What is the Eureka moment for your business idea?
Discussion About Opportunity Recognition and Opportunity Formation
Ever since the day that Archimedes, the famous Greek mathematician, leapt from his bathtub and ran through the streets of ancient Syracuse triumphantly shouting Eureka, “I found it!,” the history of science, technology, and business has been punctuated by exciting moments of true insight and discovery.
It was during a visit to the baths that he was lost in thought, contemplating the problem of how to test the purity of the gold in King Hiero’s crown without destroying it. He noticed the water overflowing from his bath and discovered his solution: Drop the crown into water and measure the amount of water displaced.
At the heart of even the most complex innovation there is usually a basic, and yet startling “entrepreneurial insight,” a new way of looking at an old problem. James Watt’s sight of snow on the Green of Glasgow in the spring of 1765 led to the invention of the condenser, and he went on to change the world.
Peter Drucker says entrepreneurs are “kissed by the Muses” and have a “flash of genius.” Every business begins with just an idea, and opportunity recognition suggests that good ideas for new ventures are “waiting to be discovered by an astute observer.”
What Is the Strategic Inflection Point in Your Industry?
Whole industries can become vulnerable to “new rules,” but entrepreneurs see such change as the norm and healthy. In fact, the entrepreneur always searches for change, responds to it, and exploits it as an exceptional opportunity. Taking root in a disruption is the first condition that entrepreneurs need to meet to improve the probability of successfully creating a new growth business. In fact, research has shown that if they cannot or do not do this, their odds of success are much smaller.
The disruptive technological changes we discuss are the principal drivers of competition in the world today. Technological change plays a major role in industry structural change, as well as in creating new opportunities. Many of today’s great companies grew out of technological changes that they were able to exploit.
Andrew Grove, CEO of Intel from 1987 to 1997, was instrumental in making Intel one of the great success stories of entrepreneurial capitalism. In Only the Paranoid Survive, he defines “strategic inflection points” as major changes in the competitive environment that can threaten a company’s livelihood if not addressed effectively. He said that it is easy to miss the potential of new technologies and the impact of new competition that springs from these inflection points.
Grove and co-founder Gordon Moore, in the wake of the disruptive processor chip, literally saved Intel with one question. Grove asked, “If we had to start all over, would we start with the DRAM chips?” Moore said “No,” and they successfully transitioned Intel from DRAM chips to microprocessor chips.
Who Says It’s A Great Idea? (It Better Be a Domain Expert!)
Physicist Niels Bohr once said that an expert is a man who has made all the mistakes that can be made in a very narrow field. In business, according to Michael Dell, “Opportunity is part instinct and part immersion in an industry, a subject, or an area of expertise.” The discussion and value of the domain expert in entrepreneurship is nothing new in the literature, considering that Karl Vesper had profiled Noyce and Moore, founders of Intel, back in 1979.
In a popular Harvard Business Review article, “How Entrepreneurs Craft Strategies That Work,” Amar Bhide looks at America’s fastest growing private ventures. He found that “new ventures are usually started to solve problems the founders have grappled with personally.”
– In fact, 71 percent were what we call domain experts, as they replicated or modified an idea they encountered in their area of expertise.
– Some 20 percent discovered the idea serendipitously. Of this group, 6 percent actually wanted the product or service as an individual consumer, and only 4 percent got an idea while they were reading industry publications.
– About 5 percent conceived their idea following a technological change, and only 4 percent “discovered” the idea through “systematic research.” Bhide’s advice: “However popular it may be in the corporate world, a comprehensive analytical approach to planning doesn’t suit most start-ups.”
Brainstorming and Forced Analytics
As a corporate entrepreneur, what do you do to come up with great new ideas and winning innovations when competitive pressures, especially from start-ups, are nipping at your heels? For keeping your company “fresh, alert, and constantly innovating” we refer you to The Business of Innovation by Roger Bean and Russell Radford. It provides a powerful model and hands-on strategies for actively and systematically managing creativity throughout larger, established organizations. It also introduces a model for managing and nurturing innovation, and guidelines on measuring and evaluating innovations.
If you are stuck and need your creativity rebooted, or need some guidance leading group discussions, there are some techniques and books targeted for all entrepreneurs. Michael Michalko’s Cracking Creativity: The Secrets of Creative Genius is a great workbook for reorganizing your thinking around idea-generating strategies. It will help you open up a fresh viewpoint that leads you to creating innovative solutions to everyday challenges.
Other sources of ideas come from attending trade shows, listening to consumer feedback, formal competitive intelligence projects, R&D technology transfer projects, focused marketing intelligence reports, attending networking events, and hiring consultants to come speak to your company.
Discussions About Creating Your Problem Statement
A problem is a situation that needs to be corrected. It can be experienced in a variety of ways but is looked on as a discomfort, or a pain of some sort. In the early days of the PC industry, computers were very expensive, having gone through many hands before reaching the consumer.
The “street price” to the end-user for an IBM PC was around $3,000, but the components themselves were worth around $600. Michael Dell saw this as a problem and boiled it all down into one statement, “I started the business with a simple question, how can we make the process of buying a computer better?”
An important early phase in analyzing your opportunity is creating your problem statement. This step is about carefully refining vague or general ideas, which can come from brainstorming, mind mapping, and the white-boarding of all your discussions surrounding the problem.
Then you need to clearly define your initial observations, drawing on domain expertise and research of existing literature, and generate a concise problem statement like Dell’s.
Consider these questions:
– How do you define the problem?
– Who decides there is a problem?
– Who owns the problem?
– What are the solutions?
– Who sees this problem too?