Introduction

Entrepreneurs in the innovation/technology sector frequently encounter the expression “reinventing the wheel.” Typically, critics who use this phrase expand on it as follows:

  • This product already exists. Why waste time making it again?
  • This technology already exists. Why spend time and money building it from scratch instead of using the ready-made version?
  • This is a very simple subject. Aren’t there more serious, value-added things to work on?

When we examine these criticisms, it becomes clear that, from a business perspective, they boil down to three main considerations—implying that there is a problem with one or more of them:

  1. The Value Add of the activity
  2. The Additional Resource Costs of the activity
  3. The Opportunity Costs of the activity

The Three Core Points

These three topics are indeed very important in business. Anyone with business training can evaluate their impact on an activity and judge whether the activity is positive or negative for the company.

For example, suppose you are a laptop manufacturer. A laptop basically consists of the following parts:

  • LCD screen
  • Motherboard
  • Processor/Hard Disk/RAM/etc.
  • Case
  • Battery Pack
  • Keyboard/Touchpad

You already get all of these parts from other manufacturers. You consider making your own motherboard since it’s a significant cost item, and you analyze:

  • You don’t need to invest in a huge facility—there are already electronics board manufacturers in the country; you can outsource. Great.
  • But manufacturing the motherboard will take time—certainly not a 3–5 month job. Since you’ve never done it before, who knows how long it will take? You need to go to market quickly. That delay is unacceptable; otherwise, the opportunity cost is huge—your competitors will overtake you with next-gen laptops.
  • You’ll at least need to build a product development team, maybe even engage in R&D. That’s expensive: office, salaries, insurance, prototypes, etc. Plus it’s operationally difficult—hiring the right talent isn’t easy. If prototypes fail, it’s a complete waste.
  • Suppose you ignore those problems and parallel it with your local assembly strategy. You calculate: designing and preparing the motherboard for mass production will cost 600,000 USD upfront, with a unit cost of 200 USD. You currently buy them from a Taiwanese supplier at 400 USD. Incredible!
  • You’re already a successful businessman making good money in this industry. You run the numbers and see that designing and manufacturing your own motherboard makes no business sense.

Given this analysis, entering motherboard sector seems utterly irrational.

So far, no problem.

A Deeper Analysis

Now let’s add 3–5 more points:

  • The Taiwanese motherboard manufacturer’s turnover is 1,000 times yours.
  • Their profitability is 30%, while yours is 8%.
  • Thanks to you, those companies can expand their computer manufacturing ecosystems—pulling further ahead of you.
  • Thanks to you, startups and entrepreneurs in those countries can find local companies to sell their technologies to.
  • Your biggest competitors are always 1–2 generations ahead, because you don’t get the latest versions right away—you get the leftovers.
  • If a foreign company comes to your country to produce laptops, your market share falls, and you go bankrupt.

You’re the entrepreneur of the year yet clearly something is wrong. So where is the problem?

The Real Issue

The problem lies in ignoring the two deeper aspects behind “reinventing the wheel”:

  1. The Future Impact of the Activity
  2. Product/Technology Continuity

Future Impact means evaluating the long-term benefits or harms of an activity, in addition to the three short-term business concerns.

Product/Technology Continuity means: without developing a technology at a fundamental level, it is impossible to advance it. You have to catch hold of a technology at some point and engage in its development. Otherwise, you can’t progress, because you lack the foundational know-how needed to improve it. Knowing how to use a technology is not the same as knowing how to develop it.

Conclusion

If your plan is simply to compete on price, cost, and availability in the short term, then no—you don’t need to reinvent the wheel. By optimizing your distribution network, production process, and supply chain, you can succeed that way. Indeed, many companies operate on this model.

But if you want to be resilient against market turbulence, to be globally competitive, to grow, and to make serious profits, then yes—you must sometimes disturb your comfort and engage in reinventing-the-wheel type activities. Otherwise, it won’t work—you already see that it doesn’t.

Note: A Personal Anecdote

In 2013, while developing a local industrial mobile robot, we initially used off-the-shelf wheels for our prototype. Even though we generally embrace the “reinvent the wheel” principle, I personally didn’t want to bother with wheels at the time. After all, these wheels were robust, high-traction, used in mobile factory vehicles, and widely accepted as a good choice. No brainer.

But we ran into a problem: when our robot turned, the wheels slipped, throwing off our location calculation system. As a result, the robot couldn’t move with the precision we needed. After some R&D, we discovered that the issue was indeed the wheels (at first we suspected our custom propulsion system). Working with our mechanical and mechatronics engineers, we experimented with different wheel materials. Once we confirmed the right material, we worked on shapes and tread designs. Finally, we produced a wheel that barely slipped even on the slickest factory floors—and thanks to that, our robot worked properly.

In the end, we really did have to reinvent the wheel.