Idea Identification

Idea Identification Will Your Business Idea Fly?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

“There is nothing more powerful than an IDEA whose time has come.”

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

Ideas are the basis of the new digital and knowledge based economies.

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

Now, the best ideas can be implemented with 3 – 4 driven individuals.

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

But the idea must be the right idea…

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

Three Types of Ideas Useless, Workable and Quick Hit

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

Useless Ideas

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

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

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

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

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

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

Examples of a Useless Idea

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

A farmer starting a manufacturing plant that produces auto parts

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

An MBA starting a game development house

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

A plumber starting an electrical business.

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

Workable Ideas

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

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

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

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

Software Development Companies

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

Consulting Firms

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

Research Houses

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

Technology Planners

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

Quick Hit Ideas

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

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

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

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

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

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

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

Idea Proofing Determining If Your Idea Will Last

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

What is Idea Proofing?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

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

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

So what are we looking for?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

Does it solve compelling unserved need?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

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

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

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

How much money will you need and how will you use it?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

This is a big question because capital is what makes businesses run and grow.

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

What are you offering and how does it work?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

Exactly what product/service are you offering and how will it work?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

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

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

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

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

Who exactly is your customer?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

You need to be able to define who will buy your product/service.

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

Another question you have to answer with this question is –

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

The more precise you are, the better you idea proof your idea.

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

How will you provide your product/service?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

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

Who is involved in your venture’s success? Who are the stakeholders?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

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

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

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

But does that mean you don’t hire friends?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

Who will be your competition?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

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

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

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

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

What makes your venture special? What makes you different?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

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

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

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

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

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

We also use a Buyer Utility Map

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

Why is this a great tool?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

So let’s look at both sides of the table

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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

The Six U7lity Levers Environmental Friendliness

In today’s world, everyone is environment friendly – is your product?

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 Produc@vity

Does it improve their produc@vity in any part of their lives?

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

You now have a basis for understanding how to idea proof your venture.

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

Next Lecture:

The Business Model

http://emagine-­‐group.com

Brand Focused, Socially Active, Digitally Enabled

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