Innovative ideas are exciting. However, there is a big difference between an interesting idea and an idea that represents a real business opportunity. Can you tell the difference?
Opportunity recognition is a mental process that addresses a question that every business owner must ask: Does this idea represent real value to current or potential customers? Being able to answer this question is as important as having an innovative idea in the first place.
A blog post by Incrementa summarises a few of the questions entrepreneurs and innovators should consider and whilst there is no one exact way of recognising the opportunity associated with innovation there is a theory called the buyer utility map. This indicates the likelihood that customers will be attracted to a new idea or product.
Essentially, business owners and innovators should ask themselves:
- Where can we create the greatest change in the lives of customers? Does the idea fill this space?
- Is that change higher or lower than the change offered by our competitors?
- Which of these changes matters most to our customers?
- How could we redesign our product or service idea to offer the greatest change to customers in the areas that matter most to them?
In addition to looking outside of the business to evaluate innovation, business owners should consider how the business is lined up to exploit this innovation:
- Does the innovation have a strategic fit with the company?
- Do we have the technical competencies to make it work?
- Do we have the business competencies to make it successful?
If the business owner can answer yes to all 3 of the above questions, the business is likely in a sufficient position to exploit the idea.
Finally, the business owner should assess the market potential if the new idea/innovation is allowing the business to enter a new market. If so, consider:
- What is the size of the market?
- What is the state of the competitive rivalry within the market?
- Is the market growing or shrinking? If it is shrinking will the innovation change this and send the industry life cycle on an upturn again?
Incrementa has a significant track record in delivering small business growth services to pre-start and growing businesses. The team of consultants at Incrementa have helped to start over 1000 new businesses and have assisted over 250 existing businesses to grow and develop. http://www.incrementa.co.uk/