Planting the seeds of a new business
Jeff Schiebe
(Editor’s Note: Inspiration and Innovation, which focuses on entrepreneurs and entrepreneurship, is a new feature that will run in every other edition of the Worcester Business Journal.)
Lots of cool ideas and products are launched every day. Why do some succeed while many fail? Many are just that – products, but not real, sustainable businesses.
Here are a few reasons why they fail: missing features, the price or production cost is too high, it’s over-designed or wrongly positioned. Some of these reasons are tied to a lack of good execution within a startup in engineering, manufacturing or marketing.
For now, though, let’s focus on the generation of ideas that become products.
Entrepreneurial process
I have been in the entrepreneurial ecosystem for many years; starting companies, working in startups, advising and mentoring startups. For the past six years, I have been teaching entrepreneurship and have found that the process of coming up with an idea is the same no matter the industry, market, product or service. All entrepreneurs’ actions fall into these five areas, each with an underlying basic question to answer:
• Idea generation: How so you come up with an idea?
• Identifying opportunities: Is the idea real?
• Creating a business: What does it take to start and fund it?
• Launching the business: Where? When? How?
• Growing the business: How do we scale it?
In the world of business creation one cannot use the phrase “If you build it . . . they will come,” from the movie “Field of Dreams.” Today, it’s “Build it if they need it (or want it), then they (the customers) will come.” So, the beginning of the process is vitally important.
Idea generation
Where do ideas come from, and how can we determine if they’re worth pursuing and will be successful? Let’s begin with how ideas come about. They’re basically right around us and fall into three categories:
1. Observing trends. This may be the easiest. Just read, follow, watch, listen to the world around you and see what’s trending. How fast is the market growing? Which direction is it moving? What customer needs have changed? How fast are these changes happening? Has the market or need peaked?
Trends are so important when thinking about starting a company and launching a new product (or service), since they relate to the “window of opportunity.” If we can anticipate prospective customers’ needs, which way they’re heading and how fast they’re moving, this often provides us with ideas to ride those trends by creating a product to fill those needs.
Trends that we should monitor generally fall into these four areas: economic (such as income, price drops and global changes); social (age groups and level of education), technical (speed, storage, mobile and cloud computing) and regulatory/political (food labeling and deregulation).
2. Solve problems. Often, this is an area that results from personal experience. Tracing family origins used to be an unbelievably difficult challenge for anyone doing genealogy research. With the development of the Internet and scanning technology, a number of problems were solved to enable document capture and sharing of information that nearly everyone could do easily. That opened up possibilities for new products and services in a number of areas, spawning numerous companies. One example is Ancestry.com, which now does more than $600 million a year.
3. Find the gaps. This category is also generally on the personal side. We know someone who has a need and we just cannot find a solution. All available products are just not suitable. They might work temporarily or meet some of the requirements, but we’re frustrated because of this market “gap.” Let me illustrate with a story:
Kathryn Kerrigan is a young woman from Chicago who pursued her MBA 10 years ago. She was also a basketball player, 6 feet tall with size 11 shoes.
Her problem was that she could not find any stylish women’s shoes in the larger sizes, although shoes make up a multi-billion dollar business. Seeing and experiencing this gap, she wrote a business plan while in school, launched her business online and in stores, generated sales, and was named female entrepreneur of the year in 2007 by Inc. magazine.
Identifying opportunities and creating new business ideas doesn’t guarantee success, but it’s where the entrepreneurial process begins.
Jeff Schiebe is an international advisor and educator in entrepreneurship and associated with Clark University, Babson College and Hult International Business School. Contact himat jeffschiebe@verizon.net.
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