Develop your idea
An idea in itself is not a business. The idea needs an application to give rise to a commercial opportunity. Post It Notes are a great example of an idea searching for an application. What started as non-sticky glue found its way on to our desks in little pads called ‘Post It’ Notes.
Often ideas can have many potential applications and sometimes the initial intended application is not necessarily the best commercial opportunity. Different applications will have different markets. The best commercial opportunities are identified through identifying market opportunities and developing the idea into products and services to meet these market opportunities. This is referred to as a market demand “pull” approach.
The alternative approach is to “push” the idea out to the market in an application. However you should recognise that this can be a high risk and very expensive process since the market may not need, want or even be ready for your product or service.
Who are your customers?
To determine the best potential commercial opportunity and reduce the risk of market failure, develop your idea aligned with the market. The best commercial opportunities are those products or services that are unique, solve an existing problem, and provide an incentive for customers to switch to the new product or service.
Research the market to understand the market opportunities, identify the optimal opportunity, and develop your idea to meet the opportunity. Some questions to consider in researching the market are:
- What is the size of the market and its growth rate?
- What are the key market trends and gaps?
- What stage of the lifecycle is the market (emerging, mature, declining)?
- What is the target market?
- What do the target customers want?
- Who are the key competitors?
- What are the entry barriers (for example: consumer acceptance, competitive rivalry, emerging technology, distribution networks, bargaining power of suppliers, government regulation, tariff barriers/quotas, unions, physical environment, cost structures etc)?
- What are the exit barriers (for example: length of time needed in the market to honour labour contracts, length of existing leases, services and parts provided to customers, government regulations, social responsibilities to community and workers, level of emotional attachment to the business or industry, outside obligations to warehousing or financial institutions etc)?
- What is your competitive advantage?
- Who are the potential partners?