The Bad Idea Tax

The Bad Idea TaxIn the software development world, there is an important concept called “technical debt.” Basically, it’s a metaphor developed by Ward Cunningham (inventor of the wiki) and it goes something like this. You’re building a piece of software. It could be a full system or just part of a system. You know there are two ways to approach the development; the quick way or the “right” way. But you’re facing some time pressure to deliver so you choose the quick way. You know there are best practices and other things you should and must do but you choose not to do them now because of the time pressure. By choosing the quick way you choose to accumulate some technical debt.

Today I was reading this book “Flirting With the Uninterested” by Maria Ferrante-Schepis and G. Michael Maddock. [1]

In the book the author discusses a new type of debt, “innovation debt” although in the book she refers to this as an “innovation deficit tax.” In my view it’s more properly termed “innovation debt.” Here’s the entire discussion from the book.

Flirting with UninterestedWHY DO YOU WANT TO PAY MORE IN TAXES THAN YOU HAVE TO?

You are likely paying an innovation deficit tax. Why? Because marketing and advertising are the tax you pay for a bad idea. More accurately said, they have become the tax you pay for not being able to create a better idea than your competitors.

The days are gone when a nice tagline or clever campaign could create sustained buying behavior. The more complicated the product, the more likely that people will tap their social network to make decisions. People don’t talk about ad campaigns when making these decisions. They share excitement and information about truly differentiated products. The lesson? The smartest companies are shifting their ad spend to innovation spend. They have realized that can get exponentially higher return by investing in something that is truly different and needed, and THEN marketing it. And when they do, they spend less on marketing because their consumers do the marketing for them.

If you incur technical debt, as with any debt, you’ll need to make interest payments. These come in the form of the extra work you need to do both now and in the future. Incurring technical debt isn’t always the wrong choice; there may be a window of opportunity that, if missed, would incur a far greater debt. Presumably however, if you want to stop paying the interest, you’ll need to pay down the debt and do the work required to build the system the right way.

If you incur innovation debt, you’ll also need to make interest payments. In essence, if you haven’t invested the time to build something truly innovative and compelling that distinctly meets a customer need better than your competitors, the interest you’ll pay will be in the form of marketing and advertising.

The key takeaway: “The smartest companies are shifting their ad spend to innovation spend.” So, “If you’re considering spending a bunch of money on marketing or social media, why not start by developing a game-changing idea first and marketing it second?” [1]

[1] Ferrante-Schepis, Maria. “The Product Isn’t the Problem” Flirting With the Uninterested Innovating in a “Sold, Not Bought” Category. Charleston: Advantage Media Group, 2012. 12. Print.


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Jeff RubinghJeff Rubingh is a technology innovation expert, consultant and analyst. Focused on the intersection between technology and business, Jeff helps clients identify ground-breaking solutions that maximize ROI across existing and emerging technology disciplines.

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