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What Works: The Economics of Good Enough

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It’s been a while since I wrote one of my Om Says newsletters. The fact is that I got hit by a massive writer’s block — the first one in a long time, brought on by various things I have been juggling on the non-writing front. Last week, for example, we raised new money to keep expanding our business, especially our rapidly-growing GigaOM Pro research service. . Anyway, it is good to be focusing on writing again.

Last week, when sifting through my daily readings, I found myself reading a post by Adam Singolda, the founder and CEO of a New York-based video recommendation company, Taboola. Singolda had started the company after spending seven years in the Israeli Army. In his article (and a presentation he gave to students at MIT’s Sloan School of Business) he talks about The Economics of Good Enough as a business mantra and the lessons he learned from taking that approach. Those lessons boil down to this:

  • Succeed with what you have.
  • Failing is a part of the process, not the end of it
  • Golden moments don’t exist. “Just do it”
  • Creativity. New world requires new tools
  • Networking. Not as rolodex but to create opportunities.

What many don’t realize is that today’s always-on economy has an entirely new dynamic that involves an always-on, anywhere customer, unpredictable demand, and — most importantly — the limited attention span of customers. Add fierce competition to the mix, and what you have is an unpredictable and highly chaotic marketplace. And what that means is that today’s company – regardless of their business focus — has to have a much higher metabolic rate. It grows faster, and fails even faster. Against such a backdrop, one needs to break down one’s business into many small chunks.

“I constantly manage challenges and crises on an 80/20 rule [also known as the Pareto Principle], asking people to get to something, and then to make it work rather than analyze the entire task and then get going, (i.e. the economy of good enough) if it makes sense,” Singolda explained to me in an email later. Now, none of this is that new — except that these guiding principles dovetail nicely with today’s network-driven economic realities.

As an entrepreneur, I can totally relate to Adam’s lessons. In five years of building GigaOM, one of the biggest lessons has been embracing the idea that sometimes things don’t work out as planned and it is okay to move forward. Adam, in his MediaPost column, writes:

Most of us by nature are tuned to plan “the win,” how to behave when winning, how to defend our business when we are there, market size analysis to make sure it’s a billion dollar market, etc. However, in the “economy of good enough,” we are likely to have many little failures and unknowns as an organization and it’s much more important to get ready to the next failure instead of the next win. Statistically it will happen much more. By doing that, you’re building a culture that embraces trying, data collecting, and optimizing.

As I often say, start-ups are a marathon interspersed with 100-meter dashes. One of my fatal character flaws is that I only believe in running at full speed. I don’t know how to pace myself, moving always in the top gear. Well, that kind of drive can sometimes be fatal, especially if you are out of shape and have a whole score of bad habits. I think we as founders of companies sometimes forget that running full tilt can basically get in the way of differentiating things of minor consequence and those that are vital to the future of company.

Even today, despite learning and adapting, it remains a constant challenge. Another personal challenge has been becoming more decisive and learning to live with decisions. So when Adam says there are no golden moments, I kinda know what he means — startups don’t have the luxury to procrastinate over decisions for too long. The faster the decision-making process, the faster you move. And even if you make a bad choice, one needs to be able to quickly modify.

PS: If you want to share the lessons you have learned as an entrepreneur, drop me a note at omsays at gigaom dot com.

10 Responses to “What Works: The Economics of Good Enough”

  1. Top companies are not just good enough in the competencies that go towards their advantage, but they can be good enough everywhere else.

    The quote I like – and might link to my blog – is the “today’s company has to have a higher metabolic rate”.

    Thanks for the post!

  2. Om, I appreciate you covering this – I did too on my blog – because if nothing else it is useful to think about the concept of “good enough” as it relates to business today versus say a decade ago. But let’s not heap too much praise here on this phrase being revolutionary because the “Economics of Good Enough” is not a new term. In fact, I’d be willing to bet that Adam listened to the same Harvard Business Review webinar that I did from Ranjay Gulati entitled “Unleash the power of marketing to drive innovation and profit” which covers this topic deeply.

  3. Ian, it’s just as well we’re not living in the pre-Internet era then. :-)

    Taking our case again (the only one I’m really familiar with…!), we’re a Singapore company but our subscribers are all over the world (180 countries, with paying subscribers in over 50!)… and the vast – VAST – majority of our paying subscribers are in… hold your breath… the US.

    Not taking anything away from the extra-hard work you no doubt had to put in, but I guess perceptions change with time. Thankfully for us. :-)

    – Varun.

    PS: It *is* good enough to mis-spell Pareto… Om isn’t selling prose, he’s selling knowledge, advice, wisdom. That said, I might not buy his literature… ;-)

  4. Ian Kemmish

    I’m not sure it’s “good enough” to mis-spell Pareto’s name in your teaser paragraph. Especially if you work in the media and are trying to sell your prose!

    And if you think omnipresent, fickle, and demanding customers are anything new, then you’re not ideally placed to learn the lessons of history (which definitely isn’t good enough). I’m sure the first vendor of blank clay tablets felt the same about his clients. I know I did, more than twenty years ago.

    And how do you measure “good enough” anyway? Before the Internet, any UK software product that wanted to succeed in the US had to be twice as good as its US competitors at half the price before it was considered “good enough” by prospective customers.

  5. Om, all of us remember Flip – the product that almost single-handedly told the world “Good enough is… well… good enough”. You don’t have to be a Rolls Royce when a Camry might be good enough (and affordable too). For a while, at GotoCamera, we used to say “we’re the Flip of home and small business video monitoring”. Then Cisco went and shuttered Flip… sigh… ;-)

    The ethos of being “good enough” is what the Web lives on. “Launch with a minimum viable product and iterate” = “launch what’s good enough”. And so on.

    Oh, btw, a lesson for fellow startup founders: celebrate small successes. It keeps you in good spirits, keeps the team in good spirits, and keeps you climbing the ladder. God knows the big successes are few and far between.

    – Varun

  6. Economics of “good enough” is not good enough if you want to be top company or if you want to create top products. I learned that in my experience creating iPhone apps for the past 1.5 years.