Lecture 2 - Idea Identification
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The document discusses different types of business ideas and their viability. Useless ideas are those where the entrepreneur does not have personal experience in the industry or business they are proposing. Workable ideas take time to develop but will be profitable once stable and continue growing. Quick hit ideas can be implemented quickly and have the potential for immediate returns through a successful product launch or service offering. The document provides examples of each type of idea to help entrepreneurs evaluate whether their idea has potential or not.
Lecture 2 - Idea Identification
- 1. Idea Identification Will Your Business Idea Fly? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 2. “There is nothing more powerful than an IDEA whose time has come.” http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 3. We all know this phrase in respect to politics and social change, but have you ever thought about it from the business point of view? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 4. Ideas are the basis of the new digital and knowledge based economies. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 5. For decades, business ideas required huge capital investment to setup factories, distribution and sales engines. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 6. Now, the best ideas can be implemented with 3 – 4 driven individuals. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 7. But the idea must be the right idea… http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 8. Three Types of Ideas Useless, Workable and Quick Hit http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 9. Useless Ideas http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 10. A Useless Idea is something that is dreamed up but the entrepreneur has no personal understanding or experience in the business they are proposing. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 11. When you don’t have the experience to back up the idea, you are dependent on other people to make it successful and personally have no buy-‐in with the venture http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 12. That makes you – replaceable – and that is not a viable idea for a venture capitalist, angel investor or bank. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 13. VCs, Angels and banks only invest into ideas where the person sitting in front of them has a personal buy-‐in with the venture http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 14. They are either the vision that drives the organization, the force that runs it or the intelligence that builds it http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 15. The world is full of idea men, very few of them can deliver on their ideas. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 16. Examples of a Useless Idea http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 17. A farmer starting a manufacturing plant that produces auto parts http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 18. An MBA starting a game development house http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 19. A plumber starting an electrical business. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 20. I think you get the idea – if you don’t have any real, measurable experience in the industry that you want to start – you have the wrong idea. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 21. Workable Ideas http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 22. A Workable Idea is something that will take time and effort to develop but will be profitable once stable. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 23. These ideas are the basis of the knowledge economy because they will continue to grow and develop as the venture grows – in other words, they don’t stagnate http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 24. VCs, Angels and banks love these types of ventures because they are able to invest into the initial start-‐ up and reap their returns during the growth stage http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 25. Allowing them to cash out – or capitalize – when the venture is mature with very high returns on their investments. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 26. Software Development Companies http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 27. Consulting Firms http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 28. Research Houses http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 29. Technology Planners http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 30. These are all ventures that take time to build and become successful, but will continue to expand and develop over time increasing their product/service offering with each expansion. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 31. Quick Hit Ideas http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 32. A Quick Hit Idea is one that will generate revenue from day 1 of operations. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 33. These ventures are typically called quick hit ideas because they return the investment immediately but the returns are minimal at best. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 34. Experience doesn’t matter because you are only looking to capitalize on a temporary need in the market and know that you will be “out of business” once the need disappears. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 35. Quick hit ventures are also low-‐ experience, low intelligence businesses – and I don’t mean that to be rude. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 36. Take for example, your local general store – what does he offer that the general store next door or down the street doesn’t? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 37. In other words, the revenue generation of this idea is limited until someone opens another store in the area that cuts into their limited customer base. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 38. So now that we have identified the different idea types – how do we judge our own ideas? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 39. Idea Proofing Determining If Your Idea Will Last http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 40. People will give you a lot of ways to judge your idea, but most of them are not useful from the point of view of “idea proofing.” http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 41. What is Idea Proofing? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 42. Idea Proofing is something we do at emagine to determine whether an idea is viable and feasible or not. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 43. It is not difficult, but it requires removing the emotion, excitement and passion of the entrepreneur from the equation. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 44. Ideas can not be judged based on what the entrepreneur says, but how it looks on paper http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 45. So what are we looking for? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 46. Does it solve compelling unserved need? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 47. Every entrepreneur thinks they have the million dollar idea, but deciding if it really is starts with this question – what need does it solve? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 48. Ask people if the need you see is really a need. Society is the best judge of the idea because they are your future customers. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 49. But here’s the trick, you can’t explain the business idea to them – only the end result product/service you will provide them. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 50. If they can’t see it from that, your idea is not going to work without a lot of work, education and marketing – all of which means the need is not really there. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 51. How much money will you need and how will you use it? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 52. This is a big question because capital is what makes businesses run and grow. