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Discover potential in what exists already
Successful entrepreneurial designs are often innovative without inventing anything new. The innovation lies in re-combination.
Early on, Schumpeter drew a distinction between innovations and inventions. It often takes quite some time before great inventions are market-ready because they harbor minor defects that make them fail. This is because when they’re first introduced, they haven’t yet been perfected technically, their significance may not yet be recognized, or they haven’t been accepted by the public. This is the reason why successful business people are generally not inventors but innovators. They rely on what already exists.
The American economist Israel M. Kirzner emphasized this as well; he regarded “discovering what exists” as the entrepreneur’s core business. This concept only appears to be a paradox. Something that already exists doesn’t have to be re-invented, but its significance and potential can nonetheless be interpreted in a fresh way and re-discovered.
A famous example of this is the fax machine. The invention has been around for a long time, but ultimately it was introduced worldwide by companies other than the inventor or the companies that had initially tried to market it.
Skype is a good example of the Kirzner theorem built on Schumpeter’s theory. Another example is Sergio Rial, the Brazilian bank manager who was sent to China to establish the ABN AMRO Bank there. He learned about the country’s banking sector, but in the process he became aware of something totally unrelated – chicken feet. Yes, chicken feet, which are eaten in China. Not just the thighs and legs that we eat, but also the claws, which are regarded as a delicacy. What every other visitor to China had already seen, Rial viewed with more alert eyes.
In Brazil nobody eats chicken feet. Nor do they eat them in Argentina and the other South American countries. And Brazil and Argentina are among the world’s leading producers of chickens. What happens to the chicken feet there? They’re thrown away. You can imagine how the story ends. You can read all about it in a brief report in the Far Eastern Economic Review – Rial started coordinating the stream of chicken feet going from South America to Asia. He discovered something that already existed and ensured that the chicken feet would be used well.
The real discovery is not finding unknown territory,
but seeing things with new eyes.