Generate opportunities

Generate Opportunities

Building a venture isn’t easy.  Every decision you make will impact the probability of success or failure.  Nothing is guaranteed and the odds are stacked against you.  If you enjoy chewing on glass then you’ll enjoy starting a new venture!

The goal of ideation is to develop a process for identifying business opportunities in a predictable and repeatable way.  We are not interested in luck.  Our goal is the ability to repeatedly and predictably generate novel opportunities.  Having a pipeline of opportunities will benefit you in a number of ways including increased productivity, increased objectiveness, and increased odds of winning.  As an example, every two weeks you will generate 5 high quality, novel business ideas, evaluate their validity, and test via a hypothesis.  From there you can pick the best one to invest all your team and energy on and ignore the rest.  If you approach ideation with a structured, disciplined and focus approach the above is possible.

We define an opportunity as a problem that is worth solving, specifically one that has measurable consequences to the customer, they have attempted to solve it, they have a budget that has been allocated towards it.

The goal of ideation is to:

1. Generate opportunities 

2. Evaluate those opportunities 

3. Generate a testable hypothesis 

Generate Ideas

Ideas don’t fall from the sky.  They are identified through deep understanding of specific domains (domain expertise) and understanding of new technologies and the probable impact and implications those technologies will have on the specific domains (why now).

With that as your foundation and a mindset of conscious awareness towards opportunities, new opportunities will begin to emerge.

Domain Expertise

Domain expertise is a key aspect of opportunity identification (or sometimes called founder market fit)

If you lack domain expertise, you will lack deep insight.  That doesn’t mean that you will have no chance, but it does point to the likelihood of your first identified opportunity as unlikely and will require further refinement and iteration.  Think of a venture as a perishable good.  Time is the enemy.  If you know nothing about a selected industry, it will likely take you longer to build something (as a function of knowledge and network).  If you are immersed in an industry, actively working within that industry, viewed as a thought leader with a large network of other industry professionals, your learning velocity will be higher.  

Think about it from a non technical perspective. For example, from an probability perspective, which founder would you bet on to launch a product geared at long distance running:

Founder A) A new recreational runner just starting out with 5Ks with a few friends

Founder B)  A retired olympian with two golds and bronze who has built a cult following testing out novel training methods.

Founder A may be just as capable as a Founder B, perhaps even more so, but building a network and learning the nuance of any discipline takes time.  The less you have, the longer it will take.  

Selecting domains you are interested in

What should you become a domain expert in?  This depends on what you are interested in and what your background is.  Researching, networking, participating within an industry or domain will be much easier and more enjoyable if you are interested in the subject.  Follow your curiosity.  If you have to force yourself to sit down and learn about a subject it is not likely the one for you.  When you love the subject matter, you will improve your probabilities as you will be able to generate novel insights, and worst case scenario if you don’t find anything you can enjoy the journey.

Why now? 

'Why now?’ is an important start up principle that should always be top of mind. People usually don’t change unless they have a compelling reason. The drivers of change must come from external forces, and the consequences of not changing need to be both measurable and significant.

The change could be a regulatory change, a technology change, a customer behaviour change, and market change etc.  Changes open up space for innovation.

Emerging technologies

Having a good grasp of emerging and potentially disruptive technologies (Generative AI, 3D printing, Crypto/BlockChain, robotics, autonomous vehicles, social/mobile etc) coupled with domain expertise will help predict the future of any given domain.  This can guide you towards areas of potential impact.  

Identify a novel opportunity

How do you come up with opportunities once you have selected an industry and are knowledgeable about emerging technologies? This question has been pondered by many, but Graham Wallas outlines this process in his 1926 book "The Art of Thought," detailing four stages that individuals typically go through to arrive at a creative idea. Here's a summary of the four steps:

The four stages of creative ideas

Stage 1 - Preparation:

This stage involves gathering information and materials, studying the problem, and absorbing as much relevant information as possible. It is a period of conscious effort and intensive work, where the individual immerses themselves in the subject matter.

Stage 2 - Incubation:

During the incubation stage, the individual steps away from the problem, allowing their subconscious mind to work on it. This period can involve rest, unrelated activities, or even sleep. The subconscious mind continues to process and make connections without deliberate effort.

Stage 3 - Illumination:

This is the "Aha!" moment or the sudden insight when the solution to the problem or a creative idea suddenly becomes clear. The idea often appears unexpectedly and can occur during times of relaxation or when the mind is not actively focused on the problem.

Stage 4 - Verification:

In the verification stage, the individual consciously evaluates, refines, and develops the idea or solution. This involves critical thinking, testing, and validating the insight to ensure it is practical and effective. The final product is polished and made ready for implementation or presentation.

These steps provide a framework for understanding the creative process and can help individuals recognize and facilitate their own creative thinking.

These stages map well to the venture creation process.  You need a starting point, an idea.  You research that idea exhaustively.  This is the work you should be doing.  You then take a break.    You step away from that idea.  All of sudden a lightbulb goes off in your head while you’re in the shower.  This will only happen if you do the work.  Trust the process.  When a new idea come to you, you go off and validate it, iterate when necessary.

It’s very helpful to do this work with others and in person.  Collaboration can help stimulate new ideas and accelerate existing ones.  This stage is also very difficult and you will find yourself questioning things over and over.  With a partner or two, you are more likely to stay positive and ride the inevitable waves of despair.