The Innovation Stack

What happens when you try to solve a problem that nobody has solved before? You cannot copy anyone. There is no playbook, no best practice, no case study to reference. You are forced to invent solutions from scratch. And when those inventions create new problems, you invent more solutions. Before long, you have built an interlocking stack of innovations so unique that no competitor — not even a trillion-dollar giant — can replicate it. This is the "innovation stack," and Jim McKelvey's book of the same name is a fascinating exploration of how it works.

The Square Story

McKelvey co-founded Square (now Block) with Jack Dorsey after losing a sale because he could not accept credit cards in his glass-blowing studio. The solution seemed simple: build a small card reader that plugs into a phone. But that single decision triggered a cascade of problems that required dozens of interconnected innovations — in hardware design, software architecture, fraud prevention, pricing models, customer acquisition, and regulatory compliance.

Each solution created new constraints, and each constraint demanded another innovation. The result was not a single product but an interlocking system of innovations so tightly coupled that copying any one piece was useless without copying all of them. When Amazon launched a competing product and threw its full weight behind it, Square survived — not because of superior resources but because Amazon could not replicate the entire stack.

The Innovation Stack Concept

McKelvey's key insight is that true innovation is not a single breakthrough. It is a chain of interconnected solutions born from navigating genuine novelty. Companies operating in well-understood markets compete on execution. Companies navigating uncharted territory compete on the density and coherence of their innovation stack.

The book traces this pattern across history — from the Bank of Italy (later Bank of America) to IKEA to Southwest Airlines. In each case, an entrepreneur entered unexplored territory, encountered problems no one had faced before, and built an interlocking system of innovations that became virtually unassailable.

Indian Examples That Resonate

While McKelvey focuses on American case studies, the innovation stack concept maps beautifully onto several Indian companies. Consider Zepto, which did not just solve the delivery speed problem — they reinvented dark store formats, hyper-local supply chains, delivery routing algorithms, and customer acquisition models. Each innovation required the next, and together they built a competitive position that mere funding cannot buy.

Zomato's journey from a restaurant listing site to a full-stack food delivery platform followed a similar pattern. Payment integration, logistics networks, restaurant partnerships, customer rating systems, and cloud kitchen support — each innovation demanded the next, and together they formed a stack that copycats could not easily replicate.

PhonePe's evolution from a UPI payment app to a comprehensive financial services platform demonstrates the same dynamic. QR code payments led to merchant onboarding innovations, which led to insurance distribution innovations, which led to wealth management innovations. The stack compounds.

Problem-Solving Chains and Navigating Novelty

McKelvey draws an important distinction between entrepreneurs and business operators. Entrepreneurs navigate novelty — they solve problems that have never been solved. Operators optimise existing solutions. Both are valuable, but only entrepreneurs build innovation stacks. The book encourages readers to embrace the discomfort of not knowing, to resist the urge to copy existing models, and to trust the process of iterative invention.

This message resonates powerfully in India's startup ecosystem, where the temptation to clone successful Western models is strong. McKelvey's framework suggests that the most defensible Indian companies will be those that solve genuinely Indian problems in genuinely novel ways, building stacks of innovation that no foreign competitor can easily import.

Limitations

The book is more narrative than prescriptive. If you are looking for a step-by-step guide to building an innovation stack, you will not find it here. McKelvey is honest about this — you cannot plan an innovation stack because by definition it emerges from navigating unknown territory. Some readers may find this unsatisfying. The writing is engaging but occasionally digressive, and the historical case studies, while interesting, sometimes feel like detours from the central argument.

Final Verdict

The Innovation Stack is a unique and thought-provoking book that reframes how we think about competition and innovation. For founders, product leaders, and anyone building something genuinely new in the Indian market, it offers both inspiration and a powerful mental model.

Rating: 4.2/5 — An insightful read for innovation-minded leaders, even if the framework resists easy application.