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If somebody were to ask you what makes up your business, you might talk about your employees, inventory, or place of work. But when you really get into the nitty-gritty philosophy of the matter, you soon see that companies are little more than a shifting set of ideas that adapt to meet customer needs.
Viewing companies in this way completely change your perspective. When you apportion value to your enterprise, you soon realize that the vast bulk of it isn’t in your “working capital” but in your capacity to develop and deploy successful ideas.
Think about the capacity of ideas in business to deliver industry-wide change.
Take Deliveroo, for instance. For years, people have had bicycles and telephones. So the idea of a home take-out delivery service seems like a no-brainer. However, nobody put it into widespread practice until recently.
Deliveroo took a look at the concept and saw that by combining app technology with zero-hours contracts, they could create a sustainable business model. And they did. It was actually a lot easier than many people expected.
Now, look at what Google does. Yes, it generates a lot of money from advertising. But it also invests huge sums of money into the thing that really differentiates its business from the competition: it’s artificial intelligence. You know when you type a search query into Google that you’re going to get a sensible answer. But what’s so incredible about the brand’s search engine is that there are virtually no humans involved. Instead, computers are working out the links between concepts and calculating what options to show users accordingly. It’s quite remarkable really when you think about it.
Ideas are also valuable to disruptive companies in other industries. Tesla, for instance, wouldn’t be where it is today if it wasn’t for the idea that you could make batteries smaller and more cheaply than current technology allowed. What started as a pipe dream is now a reality that most people expect. And it is probably ten years ahead of schedule, thanks to the insightful genius of Elon Musk
GHB Intellect is a consulting firm that regularly helps companies protect their intellectual property. It recognizes that leading firms today are almost completely dependent on their IP to defend their positions in the marketplace. Without it, they’d struggle to maintain an advantage and other firms would capture their customers, forcing them to lower their prices.
Protecting your ideas is, therefore, vital. But relatively few companies are working hard on it, despite all the tax incentives in their favor.
Ideas are essentially the only constant in many businesses. IBM has been around for nearly eighty years. Nobody who started with the firm all those decades ago is still there today. However, the basic ideas and driving force of the enterprise remain. That’s how we know it is still IBM and not some other enterprise.
The same is true of General Motors. The car company has now been around for more than one hundred years.
The only constraint is its ideas and ability to adapt to changing circumstances. And that’s what makes ideas so valuable.