"Don’t engage in second-tier innovations!" proclaims CK Cheng, startup veteran and co-founder of Acorn Pacific Ventures, pointing out a mistake commonly committed by entrepreneurs. Cheng has served as the director of over a dozen startups and has a wide-reaching network of contacts throughout China, Taiwan, and the U.S.
But what is second-tier innovation?
Many entrepreneurs develop a business around what is discussed by other people, what they see on the internet, or the results of market surveys - but this second-tier method lacks the sharpness created through the wisdom of firsthand experience.
Cheng previously worked in the tech sector but is now focusing his energy on investing in innovations. He has resided in Silicon Valley for close to three decades and has developed an understanding of the industry and its startups. Entrepreneurship has been on the rise in Taiwan in the past few years and the market has become increasingly friendly to newcomers. However, Cheng stresses that entrepreneurs should still take care not to engage in second-tier innovation.
True innovation, on the other hand, comes from information that you obtain from your immediate environment, much like how detectives on TV go directly to the scene of the crime to obtain clues. This doesn’t always mean going to an actual place; your experiences and "clues" can also come from user groups and virtual groups. If you are able to identify a need within a group and produce a solution accordingly, you will have created real value.
There is another key point in addition to creating true innovation: Cheng believes that all innovation should be connected to its environment. It requires a solid foundation and support, such as talent, technology, local connections, and a supply chain. Therefore, if an entrepreneur sets ambitious goals but possesses limited resources, he or she will most likely not succeed.
Weak innovation vs. strong innovation
Cheng believes that innovation can be taken in two directions. Weak innovation, with examples like Facebook and Uber, which involves less technological knowledge, and thrives in environments with an abundance of resources and a sizeable market. These two requirements are not readily found in Taiwan; in recent waves of entrepreneurship, however, Taiwan has begun to realize its strengths in technology and is quickly catching up in other ways.
The stronger form of innovation, according to Cheng, is rich in technological content, as can be seen in the spare parts, materials, and B2B markets. It takes longer for these businesses to mature, but they can endure for longer. Cheng stresses, however, that weaker innovation in Taiwan is still possible. He explains that "innovation is the process of manipulating resources to realize ideals" and that an innovative team has to think about how to position its business.
Start with a global view
With Cheng’s extensive exposure to Silicon Valley and the startup industry in Taiwan, he is optimistic about Taiwan's future and adds that entrepreneurs should develop their business with a global view and a flexible structure. Cheng concludes his interview with a smile, adding, "Don’t be afraid. Don’t overreach. Don’t sit back. As long as you embrace the world as you proceed, you shouldn’t encounter too many obstacles. Step onto the world stage!"