- Frame the problem
Inventing the next Pet Rock is relatively easy. Starting a lasting business is hard. Businesses that stand the test of time identify a problem and solve it. This is where the listening portion of ideation comes into play. You want to listen to others about what problems they face.
If you just jot down ideas without doing any research, you’re going to end up with a long list of dead ends, in part because the ideas will be based on your own predispositions and biases. Yes, you could luck out and hit on the big idea doing it this way. But you may miss out on an even bigger or better idea because you didn’t take the time to listen to the needs of the marketplace and gather feedback.
Using the goals you created above as a springboard, think about different audiences in the marketplace that may be interested in something you may be able to offer. Use general descriptors for your prospective customers or audience that are facing a challenge or have a need that you could potentially solve. Start with those that are the most obvious, then move outward to those that may be less obvious. If you’re having trouble visualizing your customers/audience, go broader and think about the industry itself.
This may seem counterintuitive since one would typically think that they should come up with a business idea first and then find customers for it. But this sets you up for failure as you may discover a solution that doesn’t have enough customers to be profitable. That’s why you want to keep the potential customer base broad. You will narrow the audience down later on as you refine your idea.
Also, if your idea is targeted to a specific geographic area, include that as part of your customer description.
An excellent way to do this is to use Excel or Google Docs. Put all the potential customers/audiences down the left side. We’ll go across the idea board next as we look at business models and pricing.
Don’t get too hung up on getting this all correct. This is supposed to be a sloppy, inexact process. Remember, you’re in ideation mode, not operational mode. You will be refining this all as you go forward. If you’re lucky, you’ll find a few gems on the first attempt. But you may end up doing several of these frameworks until you start to see the thread that will lead to ideas that you can build upon.
Now that you have a list of customers/audiences, you can go across the top and put business or pricing models into the cells. Examples are subscriptions, product bundling, outsourcing non-core functions, after-sale care, daily deals, lead generation, or even more exotic models such as collaborative consumption (think Airbnb), or rapid evaluation/matching (think Match.com or EHarmony), etc. If you need more, TechCrunch has a good list.
An example of the grid in action…
Let’s take a single idea for a spin and see how this grid would work.
Let’s say you love skydiving. It’s your passion. You would skydive every day if you could. But as you know all too well, skydiving is a seasonal pursuit, as the marine layer loves to cover the Washington State with low clouds, the bane of skydivers everywhere.
As every skydiver knows, the fun of the sport isn’t in the long airplane ride to altitude or the ride under the parachute. The fun is in the falling. To fall just 60 seconds, you need to reach an altitude of 12,500 feet, which means a 20 minute airplane ride, not including loading and taxiing. It also doesn’t include the time you have to wait on the ground to get a spot on the plane. So, at best, you get four minutes of actual freefall time over the course of an eight hour day. And that’s when it’s sunny.
There must be a better way, you think. Now, controlling the weather isn’t possible. Building a giant dome of glass over the state would seriously disrupt air travel and who wants to clean it? You could dig a really deep hole in the ground for people to jump into, but how do you get them back out? You recall the time you tried to dig a hole to reach China and decide that would be too much work anyway.
One day, it’s particularly hot outside and you’re stuck at home with the kids. You wish you could be skydiving, but instead you’re sitting in front of a box fan wishing there was way more air so you could at least feel like you are freefalling. And you think to yourself, “Hey, could this be an idea for a business?”
At this stage, that’s all you know. You don’t even know how or if a fan of any size would work. But that’s not important at this moment. It’s just an idea.
That’s why you start with customers, enough customers to make it worth pursuing. It could be technically feasible, it could solve a problem, but are there enough customers to keep the doors open.
After doing a little research, you discover there are roughly 500,000 skydivers in the U.S. Given that the U.S. has 328 million residents, that’s a pretty small market. So you think, would anybody else want to experience the thrill of floating in the air, especially if they could do it for more than a minute.
Adrenaline junkies, bucket listers, celebrants, families, grandparents, belongers, corporate trainers, adventurers get added to the list down the left side of your spreadsheet. You can always add more later, but this will get you started.
Now, how are you going to bring them in and how are you going to keep them coming back? This is where your business/pricing models kick in. List all the ways you could engage customers – memberships, special events, promotions, loyalty and referral programs, loss leaders (buy 1, get 1 or heavy discounts), etc. – across the top of the grid.
By now, you should have a nice grid to work with, one with customer/audience types down the left side and business/pricing models across the top. Now it’s time to tackle each square where they intersect. What could you offer that will get them to come in and more important, come back. Some boxes won’t have an obvious connect point. Others may have more than one.
This will help you match up customers with ways that you can meet their need and demonstrate a wide enough customer base to support a business. You may also discover additional businesses/offerings you could add to your model.
Research some businesses that use similar models so you can visualize how it works for a particular customer/audience. Then test it on each customer or audience in your grid to see if there is a fit. What problem would the model solve or what need would it fill? If you get stuck, study up a bit on the audience.
Go back into listening mode and see what that customer segment is talking about. In the example above, maybe you’ll find out that skydivers actually love the ride up in the airplane and there may be a better business opportunity there instead (an inflight drink cart service is probably not going to be one of them). Or perhaps you come to find that an audience segment would pay a premium to buy a high performance parachute that would let them do more once they pulled the ripcord. That could be another business idea on another spreadsheet to ponder.
As you mull these ideas, ask yourself who is already meeting the need? How are they doing it, and why are they in that space? What opportunities do they see that you also see? More importantly, what don’t they see?
Back to the skydiving scenario again.
As you look at your grid, you start connecting some dots. The box that intersects Skydivers (audience) and Memberships (business model) is an easy one. You could offer memberships that allow skydivers to buy freefall minutes in bulk. For a Loyalty Program, you could offer additional time blocks air as a perk after they reach a milestone (hours in the air, # of visits, etc.).
Memberships could also work with New Customers. While their adrenaline is still pumping, you could offer an Introductory Membership to a first timer at a discount to entice them to come back.
Keep doing this for all of the boxes in your grid. Again, don’t worry about getting all the answers at this stage. The goal is to quickly formulate an idea and come up with some customers and models to see if it is even viable. You’ll do a lot more research and testing in the next stages.
Need more ideas?
If you’re stuck for ideas, you can use a technique that’s called the “idea date.” This is an uninterrupted block of time where you explore the world around you to come up with new ideas. The goal is to set aside any predispositions, observe things without the usual life distractions, and look for new ideas that are all around you.
Take a notebook with you on your idea date, which should take you somewhere you haven’t been before or been to in a long time. Getting away from the familiar can get your creative juices flowing and help you see the world differently, which can often lead to amazing breakthroughs as you experience your environment in new ways.
As stated in the opening video for this module, this is a great time to listen, observe and be curious. Pay attention to what others see as problems, look at trends that are taking shape, and understand human needs and desires so you can start to see ways to help people achieve their objects of desire. Use your imagination to ask “what if…” as you wander about the environment you’re in.
It may take you a few outings to get used to these dates. You may initially get nothing out of them or think they are a waste of time or worse, an indulgence. Don’t be too hard on yourself. If you’re stuck, these adventures will help unstick you. Eventually, you will start to form new ideas, ones that might even surprise you.