The Science of Finding Good Business Ideas
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The document summarizes techniques for generating great business ideas: 1. Combining existing products or ideas in novel ways. Examples include combining online food sales with gourmet products. 2. Leveraging industry knowledge and expertise to identify opportunities. Drawing on work history and areas of deep knowledge. 3. Copying proven business models that have worked for others. Many successful companies have been copies of innovations. 4. Getting ideas from "lead users" who develop solutions to their own needs before others. Users often innovate to solve their own problems. 5. Carefully observing problems or trends in areas like newspapers to identify opportunities. Innovations often come from spotting issues others have not addressed.
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The Science of Finding Good Business Ideas
- 1. Idea generation The science of generating amazing ideas
- 2. Agenda 18:00 How to generate great business ideas 18:30 Idea generation session 19:20 Pitch competition and prizes 19:40 The science of starting a successful business 19:55 Information session: StartupCherry Launch
- 5. Session objectives Tomima Edmark • Tospy Tail: $100 million sales in 1991 • Bowrette turns: ribbons into hair ornaments. Failure. • Halo Hat: collapsible rain and sun hat. Failure. • Kiss enhancing machine. Failure. • 12 books. Moderately profitable. • Women’s and men’s undergarments. Moderately profitable.
- 6. Fact 1 The difference between success and failure is often down to the quality of the opportunity.
- 7. Industry choice vs. Inc 500 Source: Shane (2009) Industry Number of Inc 500 firms Firm starts Percent of Starts Pulp mills 6 33 18.182 Computer and office equipment 99 2359 4.197 Guided missiles, space vehicles, parts 2 60 3.333 Nonferrous rolling and drawing 14 581 2.410 Railroad car rental 3 136 2.206 Measuring and controlling devices 49 2482 1.974 Paper mills 3 125 2.400 Search and navigation devices 6 310 1.935 General industrial machinery 26 2173 1.197 Photographic equipment and supplies 7 646 1.084 Manifold business forms 3 281 1.068 Household appliances 4 390 1.026 Electrical industrial apparatus 11 1080 1.019 Legal services 10 129207 0.008 Eating and drinking places 34 494731 0.007 Carpentry and floor work contractors 4 66383 0.006 Real estate operators 5 90042 0.006 Hotels and motels 2 39177 0.005 Painting and paper contractors 2 43987 0.005 Retail bakeries 1 22165 0.005 Grocery stores 5 112473 0.004 Used merchandise stores 1 24442 0.004 Automotive repair shops 5 124725 0.004 Beauty shops 3 79081 0.004 Residential care 1 27710 0.004 Videotape rental 1 27793 0.004
- 8. Industry choice vs. Inc 500 Computer and Office Equipment (1/25) Eating and Drinking Places (1/14,550) Source: Shane (2009)
- 9. Industry Inc 500 Computer and office equipment 582 succeed Eating and drinking places 1 succeeds Source: Shane (2009)
- 10. Number of opportunities evaluated by startups Source: Gruber, MacMillan and Thompson (2008) 4% 8% 6% 2% 7% 72% evaluate 1 opportunity 5 or more opportunities5 opportunities 4 opportunities 3 opportunities 2 opportunities
- 11. The more ideas the better the opportunity Source: Terwiesck & Ulrich (2009) 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 Terrible Amazing Qualityrating 234 opportunities Generated identified by 47 individuals Revenge social network Brokering “Medical Tourism” for semi-elective surgery
- 12. Top accelerators and VC investors 1000 business 1 major success
- 13. Question? How many opportunities (ideas) have you considered?
- 14. Where do great business ideas come from?
- 15. 1 Combining
- 16. Where do good ideas come from?
- 17. “Creativity is connecting things” - Steve Jobs
- 18. The idea for Facebook
- 19. The idea for Google
- 20. Combing products and ideas
- 21. Combing products and ideas Online site for gourmetfoods
- 23. Raymond Ackerman Source: Bhide (2000)
- 24. Steve Jobs
- 25. Steve Jobs
- 26. Steve Jobs
- 27. Steve Jobs
- 28. Inc 500 source of startup ideas Source: Bhide (2000) Previous work experience 20% Discovered serendipitously 4% Systematic search 5% Other 71%
- 29. Generating ideas from industry What fields do I have expertise or deep knowledge? • What industries have you worked in? • What industries do you know a lot about? • What fields do you have deep expertise in? • Where are your areas of expertise? • What sports/hobbies do you have deep knowledge of?
