Here is a fact: developers tend to overvalue their innovations.

Contrarily, consumers tend to undervalue innovation. This disconnect is fundamental, and explains so many behaviors in Silicon Valley, I'm surprised by the lack of awareness or at least attention paid to these points by venture and early capital investors. It's out there, but it's advice you'll usually only get after you drive a few companies into the ground, and that can be tough advice to learn.

What ends up happening is that the typical inventor becomes obsessed with their innovation: entrenched in the idea of bringing it to life. The theory among entrepreneurs goes: "This single mindedness is absolutely necessary to bring about the product; without obsession and single-mindedness on a day-by-day basis, there won't be the intensity of investment in effort and finance to succeed." You see a lot of articles about the importance of fully committing: quit your day job; go for broke; don't let anything stand in your way.

On balance, this is good advice. However, it's important to bear in mind that the vast majority of innovation doesn't matter to the customers for whom it's being built. The curse of innovation is that most customer have some kind of alternative that already works, and many products are left to try to explain themselves to consumers (the "make a market" problem).

Because developers, entrepreneurs, and some investors value innovation above all else, and customers tend to value it less, it creates a very high rate of failure for new companies. In my company, I teach my staff the, "In it Vs. On It," problem. When you're "In" something, it's extremely difficult if not impossible to be "On" something as well. You can't see things clearly when you're super-involved in day-to-day decisions, questions, and communications. In fact, the more you think you see, the less likely you actually are. Many experienced entrepreneurs learn their weaknesses, and learn to rely on outside advice because they learn their own internal guidance is unreliable when it comes to products and services with which they are deeply involved. This is the curse of innovation. When you're working on something, don't pretend for five minutes that you have any form of objectivity: you need help.

New products brought to market regularly fail, and highly innovative products fail at a greater rate than more "evolutionary" product releases. It's not bad products, bad teams, bad advice, or anything else obvious, it's even more obvious than that. The failure in the marketplace of the vast majority of highly innovative products has to do with entrepreneurs overvaluing their companies and innovations while consumers systematically undervalue them. I'm not saying this is true for every single innovative company out there, but so many of the product companies I see in the Web 2.0 ecosystem today are vastly overvalued by their investors and creators, and when you sit down to talk to your average Dick and Jane user, they say something like, "Yea, it's interesting. I tried it. It's cool." And that's about it.

One of the greatest strengths of the Web 2 era is the reduced product development cycles. Minimizing the time for the feedback loop between conception and shipping is the greatest insurance against building a product that users don't really care that much about. The majority of services are so simple they can be created with minimal investment. The rise of virtualization for low cost but scalable deployment, languages and frameworks that lend to excellent RAD (Drupal, RAILs, PHPCake, Hibernate+Spring), and a business philosophy of "ship first, get feedback" all contribute to the proliferation of Web 2.0 products and sites: the garage startup is alive and well.

However, it's incredibly important not to overvalue innovation, and to remember to stay connected to users, as almost all innovative products involve behavior change for consumers. Because high innovation is often competing with an "existing way" of doing things, what most Web 2.0 companies ask people to do is change their behavior from something they're already doing.

My random thought for the day.