Ideas to Opportunities CEO Talk WL Dougan February 4, 2009 Agenda Ideas versus Opportunities Where are Opportunities Born? Generating Ideas for Opportunities Ideas v. Opportunities Ideas are not the same as opportunities Ideas are frequently solutions without problems Better mousetraps fallacy Plenty of ideas Don’t have to be your own Myth of the single idea IBM Daktronics Polaroid Scott Shane Entrepreneurs pick industries that are easier to enter, not ones that are more profitable. Lower barriers to entry Higher rates of failure About 43 people have to try to start companies so that we can have nine jobs in ten years On average, jobs in new firms pay less, offer fewer fringe benefits, and provide less job security than jobs in existing firms A tiny sliver of startups accounts for the vast majority of the contribution to job creation and economic growth that comes from entrepreneurial activity Developing an idea Rule of Ten Your great idea $10 Discussion with friends $100 Build a working prototype $1000 Business plan & patent $10000 Prepare for manufacturing $100000 Rolling it out to the market $1000000 Opportunities Are ideas Solve problems and/or meet needs Better handle on kitchen utensils – OXO More convenient way to shop for books – Amazon, B & N, etc. Customer will pay Customer can be reached Better than what is there Meet financial and manufacturing criteria Forgiving margins Meet a window of opportunity Conveyor going out the window of opportunity Are durable Three BIG Questions Is there really an opportunity to serve an important customer need or want? • Value Proposition Do the numbers work out favorably? • Business Model Does the opportunity really match your personal goals and values, and will you have the abilities and resources required to exploit the opportunity? Opportunities create value For the stakeholders involved Customers Well-focused target market Investors Return Associates Livelihood compensation Entrepreneur When the rest are happy Opportunities have manageable risks A risk is what you don’t know and can’t find out. Will 1% or 10% of your target market purchase your product? Controllable through proactive strategies Can be spread, e.g. over investors Worth incurring, Risk and return Two Chefs Chef 1 Plans menu Buys food Cooks dinner Chef 2 Explores cupboards and fridge WHILE cooking dinner Entrepreneurial Means 1) Who they are – their traits, tastes and abilities; 2) What they know – their education, training, expertise, and experience; and, 3) Who they know – their social and professional networks. Where are Opportunities Born? Technology sea change Moore’s Law – Computing Power Gilders Law – Communications Metcalfe’s law – Value to Users Disruption Market sea change Value chain disruption/obsolescence/vulnerability Deregulation Where are Opportunities Born? Societal sea change Changes in ways we live, learn, work, etc. Gilder’s Law – 10xs in 10 years Brontosaurus factor Arrogance of existing providers Loss of peripheral vision by providers Deadened reflexes – turning the tanker Irrational pessimism Undervalued assets Generating Ideas Approaches Creation Synthesis Modification Focus on the value-added concept- that’s the opportunity! Network, talk to everyone and anyone Consumers Competitors Distribution channels Generating Ideas Draw from experience Get outside the box Brainstorm Think in “opposites” Do an attribute listing See OLD as NEW Force relationships Think retrofit/recycling/maintenance Change prepackaged opportunities Sell in new ways/places Create a Plot Draw from experience Pattern recognition Dell IBM oversell Chouinard Ice hammer Brown (Agsco) Online purchase of farm chemicals Intuitive and inductive Cross-linking of “chunks” of experience 10 years to accumulate 50k “chunks” Get outside the box “I never recognized an opportunity until it failed to be one.” Samuel Clemens Subway Brainstorm No criticism allowed Freewheeling is okay, wild is okay The more ideas the better Combinations and improvements are great, hitchhikers wanted Think in “opposites” Upscale discount store Upscale fast food Heaters for soda machines Do an attribute listing How would you improve a common object, or tool, e.g. a pen, a computer keyboard? List as many attributes as possible, e.g. size, color, shape, weight, function, and so forth How can you improve upon at least one attribute See OLD as NEW Look for new uses for existing designs Look for new uses for old designs Look for new uses for existing technologies Look for new uses for old technologies Look for new markets for existing designs Look for new markets for old designs Look for new markets for existing technologies Look for new markets, for old technologies EXAMPLE – Classic computing games - Pong, EXAMPLE – Air Conditioning for strollers Force relationships What products, technologies, etc. could you combine to make something more useful Voice recognition software and kitchen appliances RFID and mountaineering equipment A robot and a Segway Think retrofit/recycling/maintenance What can you sell that is old or used? What can you sell that keeps something that is old and useful in service? Change prepackaged opportunities Franchise listings Phone book Government regulation Government patents Sell in new ways/places Pharmaceuticals – Networked pharmacy Music – Internet distribution Banking services – Mobile transactions Telephone service - VOIP on WiMax Virtual books - Kindle Create a plot Character Objective Obstacle Outcome Business Registered US Mail Biometric person document too slow registered delivery email Surgeon Surgical Damage to Laproscopy surrounding repair tissues Warehouse Scan items Only two Wrist worker while hands mounted picking scanner Evaluating Criteria for evaluating venture opportunity Industry and market Economics Harvest issues Competitive advantage issues Management team Fatal-flaw issue Personal criteria Strategic differentiation
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