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INNOVATE

Don’t Think of Scarcity as a Challenge

Innovators thrive when scarcity exists.

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BY Jeffrey Phillips - 18 Oct 2018

Don't Think of Scarcity as a Challenge

PHOTO CREDIT: Getty Images

While it may seem strange, I believe that scarcity is a blessing for innovators. There are a number of reasons for this thinking. Janis Joplin may have summed it up best when she sang (paraphrasing here) "when you've got nothing, you've got nothing to lose". As strange as it may seem, scarcity can be an innovation blessing.

I often lead innovation workshops and projects for Fortune 500 companies, and they lack for nothing. The innovation teams are awash in ideas, they have resources available to them that most startups can only dream of and have access to deep pools of funding. That's not to say that every corporate innovator gets what they want, but (Rolling Stones quote - can't resist) they do often get what they need and more.

Contrast that with the nascent entrepreneur. Many have only one thing - a really compelling idea that fulfills a significant customer need. Entrepreneurs may lack funding, personnel, access to channels or markets. And to many this seems like a daunting hill to climb. Yet many corporate innovators look at what entrepreneurs have with envy.

Scarcity as an asset

That's because in many cases scarcity is an asset. For example, since the entrepreneur doesn't have an existing product line to sustain, he or she can place all their focus on the great new idea. And, since there isn't an existing product line, they don't have to worry about spending resources to defend existing products, or worry about cannibalization.

Further, having access to resources is great - but acquiring and using those resources will require justification. Larger firms must make tradeoffs between a number of competing ideas and other priorities. The biggest challenge for innovators in larger firms revolves around project prioritization and resource allocation. For entrepreneurs, there are no tradeoffs. All focus goes behind the one great idea. There's not enough time or bandwidth for another.

Scarcity as an enabler

Strange as it may seem, too many corporate teams are too well funded, and too burdened with overhead and expectations. Scarcity can create constraints, but it also introduces a lot of freedom. Every innovation needs some investment, so scarcity makes an entrepreneur more creative in terms of where those investments come from, and what to give up in order to receive those investments. An entrepreneur must be creative within the scarcity, while many corporate innovators debate how to spend the "limited" investments that they have. In many ways, scarcity requires new thinking and requires more creativity. It also makes value judgments and tradeoffs much more stark, creating really bright lines about what matters and what doesn't matter.

The grass is greener

It's strange that the two groups are often jealous of the other. Entrepreneurs sigh and say, if only we had all of those assets. Corporate innovators sigh and say, if only we had that freedom. I will often tell corporate innovators they should be jealous of the focus that entrepreneurs have, because entrepreneurs must place all their emphasis on just one idea.

The takeaway here is that entrepreneurs should learn to value their condition - stop trying to emulate corporate innovators and embrace scarcity and the opportunity to focus. Likewise, corporate innovators would be well served to act more like entrepreneurs - narrowing their focus, freeing themselves from corporate bureaucracy, getting more creative by practicing scarcity and, when the opportunity arises, worrying less about defending existing products and services and more about the opportunities disruption presents.

 

 

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