In the first post in this series, I suggested a step-by-step process for launching a business. Since we’ve already established a detailed process for Step 1– Define, where you define the evaluation criteria for a business idea, this post will focus on Step 2 – Generate, where you generate ideas.
Generating Ideas – Your goal is to identify unmet needs, identify products and services to serve those unmet needs, and then identify various product and service platforms that are able to deliver the necessary products or services to serve those unmet needs. Always start and finish with customers.
For example, the best Smartphone applications (“apps”) serve a singular purpose very well to meet a specific and painful need that is clearly understood and easily solved by the app. Those satisfied customers will hopefully Tweet or post a Facebook comment about how cool their new app is, and hopefully the app goes viral.
Caution: Customers will not always know what they want. Sometimes you have to solve the problem first and they will only want your solution after they see it in action. Further, prospects may unintentionally mislead you as research reveals that people may respond to surveys differently than they do with their wallet. This is due to issues such as distractions, misunderstandings, not wanting to hurt feelings, and trying to answer “correctly”.
Leverage Your Strengths
The most powerful ideas will leverage as many of your skills, character qualities, experiences, and giftings as possible and will be in the context in which you are the most comfortable and familiar. The more of your background you are leveraging, the better your chances of success.
The best idea to pursue is to take a problem you know exists, experienced by a large customer set you know how to reach, solved it in a way you know how to solve, delivered by means you know how to deliver, with resources (people, processes, or technology) you know you can control, and in a timeframe you know you can meet.
Discovering a Customer’s Unmet Needs
If you have deep experience in a particular industry, I would suggest focusing on that industry and doing a deep dive to find out if there is an attractive opportunity for you.
For example, when I was researching the business plan for a real estate services company that has since its founding grown into the tenth largest in its industry, I talked to as many of the constituents of the industry as I could to determine the macro trends, issues, and unmet needs. I met with land developers, builders, homeowners, vendors, managers, software providers, investors, investment bankers, and potential buyers.
My notes from my interviews were then distilled into major themes and the strategic imperatives of the plan. Since there were 2,000 companies in the industry, it was important to create a differentiated solution to stand out in a crowded field. The major risks also emerged from the research, which enabled me to develop the plan to mitigate those risks.
Good ways to perform your discovery process include: attending trade shows, reading trade journals and websites, industry news, and analyst reports, and looking for investment activity and rationale by venture capital firms and private equity firms.
Some entrepreneurs will want to focus on a disruptive or breakthrough business idea – one that is so different than “business as usual” that it brings disruption to an entire industry – causing more of a market “revolution” instead of the normal market “evolution.” Disruptive business models usually lead to massive market upheaval, tectonic shifts in customer behavior, and the shifting of large chunks of market share as the innovators with the new, disruptive model roll out their revolutionary product or service.
One example of this is how Dell led the way with a direct-to-consumer computer retail model as opposed to the typical retail store front that existed at the time of Dell’s launch. Dell could serve customers cheaper and with the most recent components far more effectively than the typical store-front operation. Within five years or so, nearly all store-based computer retailers were out of business.
What is the best method of coming up with a breakthrough idea? Is it waiting for that “ah ha!” moment or is it through the process of experimentation? Thomas Edison, one of America’s greatest innovators, is quoted as saying “to have a great idea, have a lot of them” and “I have not failed. I’ve just found 10,000 ways that won’t work.” Clearly Edison’s innovation sprang from experimentation rather than one single “light bulb” moment.
Peter Sims is an author who performed extensive research on creativity and one of his observations is that breakthrough ideas emerge from small discoveries through the process he calls “little bets.” He describes these little bets as “concrete actions taken to discover, test, and develop ideas” and his conclusions include the notion that ingenious ideas “almost never spring into people’s minds fully formed,” but instead “emerge through a rigorous discovery process.”
Get Into the Flow of Ideas
Just like a bear needs to wade out into the stream to take full advantage of all the fish swimming past, an entrepreneur needs to be in the marketplace of ideas in the middle of customer problems to experience a breakthrough. And when combined with another of Sims’ revelations regarding the need to “unleash your imagination,” ideas will then likely bubble to the surface.
For example, Sims points out that Larry Page and Sergey Brin were working on a Stanford University digital document library project when they accidentally stumbled across their PageRank idea that led to their founding of Google.
Fire Adjust, Fire Adjust
Much like an artillery gunner, an entrepreneur needs to maintain a process of “fire adjust, fire adjust” in the marketplace to discover where their ideas are hitting, so they can keep adjusting their idea until they hit a bull’s-eye with customers. And, because markets always change, entrepreneurs will often have to “pivot” or transition their plans to start firing at a new target.
Eliminating Bad Ideas
The next step is to thoroughly evaluate your ideas in Starting Your Business Part 3 – Evaluate. The bottom line is that you want to eliminate bad ideas based upon their poor fit with your pre-determined evaluation criteria. You should never feel bad about abandoning an idea that is not a good fit with your personal, spiritual, or business evaluation criteria.
- See Venture Academy Course #11 – Building a Business from Start to Finish for detailed video instruction.