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Question
Idea Multiplication
All great ideas start with a seed of an idea. The trick is
moving from that seed to something that is robust, exciting, and powerful.
Doing so requires input from others, such as your fellow co-founders, trusted
mentors, friends, and family. Spend as much time as possible brainstorming your
idea with this group. These informal conversations help you think through the
idea and flesh it out. You will learn more about some of the shortcomings or
challenges of the business idea, and you will also gain new insights on how it
might grow beyond that first product or service.
We offer one caution, however: Avoid becoming a
“cocktail-party entrepreneur.†This is the individual who always talks of
becoming an entrepreneur or brags of the ideas he or she thought of that others
turned into exciting, profitable ventures. In other words, a cocktail-party
entrepreneur is all talk and no action. Anybody can be a cocktail-party
entrepreneur because it doesn’t require any effort or commitment, just a few people
who are willing to listen. To become a true entrepreneur requires effort beyond
that first conversation. It requires continual escalation of commitment.
We have found a few useful processes that help move you
beyond the simple initial idea. The first is called idea multiplication and is
best exemplified by IDEO, the idea think tank responsible for many of the
product innovations we take for granted. For instance, that thick, grippable
toothbrush you use every morning was developed by IDEO, as was the design of
your computer monitor and any number of other products you use every day.
Figure 3.1 highlights the top IDEO innovations over the years. IDEO, founded by
Stanford engineering professor David Kelley, is hired by leading corporations
worldwide to
develop and design new products. We can learn a lot by
observing its process.9 There are four basic steps: (1) Gather stimuli, (2)
multiply stimuli, (3) create customer concepts, and (4) optimize practicality.
Let’s talk about each.
Gather Stimuli. All good ideas start with the customer. Most
often, entrepreneurs come across ideas by noting that there is some product or
service they would like but can’t find. This is your first interaction with a
customer — yourself. To validate this idea, you need to go further by gathering
stimuli.10 IDEO does this through a process called customer anthropology, in
which the IDEO team goes out and observes customers in action in their natural
environment and identi- fies their pain points.11 For example, in an ABC Nightline
segment about IDEO, the team went to a grocery store to better understand how
customers shop and, more specifically, how they use a shopping basket. The
team’s mission was to observe, ask questions, and record information. They did
not ask leading questions in hopes that the customer would validate a
preconceived notion of what that shopping cart should be. Instead, the
questions were open ended.
Beware the leading question. As an entrepreneur who is
excited about your concept, you may find it all too easy to ask, “Wouldn’t your
life be better if you had concept X?†or “Don’t you think my product/service
idea is better than what exists?†While this might be a direct way to validate
your idea, it requires that people answer honestly and understand exactly what
they need. Most people like to be nice, and they want to be supportive of new
ideas—until they actually have to pay money for them. Also, many times people
can’t envision your product/service until it actually exists, so their feedback
may be biased.
During the “gathering stimuli†phase, act as if you were
Charles Darwin observing finches on the Galapagos Islands—just observe.
Ideally, you’ll gather stimuli as a team so that you have multiple
interpretations of what you have learned.
Multiply Stimuli. The next phase in the IDEO process is to
multiply stimuli. Here, the team members report back on their findings and then
start brainstorming on the concept and how to improve upon the solution. One of
our colleagues shared with us the trick of comedy improv for facilitating this
process. A group of actors (usually three to four) poses a situation to the
audience and then lets the audience shout out the next situation or reply that
one actor is to give to another. From these audience suggestions, the actors build
a hilarious skit. The key to success is to always say, “Yes, and . . . .†Doing
so allows the skit to build upon itself and create a seamless and comical
whole. Likewise, multiplying stimuli requires the team to take the input of
others and build upon it. Be a bit wild-eyed in this process. Let all ideas, no
matter how far-fetched, be heard and built upon because, even if you don’t
incorporate them into the final concept, they might lead to new insights that
are ultimately important to the product’s competitive advantage.
Remember that “Yes, and . . . .†means that you build upon
the input of your colleagues. All too often in a group setting it is easy to
say, “That won’t work because . . . .†These kinds of devil’s advocate debates,
while important in the later phases of business development, can prematurely
kill off creative extensions in this early phase. Also beware of “Yes, but....â€
statements, which are really just another way of saying, “Your idea won’t work
and here’s why . . . .†The key to this phase of development is to generate as
many diverse ideas as possible.
