Q: Hey Steve! I have owned several successful businesses and am ready to jump in again, but my question is regarding innovation. Do you think it is generally a good idea to run with a new idea or stay with the tried and true? The former seems like a bigger risk, but also a potentially bigger reward.  Would you agree with that assessment?

Stephan, Mexico City, Mexico

A: There is no doubt that a new idea has the potential to create what is called the “first mover’s advantage.” Simply put, that means that the first business to break open a new market can often dominate that market because

• It has a head-start
• It can create the first, and therefore memorable, brand
• It usually has already ironed-out most of the kinks just as new companies are entering and making mistakes

As a result, the innovative company is often the one that becomes a category killer. Think Amazon.com.

However, the problem with innovation is that you have to teach people how to use your product or service, and that can be both time-consuming and expensive; Amazon, being the first major online retailer, encountered a fairly steep learning curve teaching the world how to buy online.

It is for this reason that I really like the idea of taking a successful idea and tweaking it just enough so that it is both innovative and tried-and true; that way, you get the best of both worlds. You do not have to re-invent the wheel.

Here is an example of what I mean: Sean Neville used to work on Bay Street (the Canadian equivalent of Wall Street.) Although he spent many an hour trying to come up with a Big Idea, for a while his entrepreneurial dream seemed just beyond his grasp.

But he eventfully did come up with what I think is a fantastic idea for a business, and he did so because he personally encountered a problem to which there was no commercial solution.

You see, Neville used to have a fairly long commute to work, and along the way he would often listen to audio books. As you likely know, the problem with audio books is that they are not inexpensive and are only used once. But when Sean went to rent an audio book, he found that difficult to do. Bingo!

Instead of re-inventing the wheel though, he took this unique idea and combined it with a system that already worked: Neville decided that there might be a huge opportunity to rent audio books online much as NetFlix does for movies. www.SimplyAudiobooks.com was born.

No one ever said entrepreneurship was easy, and when I spoke with Sean Neville last week, that was certainly true for him. Over the course of one week in 2003, he quit his job, started this business, bought a home, and had a child. Whew! But as he says, “Sometimes in business you have to go full blast – 100% committed. It is like the tightrope walker who works without a net – he can’t fall!”

As with NetFlix, Simply Audio books offers customers affordable, unlimited rental on audio books with no due dates, no late fees, and no shipping charges. With an inventory of more than 6,000 titles, the company sends customers as many books as they can hear every month for a low, flat fee. That is a great idea.

Starting in Canada, the business really took off when Simply Audiobooks entered the U.S. market. When I asked Sean what works in his business (so that we can tweak his good ideas and use them in our businesses) he said:

• Test, test, and test some more: Simply Audiobooks tests everything – from website colors and prices to online promotions and marketing campaigns.
• Customer service is more than just talk: “Because we have an online business” he told me, “our 800 number is highly prominent, and when people call they speak to real people selling real products. We want to create raving fans, and so the personal touch makes the difference.” Neville himself got on the phone Christmas Eve last year to help resolve a shipping backlog. Now that is commitment.
• Solve a problem: “We are all unique,” Neville noted, “just like everybody else.” The point is: If you have a problem, there is a high likelihood that other people have it too. Solve it, and you are on the road to business success. “You don’t need a billion dollar idea, just a solution to a common problem” said Neville.

Today’s tip: Lately in this column I have been stressing the need to sharpen the ‘ol business saw, that is, to continue to find new ways to succeed (besides this column of course!) Well, consider that Simply Audiobooks has 714 business audio books for rent.

What are you waiting for?