Creative Destruction

　 Innovation has uncertainty, and what does uncertainty mean? It means unpredictability. Unpredictable means unique, that is, not available in the past. Uncertainty in innovation, as I understand it, is in 3 ways.

　　The first is that it is not known whether the technology will work; the second is that it is not known how commercially viable it will be; and the third is the uncertainty of institutions, culture, and policy.

　　Let's look at the technical uncertainty first. For example, when steel production increased in England more than 200 years ago, a famous entrepreneur named John Wilkinson said we could build bridges with iron, and people thought there was no problem; then he said he could build ships with iron, and everyone said he was crazy. Because in 1750, people didn't know if something heavier than water could float on water, so when he proposed using iron to build a boat, 99% of people thought it was impossible.

　　Every time a new technology emerges, we don't know if it will work or not.

　　The second is the commercial uncertainty. That is, it is technically feasible, but it is impossible to predict whether consumers, the market, will accept the technology. Looking back, in 1985, Steve Jobs was ousted from the board of directors of Apple. Because Jobs produced a computer called the McIntosh, which sold much less than expected, so the board considered it a failure and Jobs lost his job over it.

　　The third uncertainty is brought by the system, policy and culture, etc.

　　One expert has said that every innovation is born in a very unfriendly society, which has few friends and many enemies. Few friends means that few people support it; many enemies means that others are against it.

　　To give you an example, Easterners drink tea and Westerners drink coffee. In fact, coffee was shipped to the West a little later than tea was shipped to the West. Coffee came from Ethiopia in Africa and was initially introduced to the Middle East, then through Turkey, to England, and then to continental Europe. The first coffee house in England was opened in 1650 by a Lebanese man.

　　Brewpubs, tea dealers, and other drinkers objected, and they took various measures, including asking the government to introduce regulations. In December 1675, King Charles II issued a decree that all coffee houses must be closed by January 10 of the following year for "reasons of national security". This example shows that even a simple innovation can be a great challenge to tradition.

　　Of course, not every innovation will encounter these aspects of uncertainty at the same time, but any innovation is likely to encounter at least one aspect of uncertainty.

　　The success of innovation becomes more difficult, so we especially need a spirit, and that spirit is entrepreneurship. Entrepreneurship can be defined in many ways, but the simplest one is non-conformity, which means breaking the rules.

　　Entrepreneurial decision-making is not a scientific decision, entrepreneurial decision-making is not to give you data to do calculations, if so, it would be too simple. Entrepreneurial decision making is based on imagination, judgment, on what you see and others do not see, and what most people do not see.

　　What most people think is right is certainly not what entrepreneurs do. What entrepreneurs do is what most people think is impossible and wrong.

　　We must separate the management decision from the entrepreneurial decision. 95% of our enterprises are management decisions, less than 5% are entrepreneurial decisions, but entrepreneurial decisions are the most critical.

　　Entrepreneurial decision is not the solution to a given constraint, but the change of the constraint itself. In an old saying, it is difficult for a clever woman to cook without rice. Rice is the condition for rice, provided you have other things such as pots and fires. However, for entrepreneurs, rice is not a condition for rice. If you think the rice can make money, you can find people to make rice; if you can't find people to make rice, let them plant rice.

　　The final proof of whether an entrepreneur is successful or not is not how ambitious it is, but whether consumers buy it. The test of an entrepreneur is the market, always remember that.