The Innovation Stack by Jim McKelvey, Summary

Introduction: The Innovation Stack by Jim McKelvey

I read The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time by Jim McKelvey while participating in the Read 30 Books in 30 Days Challenge I created and hosted.  It was the top book I read during the reading challenge.

The book provides a captivating exploration of Square's triumph over Amazon and unveils the concept of the innovation stack. This blog post delves into the definition of innovation stacks, their historical significance, and the critical components they entail. By uncovering the essence of McKelvey's book, we uncover invaluable insights that can inspire and revolutionize your own entrepreneurial journey.

I really enjoyed reading The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time by Jim McKelvey because it was an eye-opening experience for me. And it made me think, so unlike many of the books I've read . The book weaves in the story of Square and how it beat Amazon at its own game. When investigating how the giant couldn’t slay the little man, McKelvey realized it was their innovation stack. They didn’t even know they had an innovation stack.

Book Bite: Keep in mind that every living thing is a copy of something else and can copy itself. Copying and innovation are like two peas in a pod. Fear is a part of innovation. Get comfortable with discomfort and keep moving.

5 Big Ideas from The Innovation Stack by Jim McKelvey

1. Take on a problem no one else has ever solved and do what it takes to solve it. The perfect problem has a solution but not a solution that already exists.
2. At the bottom of the market lies an unguarded economic border. There is a problem-solution-problem loop. When you solve a problem other problems arise. If you continue like this, two things will likely happen – you fail and die. Or you succeed in solving all the problems with a collection of both interlocking and independent innovation.
3. Your product may not be an invention, but a series of inventions. Put yourself in a situation where you’re forced to innovate. An innovation stack looks like a linear series of decisions. Evolution may be a survival instinct.
4. When you make business decisions, think about how they’ll impact your customers. What makes other services like yours the same? Start from there and improve. Conduct some research. Refine and improve what you offer. Keep in mind that every living thing is a copy of something else and can copy itself. Copying and innovation are partners.
5. Timing is everything. Somebody else’s invention may be the missing piece of your innovation stack. Every day you get a new set of tools – Horizon of Possibilities. Often elements are missing from the innovation stack. Timing is about being ready when the missing element becomes available. What is The Innovation Stack by Jim McKelvey About?

What is The Innovation Stack by Jim McKelvey About?

The Innovation Stack” by Jim McKelvey is a captivating book that delves into the concept of innovation stacks and their transformative power in building unbeatable businesses. McKelvey uses the story of Square's victory over Amazon to illustrate the significance of innovation stacks in overcoming challenges and achieving unprecedented success.

The book explores how innovation stacks are a series of reactions to existential threats, and how entrepreneurs can solve unique problems to create their own market and differentiate themselves from competitors. By embracing disruptive thinking, cultivating customer trust, and continuously refining their offerings, entrepreneurs can unleash the untapped potential of their businesses and pave the way for remarkable growth.

Definition of Innovation Stack

An innovation stack is a series of reactions to existential threats. Square’s innovation stack resulted from their original decision to serve people outside the existing market.

Innovation stacks are at the core of world-changing businesses throughout history. The skill of an entrepreneur is to take on a problem no one else has ever solved and do what it takes to solve it. The perfect problem has a solution but not a solution that already exists. The perfect problem need not be a massive problem that affects the world. It could be a trivial annoyance.

There are many important pieces of information in the book. For instance, the author says that the most important part of the market is its end. The end of the market is the border or line nobody is able to cross. You have those who can participate versus those excluded. The perfect example is with credit cards. Historically small businesses were excluded because of exorbitant merchant fees and other aspects that the major credit card companies didn’t view attractive.

Have you read?

Zero to One by Peter Thiel, Book Review

That’s the market that Square went after and did a really good job offering service to those excluded customers. When Amazon noticed how well Square was doing it went after the smaller company to take away the business. But the giant failed. It was able to copy some of what Square did but it didn’t understand all the processes. As I write this, I’m reminded that in Zero to One, Peter Thiel says that every startup needs a secret. That’s the differentiator and if you have a secret, it makes it more difficult for another company to copy you.

At the bottom of the market lies an unguarded economic border. What is that for your niche? There is a problem-solution-problem loop. When you solve a problem other problems arise. If you continue like this, two things will likely happen – you fail and die. Or you succeed in solving all the problems with a collection of both interlocking and independent innovation.

Your product may not be an invention, but a series of inventions. Put yourself in a situation where you’re forced to innovate. An innovation stack looks like a linear series of decisions. Evolution may be a survival instinct. For Square, harsh conditions coupled with a stubborn team led to the innovation stack.

When you make business decisions, think about how they’ll impact your customers. What makes other services like yours the same? Start from there and improve. Conduct some research. Refine and improve what you offer. Keep in mind that every living thing is a copy of something else and can copy itself. Copying and innovation are partners.

“Copy when you can, innovate when you must.”

Copying doesn’t transform anything. That’s why copying and innovation are bedfellows. Caring about something is a great source of energy. 

• What do you care about? 
• Is there a perfect problem that you can solve?

Timing is everything. Somebody else’s invention may be the missing piece of your innovation stack. Every day you get a new set of tools – Horizon of Possibilities. What can you do to let partners and potential partners rewrite their rules for you? Often elements are missing from the innovation stack. Timing is about being ready when the missing element becomes available. If you’re ready, you can quickly capitalize on the new element.

A new change can supercharge your innovation stack. It will be difficult to displace a company with an innovation stack. If the world is ready for what you have to offer, you have a responsibility to create an innovation stack. Entrepreneurs are forced down a path of invention to solve a perfect problem.

The innovation stack works hand-in-hand with all the individual blocks. It’s difficult for companies to copy your innovation stack. They can copy elements but not all. Take the time to create your innovation stack. Culture is also a part of the innovation stack and copycats forget that.

A company that creates an innovation stack doesn’t do so by copying innovation.

3 Problems That Damage Entrepreneurial Firms with New Ideas

1. Curse of Knowledge: Explain how the system works.
2. Language Gravity: People assume your innovation is like something else.
3. Feedback Failure: Provide clear messaging. Be clear with the language you use.

Tidbits I Liked in The Innovation Stack by Jim McKelvey

• Entrepreneurial companies are focused on their customers and not competitors.
• An innovation stack allows you to set your prices differently from the competitors.
• Customers who trust you are more valuable than customers who love you.
• Entrepreneurs  build companies that expand the market – disruption is a side effect.
• Fear is a part of innovation. Get comfortable with discomfort and keep moving.
• Problems are great motivators.
• A real problem is obvious.
• There’s a difference between entrepreneurship and business.

Final Thoughts: The Innovation Stack by Jim McKelvey

Jim McKelvey's The Innovation Stack sheds light on the profound impact of innovation stacks in creating unbeatable businesses. By embracing the power of disruptive thinking, solving unique problems, and forging your own path, you can unlock the potential to achieve unprecedented success. Remember, true innovation lies not in copying but in crafting a remarkable stack of solutions that set your business apart from the competition and propel it to new heights.

For me, this was an incredible book. And a breath of fresh air amidst the sea of same-old, same-old. I’m building my innovation stack and it’s making me think. I recommend that you secure a copy of The Innovation Stack.

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