How Do You Identify Your Great Ideas?

This week I found myself judging a Hackathon at a major financial services business. 8 teams had worked assiduously to create come compelling propositions, the presentations were ready, and we had the relatively easier job of listening to the 8 teams and picking the 'winners'.? Every team was given exactly 3 minutes to present and exactly 2 mins for question and answers. It was a very tight ship, and it ran like clockwork. And then it was down to us to judge and I instantly found myself faced by many questions on how exactly we evaluate ideas!

To start with, the big question is: when we're pitched an idea, what exactly are we evaluating? The idea itself? The execution done by the hackathon team? The quality of presentation? The kind of thinking and analysis done? The quality of the team? What if the idea feels like a real break through idea, but is poorly executed? What if it has great potential but also great risk? How does it stack up against a simple idea that is well executed but will only deliver a marginal benefit in the end? And what if the team have landed on an idea but completely missed a significant aspect or benefit and ended up with a currently shallow interpretation?

Let's say one team has built a simple Gen AI tool that delivers a marginal improvement in an area of employee communications. The idea is well executed but the benefit is not huge. But you can see that if it can be extended to customers, it could make a huge difference to your customer retention or acquisition, but the team haven't seen or focused on this at all. Or let's say a team have fundamentally reimagined how mortgages can be processed, but in the confines of a hackathon the execution is clumsy. But you can see that the idea in its entirety is a game changer. What then?

I've never met a company in the past 5 years who have told me that they lack ideas in the business. Everybody from your CEO to your most recent intern can and usually does have ideas for improvement. We now have the tools to capture and manage these ideas, and track their status. But our ability to identify good ideas and pick winners is still average at best. And picking the wrong ideas or wrong execution not only leads you down blind alleys or suboptimal returns, it also means that resources are diverted from the good ideas.

And the reason this is critical is that outside of the petri dish of a hackathon environment, most companies have ideas bubbling up in the business, but tend not to have an effective way of making the right ones work. In fact, business history is packed with examples of good ideas being jettisoned, or millions being lavished on bad ideas. Kodak turned its back on digital photography despite having built working prototypes and products. Xerox invented and gave away the graphical user interface.

And the challenge doesn't end there. One of the things we know about ideas is that they morph, combine and diverge, and end up being completely different from where they started. But the only way to get to value through those twists and turns is also to walk down that path. Google started as Project Back Rub in 1996, branded as Google in 1998, and landed on the commercial model that made them the financial behemoth of the digital era in 2000. Notably, a million dollars went into Google at the early stages, and over $25 million had been invested in Google before they launched AdWords.

We're often told that organisations need to think like VCs. But here's where's the VC mindset varies from that of a typical large organisation. VCs spend their lives listening to ideas and pitches, and invest in less than one percent of the ideas they listen to in detail. Second, the VC relationship with the idea and the team is a strong influencing one but it's still an arms length relationship. The VC has a strong influence on key decisions, but is ultimately not running the business or managing the team. And that's why VCs tend to back the team rather than the idea because they expect that the idea will need to be polished and will morph and evolve, but the right team can guide it through those changes.

The way organisations need to define ideas is arguably different. They could of course take the VC approach and entrust the right team but they would also need to step back and let the team run with the idea, like a VC. Let's call that option 1, which by the way is easier said than done given organisational politics, and the fact that most businesses may not have the discipline of a VC, and are not derisking their investments across a portfolio of ideas.

Option 2 for organisations is to play to their strength and work with the team to jointly envision the potential of an idea, to explore all the upsides and risks and then define how best to execute, with the right team, the funding, and the organisational backing. In this instance, you're not just backing the team but actually investing in the idea as an organisation. And that means you need to have a robust framework for managing ideas.

Here's a simple model - I'm not suggesting this the only way or the best way to evaluate ideas, but it's worth trying it if you don't have something better in place. When I am given a new idea for a product, an improvement of an existing process, or a new business model, I find it constructive to ask these 4 questions distinctly.

1. How good can this idea be? When you have a good idea, it's easy to get excited, and people will generally add new angles and dimensions to your idea, and tell you about all the extensions and additional applicability. This is good, this takes your core idea of a building and converts it into a palace. It's worth doing this to tease out all the things this could be.
2. Why might this be a bad idea? It's also important to do this as a separate exercise. Mixing the critiques with the building process tends to create a schism between the optimists and pessimists, or you can be branded a naysayer for being pragmatic and cautious. I've heard it say that the best founders are pragmatic optimists. Put aside a block of time so you and your team can try to break the idea by identifying all the reasons why this might be a bad idea. Uncover all the loopholes and list them down. Usually this won't kill the idea, and most of the problems will not be insurmountable, but it'll give you a solid list of things to fix in order for the idea to work.
3. What enablers need to be in place for the idea to work? While not exactly problems, the idea might none the less need support from internal and external entities, and there might be some critical assumptions that are implicit in the idea. This too, will give you a sense of some of the issues to fix, but more importantly, it will help map out the ecosystem that needs to be in place for the idea to work.
4. Why are we the right organisation to do this? This is a rarely asked but fundamental question. The idea might be a brilliant one, but if it requires competences, skills, market access, or technology that is not in your organisation today, it's worth asking why you think you should be doing this. Now it might be a completely new to the world idea where nobody has an advantage (or consequently, disadvantage), but this will not only provide a go/no-go decision, but also provide clues to how to structure the route to market, and whether to find an appropriate partner. Many VCs also have clarity about the areas they have a hypothesis about which allows them to invest with confidence, and what areas they avoid because it's not in their wheelhouse.

A note on bad ideas. There is such a thing as a bad idea. You know when you hear it. So I don't subscribe to the 'no idea is bad' philosophy. But good and bad ideas are often in context. So I've found it useful to articulate why an idea might be a bad idea, and retain these bad ideas in a box / list, along with the reasons. The same idea might turn out to be a great idea if something critical changes. Shazaam was a nice idea for a while, but it became a great idea with the smartphone. Regulatory changes, technology progress, strategy redirection, or environmental shifts might all lead to the rethinking of bad ideas. By the way, sometimes you can take a bad idea and through rapid execution and learning, you can turn it into a brilliant idea. This is much easier in a VC model where there's a layer of objectivity and it's easier for a start up to pivot. Large businesses culturally find it much harder to change direction even in the face of contrary data - partly because decision making takes inordinately long. Sometimes just getting the right people in a room for a discussion can take weeks or months.

You may not have hours to evaluate every idea you hear, but even in the minutes you devote, using these 4 questions and answering them distinctly will arm you with clarity about whether or not you want to move forward, and with what kind of structure and investment. Usually in a brainstorm or ideation session these questions are mixed up and asked, creating 'for' and 'against' factions, and we move quickly to a vote. Many a good idea has died in a brainstorm vote done too quickly. Voting is expedient but not necessarily effective.

As it happened, on the day of the hackathon, the 3 of us on our panel very quickly got to consensus on the top ideas, and it was obvious that across the board these were the ideas that found the most resonance with other evaluators, who were also identifying their own winners. The hackathon was was capably run by the team from AWS, and I'd say it was a very successful event.

But this whole business of evaluating ideas needs to be done more seriously for businesses, especially in the volatile environments we live in today where the long term survival of our organisations is dependent on getting the right ideas identified and backed.

A last word: it's not critical that you pick the best ideas. This process is a way of asking all the right questions but it's probably more important that you pick any ideas that have gone through this method and execute rapidly, and learn fast. But as we've said before this can be hard for large organisations, and that's really the only reason that start ups win over big businesses. They learn faster, and change quicker.