Fast companies anticipate trends ahead of their competitors. They also ideate quickly to find feasible solutions to stay ahead of others. However, when we are ideating at pace, it is paramount that the quality is not compromised. We, therefore, need a way to evaluate and select ideas to work on.
Guy Kawasaki wrote an article in Forbes Magazine. He mentioned that many business plans rely on Chinese maths for their success. He wrote, and I quote, "Chinese math is the argument that goes like this: If just 1% of the people in China bought a Macintosh, Apple would be the largest computer company in the world. Many plans cite a study that "proves" that a market will be $20 billion by 2003 and state that all the company needs to do to be profitable is get 1% of the market". Though these plans seem irresistible, they rarely account for the resources and efforts needed to mine and reach that 1% population. Such ideas should be culled immediately.
Like Chinese Maths, many business ideas base their success on the Greater Fool Theory (GFT). GFT is based on the premise that somebody in the market will buy the stuff at a price higher than our cost. Knowledge is democratized by the internet. There are very few fools available to sell our products/services using the GFT.
Here are some other questions to be asked in evaluating ideas at an early stage:
Will we be going 100% against the tide? Even if the concept is ingenuine, it is better to give it a pass. It would be worth breaking the ideas into smaller fragments. The easiest of these components could be tested first before moving to the others.
Are we betting on a single customer/supplier/partner?
Are we putting all our resources into this new initiative?
Have we piloted the initiatives and evaluated the quantitative mechanics that convert inputs to outputs? Unless we know the maths, no business can be predictably scaled.
Do we have a Plan B?
Do we have multiple possible positive outcomes from the business idea? Even if the idea fails, some other alternate objectives could be achieved.
Is the company focusing on cutting the cost before accepting the proposal? Usually, limitations and constraints result in radical innovation.
Are we expecting to be successful by doing the same thing we did in the past and failed? What have we learned from it, and how are we correcting those things this time?
Are we making this decision based on our inflated ego because of a success in some other area?
Is the idea going to create an entry barrier for the competitor? If not, the space would be flooded by other companies soon after your success.
What are the business ideas you are currently evaluating?
Subodh
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