February 25th, 2013
The entrepreneurial age will be as important as the industrial age and the information age.
In the industrial and information ages, we learned how to put physics and information to great use. Physics and information were also the basis for an organization’s differentiation and victory.
In the entrepreneurial age, physics and information will be replaced by entrepreneurship: the ability to serve a customer at the highest level of quality and scale, simultaneously. We will learn to put entrepreneurship to great use and it will be the basis for an organization’s differentiation and victory.
This is not a statement that the winners are going to win. It is a statement that (1) the best strategy is to attempt to deliver the highest quality with the highest scale and (2) other types of differentiation should only be tactics that serve an organization’s entrepreneurial capability.
Differentiation is being commoditized
Physics, information, hardware, software, marketing, press, business development, recruiting, training and every damn thing a business needs to do is quickly becoming available as a service. And innovations by one company are quickly made available to its competitors by other entrepreneurs.
It is no longer effective to rely on any type of differentiation—organizations must focus on delivering the best product in the world to as many people as possible. All other activities just help them on their way.
Scale is getting easier
In the past, scale (low cost, high distribution) was so difficult that organizations with bad products and great scale could win. And it was so difficult to scale the very best products that they never left the boutique.
The challenges of scale are now diminishing rapidly. Scale is now available as a service—see Foxconn (manufacturing), AWS (hosting) or Facebook Platform (distribution).
But scale is not being commoditized
Scale is getting easier and other forms of differentiation are being commoditized. But scale will not be commoditized. It is as important as an organization’s product development capabilities.
Why? Because the best products require unique means of scaling. The delivery of the best products is tied into the product itself. For example, look at Apple’s efforts to develop new manufacturing techniques and stores for its products.
If you don’t scale quality, you will be shut out of the marketplace
Today, it’s too easy to spread the word about the best products to leave any room in the marketplace for merely good products.
The organizations with the greatest entrepreneurial capability will collect the most customers and greatest profit. They will also attract the best talent, who will continue to build the best products, with the greatest distribution and highest profits, which will attract the best talent and so on.
It’s not bad enough that the winner is collecting the greatest profits, it’s also collecting the best talent, leaving competitors without the people it needs to stage a comeback.
The industrial and information revolutions are enabling the entrepreneurial revolution
The continuous improvements in our ability to manipulate physics and information are helping us commoditize every capability on the planet.
These improvements enable entrepreneurs to deliver services to other entrepreneurs—and these services are commoditizing every type of differentiation except product development and delivery.
If you’re interested in building a steam engine for the entrepreneurial age, AngelList is always hiring engineers and designers.
Related: Startups are here to save the world and There is no finish line for entrepreneurs
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