This reality television show on The History Channel chronicles a pawn shop outside of Las Vegas. I enjoy the show because of the history associated with the pieces that are brought in for sale. In addition to rifles from the revolutionary war and antique political documents, people bring in some unusual items like old videos games, dilapidated cars, and various novelty items.
After watching the show a bit, I gathered four practical lessons that Rick Harrison, the owner, uses when purchasing items:
- Liking/wanting an item does not make it a good purchase; it must make money
- Just because something is rare does not make it valuable
- Look at the size and analyze if something else could make more money in the same space
- Speed of sale is critical; consider the buyer’s market. In down times, luxury items sell slower
These are also good lessons for any innovator. Here are the innovation corollaries to the Pawn Star buying principles:
1. Do not get enamored with your ideas. Just because something “feels” good does not make it a good investment. Innovators often get “attached” to their creations and then blindly push forward. Knowing which ideas will create money is critical. Knowing which ideas to kill is a powerful skill.
2. Just because it is different does not make it valuable. Recognize that novelty does not translate to value. If you don’t have any buyers and it does not serve a specific need, you should not invest in it. This is not a game of “innovation for innovation’s sake.” Too many companies say they want to innovate, but don’t really know why or how.
3. Not all innovations are created equal. What solutions can create exponential value? What are the leverage points in your market? What products or services could transform your industry? Although you don’t want to only “swing for the fences” (that is, don’t solely focus on game changers; incremental innovation is also critical), make sure you invest your resources wisely with a balanced portfolio and a good risk/return profile.
4. Above all, consider the buyer. This is innovation 101. The market must tell you where to invest. In today’s economic condition, solving a pain is more important than providing an abstract benefit. In other words, be the aspirin for your customers’ pains.
Insights can be gathered from anywhere. Today I looked to a pawn shop. In the past, I was inspired by an expired bottle of mayo. Where else have you discovered new ways of thinking? Innovation is everywhere.
Stephen Shapiro is the author of five books including “Best Practices Are Stupid” and “Personality Poker” (both published by Penguin). He is also a popular innovation speaker and business advisor.