In the last two deliveries the traits and definition for entrepreneurship were dissected. I gave my preferred definition for entrepreneurship: “Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled”, and the reasons for my preference. I think anybody will agree on the “opportunity” dimension of entrepreneurship, so in this issue I want to look at finding that opportunity.
Your next business idea
I want to kick-off by debunking a big myth surrounding entrepreneurs. The very short version goes like this: The lone genius (entrepreneur) with a boring eight to five job sits in a basement one night and has a “Eureka!” moment and starts a business and becomes very rich. These stories are nice to create the enigma around the very famous entrepreneurs, but unfortunately this is by far the exception to the rule.
My space is too limited to elaborate, but let me give you some proof. The canonical story of the lone genius is largely a myth. Edison didn’t invent the light bulb; he found a bamboo fibre that worked better as a filament in the light bulb developed by Sawyer and Man, who in turn built on lighting work done by others. The Wright Brothers were the first to fly, but their plane didn’t work very well, and was quickly surpassed by aircraft built by Glenn Curtiss and others (Lemley, 2012).
I’m not going to deny the importance of the “Eureka!” moment. But it’s not the only—or even the most successful—way to start a new business. The process of coming up with a great idea for a new business need not be shrouded in mystery. Serial entrepreneurs, in particular, tend to follow a well-thought-out, disciplined process. You increase your chances of success when you use a well-defined methodology rather than pulling an idea out of the air and running with it. I want to lay out one way of finding opportunity, which I have found very helpful. I am not saying it is the best or the only way, but it is probably more robust than waiting for lightning to strike.
Step 1: Set The Stage. Your first task is to set some parameters for the new business. You have to be clear about what sandbox you are playing in. Start by asking yourself—and your business partner(s) – a series of questions. First, will this be a lifestyle business? Or do you want to create a fast-growing enterprise that could eventually list on the stock exchange? Does someone on your team has particular skills you want to exploit—maybe you’ve got a design guru or a tech whiz—you’ll want to make sure the business capitalises on those talents.
Step 2: Let the Ideas Fly. Some call it idea generation, others brainstorming, still others ideation. Regardless of the name, it’s the long-term process of coming up with lots of ideas—one of which will eventually become your business. First, figure out where you have real knowledge and expertise. This is what leads to useful insight on unmet needs or opportunities. That might mean industries you’ve worked in, technologies you know very well, or hobbies that you’re serious about.
Step 3: Picking a Winner. Now it’s time to decide which ideas are worth your sweat and money. Get together with your team, if you have one, and start criticising the list. The first cut is the easiest: Anything that doesn’t fall within the parameters established in Step 1 gets thrown out.
Step 4: Feasibility. Congratulations. You’ve got a great idea. To turn it into a business, you’ll need to answer three questions simultaneously: Can we make this product, or provide this service, and at what price? Do customers really want it? And how much will they pay? If you run into a deal-breaker, be ready to dump the idea and move on to something else.
Step 5: The Prototype. It’s time to make your product or service real, with a fully functional prototype. Once it’s built, you’ll need potential customers, possibly drawn from earlier focus groups, to test it. Their feedback will help you make adjustments.
Next time I want to review how to prototype and test fast and inexpensive. I conclude with a quote by Thomas Edison: “Opportunity is missed by most people because it is dressed in overalls and looks like work”.
Lemley, M.A., 2012. The myth of the sole inventor. Michigan Law Review, pp.709-760.
Barrett, A. 2010. Beyond Eureka. Bloomberg Business Week.