- 30. 3 Copy proven models
- 31. South African Copy Cats
- 32. Percentage of Chinese VC backed copy cats Source: Economist (2012) 50% Copy CatsOther
- 33. Percentage of Brazilian VC backed copy cats Source: Economist (2012) Copy Cats Other 70%
- 34. Venture Capitalist companies Accelerator Companies Fast grow lists Crowdfunding Sites Innovation Competitions Venture Capital Associations SAVCA NVCA CVCA Kliener Perkins Sequia Capital Matrix Partners Andreessen Horowitc Benchmark Accel Greylockpartners Venrock Meritech Capital InVenfin Knife capital TechStars Ycombinator JDFI 500startups AnglePad DreamIT KickLabs StartX Seedcamp Openfund Startup Chile Founders Institute GrowthLab NYC SeedStart The Morpheus Capital Factory Inc5000 FastTrack BRW Fast 100 Profit500 Sweden Fast 50 Technology Fast 500 Kickstarter Indiegogo Crowdfunder RocketHub Crowdrise Somolend Appbackr AngelList Quirky Fundable Shark Tank Dragons Den Rice Business Plan Competition MIT $100k challenge Innovation Challenge MIT Clean Energy Harvard Business Plan Tufts 100k Copying innovative ideas
- 35. 4 Lead users
- 36. Scratch your own itch
- 37. What is a lead user? 1 2 User of a product/service Develops prototypes to solve problems before the rest of the market
- 38. What is a lead user?
- 39. Percentage of innovations coming from users 25%Computer innovations Chemical process innovations Scientific instrument innovations Semiconductor innovations Wire stripping innovations 70% 63% 11% 82%
- 40. Users have built product for own use Source: Von Hippel (2011) 24%CAD software Surgical equipment Outdoor consumer Products Extreme sporting equipment Mountain biking equipment 22% 10% 37% 19%
- 41. Famous Lead Users Innovations Centre Pivot Irrigation Kite surfing Mountain Bike The Internet Lead User Innovations
- 42. Lead user exercise Step 1: Write a list of product and services you have used in the past (Think: Food, hobbies, electrical equipment, travel, sports, entertainment, industry, etc.) Step 2: How would you change or improve these products or services?
- 43. 5 Observing
- 44. Observing skills Source: Dyer, Gregersen & Christensen (2011)
- 45. The main reason new products fail 24% Source: Cooper (2009) Inadequate understanding of the customer Product defects Poor marketing Higher costs than planned Competitors 16% 14% 10% 9%
- 46. Ratan Tata and the Nano Source: Dyer, Gregersen & Christensen (2011)
- 47. Newspapers
- 48. Innovations from the Newspapers Why it works? Highlights problems faced by people, organisations and society Highlights what people are interested in Highlights what makes for a good story Encourages combing and associating ideas Charles Maisel The Stick Fighting Company Medical delivery by Bike
- 49. Pitch Competition Stand from your seats: Pitch idea, technique, and number of ideas (60 secs) Everyone votes Person with the most votes and ideas win 1 2 3 4 2 7 4 09 5
- 50. How the voting works 0 vote Ordinary idea “Nothing special” 1 vote Good idea “Not bad could be a business” 2 votes Amazing idea “Wow! That’s an insanely great idea”
- 51. • Person with the most votes wins a prize • Person with the most ideas wins a prize • Only one idea per person is pitched per person
- 52. 1. Combine products and ideas Step 1: Create 2 lists of brands/products Step 2: Link brands/products together Step 3: Combine products together to create a new product 2. Industry knowledge Step 1: Create a list of all previous jobs and areas of expertise Step 2: Write a list of 30 questions about the industry Step 3: Answer questions to generate new business ideas 3. Copy proven models Step 1: Visit website of top VC, accelerators, crowdfunding and fast growing lists Step 2: Look for ideas that excite you 4. Lead users Step 1: Create a list of all the products and services you have used Step 2: How would you improve or change these products or services? 5. Observation Step 1: Read the newspaper Step 2: Ask: What is the problem? What causes the problem? How can I solve this problem? What if… ? Step 3: Write down ideas Idea generation templates You can download idea generation templates at: www.startupcherry.blogspot/resources Idea generation session
- 53. For more on the science of innovation visit: www.startupcherry.com www.startupcherry.blogspot.com
Editor's Notes
- Just a very quick overview of my journey and how I got here. My journey to entrepreneurship began with wanting to chase a little bit of Olympic glory. Rowing got injured I couldn’t row any more so I started a rowing business. Where I had a factory in Germinston making carbon kevlar rowing boats. The same stuff they make rocketship and lance Armstrong’s bike out of. But soon realized that chasing Olympic glory was a whole lot more fun than building rowing boats. So I quit the business sold out to my partner and decided to get into entrepreneurship education. Starting off lecturing at the university like UJ and WBS. I soon realised what they were teaching entrepreneurs really wasn’t that helpful. So I decided to study the problem doing my masters and now my PhD in predictive models study what really do you need to do to make a business successful. And since then have helped literally hundreds of entrepreneurs get there businesses of the ground.
- If a tree falls in the forest and it wasn’t posted on Facebook did it really happen? And as a friend of mine said last week, “It’s not called facestalking. It’s call due diligence.”
- Google must be a women it knows everything. As Descart said, “I Google therefore I am”
- And that turned out really well for Steve.
- Excuse the title of the video.