view mirror.  But we have also now created a situation where entrepreneurs building applications and solutions today can leverage the convergent phase of the clean energy revolution to begin building divergently competitive businesses.  Here the advantage goes back to the quick, the nimble and those who can get close to and satisfy their individual customers best--a world the entrepreneurial and venture capital communities are much better equipped to suceed in.

 

So make sure you ask yourself whether the business you are building is living in a convergently competitive world or a divergently competitive one and to what extent you are acting as an inventor versus an entrepreneur.