The Idea

Who’s the customer… is your offer attractive?

Ideation Stage

  1. Entrepreneurial ambition and/or potential scalable product or service idea for a big enough target market.
  2. Initial business idea on why and how it would create value.
  3. One person or a vague team; no confirmed commitment or no right balance of skills in the team structure yet.

Million $ Question

Assuming that you have not identified the user need through your own pain point (experience in market);

How can you discover that need? How do you generate the hypothesis?

Walk In Their Shoes

A good starting point for developing your idea, is to ‘walk in the customers shoes’. One way to do that is to go out, and try to understand what it’s like to be a customer.

Have intimate discussions with potential customers.

By having intimate discussions, you can arrive at many insights (pain points to be solved). However, according to Prof. S. Zenios (Stanford), ‘you have to go down a lot of alleys to see what the real underlying problem is, that you’re trying to solve (just pick a group you want to serve, and learn what their problems are).’

The greatest correlation to the success of entrepreneurial students at Stanford University is; how many interviews they have done do potential customers. 

Hypothesis

One crucial distinction to be made at the startup ideation stage is trying to understand:

Is my hypothesis valid — and if it’s not valid – why is it not valid?

That question can be partially answered by deploying the ‘concierge minimal viable product’. In other words, creating a something (napkin image, presentation, demo etc.) with just enough features to gather meaningful feedback from potential customers. For what ever idea you might be testing, it’s always also a good idea do something (get a job or work placement), in a field close to your startup idea area of interest (gaining domain expertise).

Repeatable Processes

Remember to also develop a repeatable process of experimentation (ideation). Because your first idea might not ‘fly’, that repeatable process can be used later when testing future ideas (hypothesis).

Checklist (3:30)

Jason Nazar

How to examine your business idea?

NOTE: video starts & stops at pre-assigned times

Business Models

Turn customer needs/problems into a profitable company.

Take the time to understand the primary function of your startup idea, and variations on that idea or ideas (in a broader way than what you’re currently considering). The ‘Business Model Archetypes’, provides a conceptual framework for thinking through the possible startup opportunities you may not have considered earlier (different business model options). 

7 Business Models

When evaluating each of your ideas, consider how those ideas might (or might not), fit into the different business model archetypes.

  1. Product focuses on the development of a tangible artifact that can be bought and sold for a one-time cost. Attributes include; product development and monetization (sale of product).
  2. Subscription is a blend of product and service (continued access for a monthly cost etc.). Attributes include; customization, maintenance and monetization (time and materials).
  3. Service is an intangible solution (integration, maintenance, or customization by skilled professionals).  Attributes include; customization, maintenance and monetization (time and materials).
  4. Brokerage combines the activities of Trade and Service by trading on behalf of clients, as a service (provide assistance through more efficient sourcing). Attributes include; recruiting wholesalers and monetization (base-fee plus commission).
  5. Trading connects buyers and sellers (buy product for less than it is sold). Attributes include; sourcing, advertising and monetization (arbitrage)
  6. Marketplace brings together buyers and sellers (self-service platform). Attributes include; recruit vendors, advertise and monetization (commission).
  7. Ecosystem combines all archetypes – Product, Service, and Trade… Typical prototype examples of an ecosystem are the technology platform. Attributes include; develop software, manage servers and monetization (subscription).

ACTIVITY

1. IDEA ANALYSIS

Plot out your different startup ideas on the Evaluation Matrix. If an archetype is not suitable, eliminate it. For those archetypes which are suitable, try to rank them, in order to determine which ideas is most achievable, within a specific archetypes (model).

 

Complete an Idea Evaluation now!

Use the Opportunity Ideation Worksheet to determine which idea is most achievable.

Opportunity Ideation Worksheet (pdf)

 

2. OPPORTUNITY ANALYSIS

Once you have developed some archetype ideas (Idea Analysis), you can now begin to plan the testing of each ideas viability, based on the following criteria:

  1. Customer: Who are you going to serve, and what need or desire do you plan to address?
  2. Product: What is the solution to the customer’s need or desire, and is it in a form that the customer will embrace?
  3. Timing: Is market timing favorable or are you going to be fighting an uphill battle?
  4. Competition: How strong is the competition and how open is the market to a new entrant?
  5. Finance: How much capital must you invest and do the returns justify the risk?
  6. Team: How fit is your team to be a leader in providing the proposed solution?

 

Complete the Opportunity Evaluation Now!

Using the Evaluation Matrix Worksheet, begin testing each ideas viability based on the six worksheet criteria.

Evaluation Matrix Worksheet (pdf)
Source: CC Attribution Sharealike  Smarter Startup

Hypothesis (5:30)

Alex Osterwalder

What needs to be true… for idea to work?

NOTE: video starts & stops at pre-assigned times

ACTIVITY

Testing & Experimenting

Now it’s time to do a little experiment, in order to test (dis-prove) the hypothesis you have developed. First you must define how you will test the hypothesis (measure/validate), and then you need to turn the insights gained into actionable learning (decisions).

To get more instructions on how to do this, access this link:

LINK: Test and Learning Cards

Course Curated By: Dr. G. Danford

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