As you go through this multiplication stage, brain-writing
is a useful technique to avoid prematurely squashing interesting extensions.
The process is like brainstorming, but the focus is on written rather than
verbal communication. The biggest shortcoming of brainstorming is that it opens
up the opportunity for the most vocal or opinionated members of the group to
dominate the conversation and idea-generation process. In contrast, brain-writing
ensures that everyone has a chance to contribute ideas. To start, the team
identifies a number of core alternative variations to the central idea (if you
have a disparate team, as you might for an entrepreneurship class, use each
member’s favored idea). Put the core ideas onto separate flip-chart sheets and
attach them to the wall. Then the team and trusted friends, or classmates, go
around and add “Yes, and . . . .†enhancements to each idea. Keep circulating
among the flip-chart sheets until everyone has had an opportunity to think
about and add to each idea. At the end of that cycle, you’ll have several
interesting enhancements to consider. Instead of publicly discussing the ideas,
have everybody vote on the three to five they like best by placing
different-colored sticky notes on the sheets. In essence, this is another
“market test†in which your team and other interested parties are gauging the
viability of the idea.13
Create Customer Concepts. Once you’ve narrowed the field to
the idea and features you think have the most potential, the next step is to
create customer concepts. In other words, build a simple mock-up of what the
product will look like. This helps the team visualize the final product and see
which features/attributes are appealing, which are detrimental, and which are
nice to have but not necessary. Keep in mind that this mock-up doesn’t need to
be functional; it is just a tool to solidify what everybody is visualizing and
to help the team think through how the product should be modified.
When your team is developing a service, your mock-up won’t
necessarily be a physical representation but rather some kind of abstract
modeling of what you hope to achieve. For example, the initial mock-up for a
restaurant is often just a menu. Entrepreneurs who want to take the research
process even further will often test the product or service in a low-cost way.
This process allows for rapid-fire prototyping of ideas, and it also provides
the luxury of failing early and often before making substantial investments in
a bricks-and-mortar establishment.
The Competition
Would-be entrepreneurs often say, “I have a great idea, and
the best part is there’s NO COMPETITION.†If that were true, then as long as
you have a customer, you have a license to print money. However, most nascent
entrepreneurs turn out to be defining their competition too narrowly. For
example, an overly optimistic entrepreneur might suggest that Gourmet Stew has
no competition because there are no other companies producing stew in a jar.
That doesn’t account for Hormel canned stew (direct competition). It doesn’t
account for the multitude of frozen pizzas and other prepared foods that
customers can bring home from the grocery store (more direct competition). It
ignores the customers’ options of preparing their own secret recipe for stew
(indirect competition) or going out to eat (substitute). In other words,
Gourmet Stew’s competition isn’t just stew in a jar; it is all the other
businesses competing for a share of the consumer’s stomach. Entrepreneurs
ignore these competitors and substitutes at their peril.
To fully identify the competition, start with the customer.
How is the customer currently fulfilling the need or want you intend to fill?
You must identify direct competitors, indirect competitors, and substitutes.
The number and strength of your competitors mirror the market structure. In a
mature market, the industry is likely consolidated, and the power of existing
competitors is likely strong. From the Gourmet Stew example, the industry is
highly consoli- dated. Ten major prepared-food companies — Tyson Foods Inc.,
Nestle S.A., Kraft Foods Inc., JBS USA, Dean Foods Co., General Mills Inc.,
Smithfield Foods Inc., Mars Inc., Kellogg Co., and ConAgra Foods Inc. —control
45% of the market.35 Entering this market is difficult, as we saw earlier,
because the major competitors control the primary channel of distribution.
Even if you successfully enter the market, the strength of
your competitors enables them to retaliate. Competitors, because of their
economies of scale and scope, can lower prices to a point that makes it
difficult for new ventures to compete. They can spend more on their advertising
campaign and other marketing expenditures and increase their visibility due to
greater resource reserves or easier access to capital. The good news is that
many times strong competitors won’t bother with new startups because they’re so
small that they aren’t noticeable or because they don’t feel threatened in
either the short or the medium term. However, entrepreneurs should plan for
contingencies just in case the larger competitors retaliate earlier than
expected.
