Limitation isn’t in Knowledge but Application
It seems that what is scarce isn’t knowledge (whether it's technology or a method of business) but rather the application of such knowledge.
The first knowledge regarding the steam engine was recorded by the engineer, Heron of Alexandria in Roman times. He had built an engine that resembled something closer to a toy that would spin from the steam created from heating the water.
There were significant applications of this in the 16th and 17th centuries by the Ottomans and British until mass commercialization in the 18th century by the more well-known Thomas Newcomen. This led to various applications to boats, vehicles, and trains as humanity went onto the industrial revolution….17 centuries after the first steam engine product was created.
Similar analogies are at play in recent times.
The Palm Pilot was one of the first smartphones in the 90s and Microsoft had created a tablet in 2000 but wide “successful” commercialization of both was done by Apple.
Similarly in Seoul, I saw my uncle pay for his groceries by tapping his cellphone (a flip phone at that) and how food delivery for most restaurants was an everyday norm in the 90s. The knowledge was common stance in a part of the globe but it took decades until it was applied widely through various apps in the 2010s.
I previously heard Brian Halligan, Co-founder/CEO of Hubspot, comment the best companies will not be ones that have the best technology/product but the best customer experience. Note that I’m paraphrasing here but I think it’s another inference to the difference of knowledge and application of said knowledge.
This application could also be in the innovation to business models.
Lately, some could point to companies using new ways of distribution like how Atlassian, Slack, and Zoom are enterprise software companies that use a freemium model. This was not common even a decade ago.
The same can be said about how Netflix and Spotify distribute media to my life as how I have access to content is different from before. It’s not necessary the ‘new’ content that keeps me on these services but the experience and how I get the content.
I’m sure there are specific/technical factors that will discredit what I will say but as a consumer, I don’t think there is any material technological innovation that makes me use a product over another. It furthermore doesn’t mean the technologically superior company will be the better business.
It reminds me of the model where you want to be closer to the last mover than the first mover. When one considers network effects, it would seem logical to be the first mover but the true first movers in most new markets will make tons of mistakes and it seems to be the case that the last movers are able to capitalize on all this and apply the same knowledge to effectively to win it all.
So what factors influence the business’ ability to successfully apply the knowledge that already exists…and is widely known? The entrepreneur.
“The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”
Any new application of existing knowledge needs to overcome the social hurdle of what is believed to be ‘reasonable’ by the crowd.
Yes, this does mean there is an uncontrollable element of timing and various external factors that is outside the entrepreneur’s control. However, this is where survivability comes in handy and the unreasonable entrepreneur will eventually be seen as the reasonable one.