Thursday, January 26, 2012

Leading in a New Direction - 3 Techniques for Thinking up New Business Ideas

Here's a guest post from entrepreneur Duncan Murtagh,"an Irishman living in Taiwan, who has been to New Hampshire several times":

How can we move past the tough times of 2011 to a more profitable 2012? Well we could start by coming up with some new ideas to drive revenue growth. In this article I’ll demonstrate 3 different techniques that 3 very different businesses could use, and may have used, to think up new business ideas.

1. The S.C.A.M.P.E.R. checklist of questions is a powerful tool for looking at your existing product/service lines and coming up with new variations. Probably the best way to explain the technique is by working through an example. Let’s imagine you are a family owned ‘fast-casual’ restaurant in a small city facing big competition from national chains such as Panera Bread. What new product or service could you offer to fight back against your deep pocketed competitors?

S = Substitute - Fast Casual restaurants focus mainly on food, less so on drinks and desserts. What if you substituted desserts for food, and ran a fast casual, high quality desserts restaurant?

C = Combine - Could you combine the delivery option of a fast-food restaurant with your own restaurant’s quality food, to create an affordable, quality-food delivery service?

A = Adapt – How about adapting the successful drive-through services that the fast food companies offer to the fast-casual market? Fast-casual food generally takes longer to prepare, so perhaps it could be a phone-in the order 1st, pick-up at the booth system.

M = Magnify – magnify one aspect. Fast casual restaurants usually use higher quality ingredients, could you go a step further and go organic? Or vegetarian or even vegan?

P = Put to Other Uses – use the restaurant as a market research center. Consumers get a free food item for every survey or test they take. The more expensive the item, the longer the survey.

E = Eliminate (or Minify) – The classic Seinfeld episode, “The Soup Nazi”, centers around a passionate soup seller, who sells the ‘best soups in New York’ along with a couple of other items, in a super-efficient manor. Could you copy this tactic and focus laser-like on one main product? Serve the best pasta in the city? The best burritos, and only burritos?

R = Reverse (or Rearrange) – Purchase and consumption of the food normally takes place on the same day right? What if you rearranged this a little so that diners pay in advance, perhaps weekly or monthly for 5,10,15 meals, with a large discount?

2. ‘False Faces’ is a thinking technique that works by reversing the conventional assumptions. The classic example is Henry Ford’s decision to bring the car to the workers, via a production line, rather than having the workers go to the car. Let’s jump forward 90 or so years though and look at a more recent example to explain the technique.

False Faces Step 1 – write down the conventional assumptions. If we roll back the clocks to 1998, when Reed Hastings first dreamed up Netflix, we can easily imagine the serial entrepreneur writing out the conventional assumptions about the DVD rental business at that time:

● Renters will travel to a central location where DVDs are stored -renters will come to the DVDs.
● If DVDs are returned late, the renter will be hit by late fees, as the DVD store misses out on potential rental revenue.
● Most of the rental revenue will come from a narrow range of hit movies.

False Faces Step 2 – reverse the assumptions: After listing your assumptions, you should now challenge them by reversing them and writing down the opposite of each one. Let’s flip over the assumptions just mentioned and see what happens:

● DVDs will come to the renter, either by mail or via their internet connection.
● No late fees, as a business model where the renter must replace each returned DVD benefits from tardy returns.
● Rental revenue will come from a vast range of movies such as… minor hits, documentaries, classics, kids movies. This will appeal to both early adopters (who can spread the word) and customers not being served by current DVD rental businesses.

See what happened there? By reversing the conventional assumptions, a radically different business model has emerged which happens to be the one Netflix has deployed to great success. What could you discover if you reversed the assumptions around your business?

3. ‘Incubation’ is more than just ‘sleeping on it’. Everyone has heard the old cliché ‘let me sleep on it’ but you might not know why this works and the best way to apply this technique. Let’s look at a personal example to illustrate how to use the technique - How I used incubation to come up a name for my online suggestion box company – ‘Vetter’.

Step 1 - Jot down some rough details of what kind of product/service (in my case a name for my business) you are trying to come up with. Here’s what I wrote, about 6 months back: “Something short and snappy, easy to spell and ideally a real word. Should communicate the removal of bad ideas – e.g. ‘sift’.”

Step 2 - gather information about the challenge. In my case I read articles about naming a company and looked at some competitors names, to make sure I picked something that stood out.

Step 3 - Instruct your brain to find a solution, let go of the problem and forget about it for a while. Go exercise, sleep, socialize, work on other things.

Step 4 - Rejoice when a solution arrives! In my case the solution was the name “Vetter”. As you can probably figure out, the word means a person or thing that ‘vets’ something and sounds a bit like ‘better’. It’s also short and snappy” so it ticked all the boxes. As an interesting side-note, the idea arrived while in the shower, in keeping with the wise words of an un-named physicist who many years ago said: “We often talk about the three B’s, the Bus, the Bath, and the Bed. That is where the great discoveries are made in our science.”

I use these techniques several times a month and have tackled all kinds of problems with them. What are your favorite techniques for coming up with new business ideas? Please post them in the comments.

Duncan Murtagh is fascinated by the thinking process, creativity and ideas. That’s why he co-founded Vetter, which helps companies get more suggestion box ideas and break through the fuzzy front end.

Image source.

4 comments:

Marc Lussy said...

Very intereting techniques. I am working in the banking/service industry. I think here it is a bid harder to adapt this model but I think it will work as well. I am certainly giving a thought about it.

My blog on Management & Leadership
http://managementleadership-marclussy.blogspot.com/

Mary Legakis said...

Love the ideas for coming up with ideas! I'm going to apply them to my business and see what arrives. Some other ideas... I find that just having intellectual conversations with others often serves as an incubator for ideas. Another is to explore what industries completely opposite to your business do - what are their assumptions and strategies, and then can they be applied to your business?

GROW Model Of Coaching said...

Thanks for all your posts on leadership. This was really great!

Noah Lomax said...

These are very helpful techniques. I work in a college setting that is always changing with styles, trends, etc. Because I'm in charge of student leadership development, I'm always looking for new and creative ideas that are relevant to our students! Great article!