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 53. If you need too much capital or can’t explain how the capital will be used to build the business, attract the customer or grow it, your idea may not be the right one. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 54. What are you offering and how does it work? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 55. Exactly what product/service are you offering and how will it work? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 56. You must be clear with this definition because if you are not clear, how do you expect anyone else to understand it? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 57. We have talked to people with great ideas and what could be outstanding products, but they are unable to explain their product/ solution in simple http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 58. Our test – if you can’t explain the product/service in 15 words or less, you are not clear. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 59. More importantly, if it takes more than 2 minutes to explain how to use it – it’s game over. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 60. Customers don’t read manuals, instruction booklets or websites – they either understand how to use it or call you. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 61. Who exactly is your customer? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 62. The answer to this question is not everyone – no product or service has ever been designed for everyone’s use. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 63. You need to be able to define who will buy your product/service. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 64. B2B, B2C, B2G, Fortune 500, SME, NGO, Men, Women, Housewives, Bachelors, Students, Athletes…. And the list goes on and on…. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 65. Another question you have to answer with this question is – http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 66. Is there a specific situation that will drive the purchase or use of my product/service? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 67. The more precise you are, the better you idea proof your idea. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 68. How will you provide your product/service? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 69. One of the biggest questions is HOW you plan to win customers – what is your strategy for product/ service delivery? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 70. Do they need to come to your office or shop to buy? Will you go to them? Can it be bought and installed online? What hours will you keep? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 71. Who is involved in your venture’s success? Who are the stakeholders? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 72. Every entrepreneur would like to believe that they can do everything – we are all Superman when it comes to our ideas, but that is not possible. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 73. Of course, the entrepreneur must have a strong foundation of experience and stability in their professional life, but who are the other key resources? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 74. The first way to destroy your business is to hire friends because they are friends and you like to hang out together – hanging out is very different than working together. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 75. Business relationships are very stressful and can destroy friendships, especially if you have to fire a friend… http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 76. But does that mean you don’t hire friends? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 77. Of course not – it just means that you must be very clear about the skill set and abilities of your friend before hiring them – this is business. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 78. Who will be your competition? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 79. Ideas are great things, but you have to look at the whole environment before deciding if the idea is viable or not. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 80. Competitors go a long way to helping you understand if your idea can succeed or not. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 81. There are no businesses that have no competition – that idea only exists inside an entrepreneur’s head. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 82. If there are a great deal of companies, you will only get a limited share of the existing pie. If there are few competitors, you need to understand why. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 83. Talk about your competitors, understand them, figure out how your business will be better and how you will beat them – otherwise get ready to fail. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 84. What makes your venture special? What makes you different? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 85. Startups are risky for investors, so they want to know what will make you successful compared to everyone else. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 86. Does your business have a unique skill set or knowledge? Proprietary methods? Unique brands that aren’t available anywhere else? Innovative technologies? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 87. The thing that makes you different will usually make you successful because it changes the way the consumer does something – or what we call revolutionizes service delivery. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 88. These are all questions that we ask when we idea proof a venture before investing http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 89. Anywhere, we have hesitation will cause us, and any other VC, to stop and think – even if it is days before the check is written. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 90. VCs have to be sure before they release the money to the entrepreneur because getting it back is very difficult. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 91. We also use a Buyer Utility Map http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 92. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 93. This 6 x 6 table is one of the best tools we have for determining if an idea will be successful or not. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 94. Why is this a great tool? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 95. The Buyer Utility Table forces you to look at your business idea from the view of the consumer to determine whether the idea will work or not. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 96. So let’s look at both sides of the table http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 97. The Six Stages of Buyer Experience Purchase How & where do they get it? Delivery Can it be delivered to their home or office? Use How do they use it? Supplements Does it require any special or addi@onal items to use? Maintenance How oBen will it need to be serviced or checked? Disposal What does the consumer do with it when they are done? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 98. The Six U7lity Levers Environmental In today’s world, everyone is environment friendly – is your product? Friendliness Fun & Image Does it improve the consumer’s image or give them more enjoyment? Risk Is there any risk involved with product/service usage? Convenience How easy is it to carry and store? Simplicity How easy is it to use? Customer Does it improve their produc@vity in any part of their lives? Produc@vity http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 99. You now have a basis for understanding how to idea proof your venture. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 100. Next Lecture: The Business Model http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 101. Readings for Next Week: Knowing a Winning Business Idea When You See One Launching a World Class Venture The Questions Every Entrepreneur Must Answer http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled