How to generate that next ￡1bn idea

As I sit here, day-dreaming, staring at the rolling grey clouds, I wonder: are you dreaming of that next big idea?

Well if you are, stop dreaming and start doing. 

On the path from idea to exit, the idea is usually the easiest part, but, by no means does that mean it is a walk in the park, rather it is a testament to how difficult running a startup can be.

Okay, so enough rhetoric from me. How do you come up with that big idea? Broadly speaking there are two ways of getting there (1) Demand Pull; and (2) Tech Push. In short “Tech Push” starts with the product, and “Demand Pull” starts with the customer.

Demand Pull
Demand pull ideas come from identified customer issues. In other words, it starts by finding a problem and then looks for a way to solve it. Does this sound familiar? It should, this is very much the current thesis for startups. It works well with the lean startup approach, and should lead to products that people actually need and are prepared to pay for.

Tech Push
Tech push ideas start with the technology. The classic case is your crazy inventor or scientist who comes up with a new gizmo and then needs to find people to sell to.

So which is better? I can almost hear you shouting that demand pull is the obvious choice. It may be, but it is not without its critics. Demand pull ideas usually result in incremental improvements and there is an even bigger problem, your customers don’t always know what they want. Henry Ford famously said:

“If I had asked people what they wanted, they would have said faster horses.”

Tech push ideas are successful when the entrepreneur is able to identify and meet the needs of their customers, before the customer even knows that they had that need! Sounds easy, but educating a market is difficult and costly. Both tech push and demand pull as methods for idea generation have strengths and weaknesses. Tech push doesn’t account for the market and demand pull ignores technological capability. However, the two methods are not mutually exclusive and in fact, for true innovation both should be used simultaneously. *

Enough theory, now for something a little more practical. The following section is an edited extract of my Master’s Thesis: “Commercialisation of Graphene: Opportunities for Start-ups”

Demand Pull – Idea Generation
This exercise is recommended by a book called The Smart Entrepreneur (Clarysse and Kiefer (2011)) and is based on the work Edward Lumsdaine and Martin Binks, academics who specialised in entrepreneurial creativity, and Ned Herrmann who worked at General Electric and created a model for different thinking styles.

The exercise consists of six steps:

1. Seek and observe unsolved problems.
2. Explain and define problems.
3. Brainstorm ideas and solutions.
4. Organise and synthesise your ideas.
5. Evaluate and select ideas.
6. Plan how to implement selected ideas

These steps cover the entire opportunity identification and evaluation process. The first four steps relate to identification and the last two evaluation.  For details on each step and example, check the book out.

Tech Push – Application Matrix
This is another exercise recommended by Clarysse and Kiefer. The application matrix is a 5-step process for identifying and evaluating potential uses for a technology. The steps are briefly explained below:

Step 1: Identification functions and applications
The first step is to list all functions and properties of the technology and subsequently brain storm as many potential applications as possible.

Step 2: Alternatives
For each application identified in step 1, list alternate technologies being used for this application.

Step 3: Map industries
List industries that could use the technology and combine this with steps 1 and 2 to form a knowledge/application matrix.

Source: The Smart Entrepreneur

Step 4: Compare customer advantages and evaluate
For each potential application identify potential customer benefits, and then identify the most important things needed to make the application feasible.  The next step is to compare the new technology against alternatives using predefined criteria.

Step 5: Compare advantage for the business
The final step is to evaluate the best options from step 4 taking in to account the developers strengths and weaknesses and then pursuing the best options

By now you surely have that big idea and I would love to hear it @jonathanroomer and [email protected]

*Ideas in this paragraph are based in the following sources

Dixon, J., 2001. The “Market Pull” versus “Technology Push” Continuum of Engineering Education. s.l., American Society for Engineering Education.
Mowery, D. & Rosenberg, N., 1979. . The in?uence of market demand upon innovation: a critical review of some recent empirical studies. Research Policy, 8(2), pp. 102-153.
Nemet, G., 2009. Demand-pull, technology-push, and government-led incentives for non-incremental technical change. Research Policy, Volume 38, pp. 700-709.