vation stack”: One innovation makes another innovation possible,
which makes yet another innovation possible. Innovation stacks
are at the core of world-changing businesses; they are the result
of entrepreneurs who solve the right problem at the right time by
building upon what’s already possible. This means that, when a crit-
ical element of your company is outside your control, waiting can be
the best option. It’s possible to launch too early.
Do you recall the first social network? Wrong—it was GeoCities
back in 1995. Friendster came next in 2002 and did better. Then
Myspace elbowed out Friendster beginning in 2003. Finally,
Facebook took over. Why are we not all connecting with each other
over Geo chat? Part of the answer is that GeoCities, Friendster,
and Myspace all launched before mobile computing was common-
place. Without always-on access to the system, as well as a camera in
everybody’s pocket, the appeal of a social network is diminished.
Should we fault GeoCities, Friendster, and Myspace for not antic-
ipating the looming ubiquity of mobile devices? Each of those com-
panies was OK for its time, but Facebook’s timing was fantastic.
Facebook had a dozen components of its innovation stack ready
when mobile exploded, and then it quickly purchased Instagram
when Instagram was beating it in mobile.
You can be too early. Quick, name the 18th search engine com-
pany. (Ahem—you might want to google that.)
So, what then? If you are purposely waiting for the right moment
to move, is there anything to do in the meantime? Yes. The decision
to wait implies that at some future time you will have to move, so
you still have plenty to do. You work on all the other elements of your
innovation stack—everything else that you’re creating—so that when
the final element exists, everything else is ready to go.
For example, consider what happened at my company, Square.
We began in 2009 by developing mobile card readers—those small
devices you can plug into a phone or tablet and then swipe a credit
card through. But at the time, Visa and Mastercard had rules specif-
ically prohibiting the kind of technology we were creating. We spent
a year trying to convince them to change their rules—and while that
happened, we worked on other elements of our innovation stack, with
the hope that the last piece would eventually happen. It was a gamble,
but when Visa and Mastercard finally agreed to change their rules, the
rest of our stack was ready to go, and the gamble paid off.
Waiting for one element should not impede all the others. This is
risky, of course—but most of the entrepreneurs I studied took this
same type of risk, even if it made them uncomfortable.NOW LET’S TALK about moving now.
How does now feel? Well, in my case, I get nervous. Toward the
end of my first year at Square, I was actually having “mild” panic
attacks about all our unresolved issues. I remember pulling off the
road one day and running into a pharmacy and getting a bottle of
aspirin to fight the heart attack I was sure I was having. But this was
good, in a crazy way. Here’s why: Right feels early.
If the timing feels right, you are probably too late. That’s because
we, as people, move in herds. If the innovation feels right to you, it
probably feels right to a hundred other people with the same idea.
If it feels too early, in my experience, that’s a good time to leave the
walled city. There is no way to know when the unknown is arriving,
but it will probably arrive sooner than you think.
There’s a secondary benefit: When you act now, you can actually
create change—sometimes supplying whatever the missing element is
in your business. In other words, leaping can cause you to grow wings.
In Square’s case, let’s return to the permission we needed from the
card networks. We built a system that violated their rules...but had
we not already built the system, Mastercard and Visa probably neverwould have bothered to rewrite their rules to accommodate us. Our
system gave them something to aim for. Once Mastercard (and then
Visa) agreed to revise its regulations, the tone of our conversations
was basically “Square is cool, so how do we make it compliant?”
Southwest Airlines has a similar story. It created the low-cost-
airline model, but it did so in an era in the 1970s when the federal
government regulated airline prices. It could have waited for the
laws to change, but it chose not to. Instead, it proved itself as best it
could; it operated only in Texas, which, because it wasn’t crossing
state lines, meant it wasn’t subject to federal laws. Soon people took
notice of its demonstrably better price, speed, and service—including
Massachusetts senator Ted Kennedy, who led the fight to deregulate
the industry. By moving before the country was ready, Southwest cre-
ated the environment in which the country could be ready.
At that point, the big question was: Is Southwest ready to take full
advantage? And the answer was yes—it was more prepared than all
of its competition.
This is an important part of timing. You have to be ready when
the missing elements suddenly appear. I have seen the following pat-
tern in dozens of entrepreneurial companies: Their innovation stack
begins to function, and then the world suddenly changes; but because
their company is still evolving, they can quickly capitalize on this new
world order before any other firm can adapt to the new ecosystem.
At the time of deregulation in 1978, Southwest Airlines had
already been flying passengers around for seven years as a small
regional airline. But because of its earlier battles with the air-
lines and regulators, Southwest’s flights, planes, finances, pricing,
staff, pilots, passengers, and a dozen other blocks in its innovation
stack were ready before deregulation hit. When the change came,
Southwest was already in the air doing 500 knots, the only company
prepared for a world where leanness and low cost would win the day.
It had happy customers, lower fares, better punctuality, better safety
within Texas, and a culture that was accustomed to adapting quickly.
Now it just had to scale everything up.WHEN IS NOT A SCIENCE. Not even the world’s best econometrician
knows exactly when to make a move. Experience helps, but by defini-
tion it is impossible to have experience for anything that is truly new.
I find, however, that simply being aware of the temporal compo-
nents makes my enterprises more nimble. I race to be ready early. But
as soon as I feel ready, a voice in my head asks, Is the world also ready?
If the world is ready, then creating an innovation stack comes with
a responsibility to create a market for as many new customers as pos-
sible. You are rewarded with a massive market that is nearly impossi-
ble for competitors to steal, so long as you can grow fast enough. This
is fun, stressful, and necessary work. Your time indeed has come.→ Adapted from The Innovation
Stack: Building an Unbeatable
Business One Crazy Idea at a
Time, by Jim McKelvey, to be
published March 10 by Portfolio,
an imprint of Penguin Publishing
Group, a division of Penguin
Random House, LLC. Copyright
© 2020 by Jim McKelvey.BO
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