How Do I Know If I Have A Good Idea?
If there is one question that should be asked about any business idea, it is: "Is this idea good?" – a simple question that rarely has a simple answer.
Understanding what ideas are good ideas, how to conjure good ideas from the ether, and the alchemy behind improving an average idea so it can become good, are part of the magic in my program Turning Points, which is all about creating unique business ideas. Lucky you, as today I am sharing a piece of this magic to help you with thinking about your own idea!
First things first, I analyse every idea, every business system and every brand position, according to ethos of my methodology. The tip of that iceberg could be summarised in these four questions:
- Is my idea interesting?
- Is there competitive advantage in this idea?
- Is the idea relevant to its audience?
- Is it engaging the audience into action?
Imagine the fit between customer, market and idea in a Venn diagram. People tend to focus on just one of the circles, maybe two, whereas the best ideas usually answer needs and take advantage of opportunities from all three areas and consider how they fit together as a system – the system that will be your business.
If you just focus on the customer segment, all the ideas converge to the same point, with a lot of brands in the same space, and the result is no brand memorability and competing on price. The opposite of a unique business idea! As ultimately what is in the customers' interest is to have their problem solved for free, and that isn’t good for business. Further to this, customers don’t know what they want, they don’t say what they think and they don’t do what they say. Asking customers what they want can often lead to an idea that won’t be successful in practice. It is always better to observe what they do than to ask what they would do.
A focus only on the market circle and the needs and the shifts of the marketplace leads to ideas that are what I call here today, gone tomorrow. Of course you’re looking for trends that are sustainable, however businesses here tend to translate other business ideas verbatim and are always a step behind the market, not evolving for the unique needs of their audience and having no strategy of their own to keep fresh over time. If you treat your idea as set and forget, that's exactly what will happen to your business. A lot of businesses in this category do really well at the start, and then fail soon after because they don’t understand their customer or business needs.
Ideas that focus only on the third circle, that of the idea and business itself always lack product-market fit. These are often the worst of the ideas. Too often, owners put in so much work and the product just doesn’t sell like they imagined it would when they open. Not all unique business ideas are good ideas. Ideas can lean toward gimmick. They can be ideas only you think are amazing. They can also be business ideas that have a market need but the customer isn’t willing to spend money to have that particular need met. The result is you've created a hobby that costs you, instead of a business that pays you.
Unique business ideas happen at the coalescence of these three areas. Ask yourself: where can you make use of the opportunities of the marketplace and avoid its limitations, whilst exciting the customer but in a way that only your business can solve to build a really sustainable competitive advantage over time? That is where good ideas come from.