Innovation vs. best practices6 min well spent

What Peter Thiel, Simon Sinek, and Henry Ford can teach us about balancing best-practices and innovation.

Innovation and best practices live on different ends of a spectrum. By definition, following best practices means doing something someone else has done successfully before. Innovating means being the first one to do something.

An innovative product catapults you into a non-competitive market, at least for a while, but it’s incredibly hard to do. Without a buyer, you’re not innovating but simply toying around.

In his industry-shaping book Zero to One, Peter Thiel writes that Competition is for losers. He goes so far as to say that if a startup fails, it fails because of competition. Instead, you should aim to be the only one, a monopoly, “the kind of company that is so good at what it does that no other firm can offer a close substitute” (source).

Thiel suggests four ways to beat the competition:

  1. Have 10x better IP (innovation)
  2. Network effects
  3. Economies of scale (software means zero marginal cost per additional user)
  4. Branding

In other words, your product must be truly innovative, scale with the number of users, or gain an outstanding reputation. Airbnb is a good example: The product is much cheaper than previous solutions (hotels), has strong network effects from a marketplace between renters and landlords, gets more efficient over time through reviews, and established a strong brand in the process.

Is it truly innovative or just a collection of best practices?

How to innovate in a competitive market

Simon Sinek, author of books like Start with Why or Leaders Eat Last, writes about how obsessing over best practices can stifle innovation in The Infinite Game (bolding mine):

“Traditional competition forces us to take on an attitude of improvement. The former focuses our attention on the outcome, the latter focuses our attention on process. That simple shift in perspective immediately changes how we see our own businesses. It is the focus on process and constant improvement that helps reveal new skills and boosts resilience. An excessive focus on beating our competition not only gets exhausting over time, it can actually stifle innovation.”

Best-practices should drive our process, not the outcome. When looking at what others have done successfully before you, focus on the way they thought about the problem, not on the solution. Done right, it’s a powerful mental model that you can apply in Growth, SEO, or other parts of your life.

A good example is Airbnb’s solution to the early distribution problem. They built a tool that automatically reached out to Craigslist users who rented out their homes and poached them. This is a best practice, but copying the approach won’t let you build another Airbnb in 2021. Instead, detach the solution from the problem to innovate.

The problem Airbnb tried to solve was capturing users who crowd on another platform. Craigslist had all the users Airbnb initially needed to build one side (the harder one) of its marketplace. Many startups face that same struggle today but might solve it by building a useful tool that attracts users by pulling instead of pushing them in.

Instagram followed that strategy by building a filter tool for smartphone pictures instead of scraping Craigslist or Myspace for people who want to brush up their pictures. “Come for the tool, stay for the network.” (source)

Competition in Growth

In SEO, the easiest way to lose against competition is to fall into the commodity content trap: entering a crowded topic space with undifferentiated content. Replicating what others have done and trying to do it better. However, doing this often leads to only marginal improvement, which in return can be beaten by someone else.

First, we need to think about content as a product. The key feature for recipe content is… you guessed it, the recipe!

Second, if the key feature is easy to replicate, you have a problem. You have a commodity; you’re one choice of many. Commodities compete heavily on price and cost. As a business, you have to weigh the cost it takes to create the product against the returns it brings. Are you in a stronger position when you compete with minimal advantage for a small share of ad views?

Third, content lives on a commodity spectrum. On one side, you have faceless, replicable content. On the other side, you have a piece that stands out from everything else, is memorable, and unique in the universe. Guess which side you should aim for?

Instead, you want to opt for something that’s hard or even impossible to copy. Pulling from Thiel’s framework, combining unique content with a solid distribution strategy (in best case user-driven) and a strong brand is the strongest success cocktail you can mix.

Hacks are to Growth what commodity content is to SEO. By definition, as soon as a hack is public, it’s not a hack anymore. Andrew Chen described the same phenomena in The law of shitty click throughs (source). New tactics quickly burn out these days because they’re replicated all over the internet. Every time a hack is copied, it works a little less efficiently because users have seen it before. Apart from that, the definition of a hack is also something related to doing something bad or illegal, so you should abide hacks altogether.

The key to innovation, as Simon (Sinek) says, is focusing on improving our internal process. We can still learn from other growth tactics and strategies but shouldn’t just copy them. We should think about why someone else came to that solution and what that could look like for our specific context.

Innovate on the process, no the outcome

Robert Greene describes Henry Ford’s innovation process in Mastery:

He [Henry Ford] built a workshop in a shed behind his home and started constructing the engine from pieces of scrap metal he salvaged from anywhere he could find them. By 1896, working with friends who helped him build a carriage, he completed his first prototype, which he called the Quadricycle, and debuted it on the streets of Detroit.

At the time there were many others working on automobiles with gas-powered engines. It was a ruthlessly competitive environment in which new companies died by the day. Ford’s Quadricycle looked nice and ran well, but it was too small and incomplete for large-scale production. And so he began work on a second automobile, thinking ahead to the production end of the process. A year later he completed it, and it was a marvel of design. Everything was geared towards simplicity and compactness. It was easy to drive and maintain. All that he needed was financial backing and sufficient capital to mass-produce it.

Ford faced fierce competition and best practices (Quadricycles) dominated the market. Eric Ries writes in The Lean Startup that “from 1900 to 1908, 501 companies were formed in the United States for the purpose of manufacturing automobiles.” By figuring out how to build a better Quadricycle, Ford’s production innovation led him to build a car.

As Growth Marketers or SEOs, we should use best practices to understand the problem better and use it to build a better process, not to copy other tactics.