My approach with this blog is to help Baby Boomers create ideas and turn those ideas into businesses.  Businesses that enable the owner to create the income live well and generate funds for retirement.

Often, we come with ideas that we believe will be so earth shattering, so impactful, that we know it will be worth billions.  Our heart starts to race, our palms get sweaty when that ‘aha” moment hits us.  We think, “Can I really do this? Can I really make this work?”  We start dreaming about how this idea will change our lives and how wealthy we will become and the impact we can have on the world.

But the first question shouldn’t be, “Can I do it”, but rather “Should I do it?”

This by no means will be an article that tells you to play it safe and not to dream big dreams.  What is will do is show you how to be pragmatic in evaluating your dream product or service.

 

3 main ways for creating a new business or a new product.

1. Take an existing product and an existing problem and creating a new product.
2. Take an existing market and an existing product and change the assumptions of the market thereby creating a new product that resolves the problems of the existing market.
3. Identify a totally new market or new opportunity and provide the product or service for that market.

 

Offer a breakthrough solution for an industry’s existing problem

Let’s take the first area and talk through it via an example.  What was the problem in the small electronics space in the early 2000s?  Until the iPhone, people needed to carry 3 devices to be able to listen to music, talk on the phone and take pictures.  Going on vacation meant taking a MP3 player for listening to music on the plane; a phone to make a call or text that you landed safety; and camera to take pictures of the sites. 3 devices and 3 power cords.  It created a lot of hassle and a strong possibly of losing at least one of them.  The iPhone eliminated that hassle with an easy to use interface for all three.  One device to listen to music, make calls, take pictures with the ability to have new applications loaded on the phone, making the iPhone an indispensable device.  It was a huge breakthrough.

Uber and Lyft are another example.  What was the problem they solved?

• A taxi may not be available when you need it.
• Often the taxis were unclean

Uber and Lyft provide transport that was dependable, clean and safe.  They removed the uncertainty in public transport.  One less worry on your business trip.

But taking on an incumbent head on can be costly and time consuming.  While Apple has phone competitors, Uber has had even more difficulties.   The most vocal have been the taxi associations and drivers.  A few years ago, taxi drivers in London and Paris staged a protest by driving very slowly, creating massive traffic snarls.

Political clout by these organizations have gotten state and city governments and even countries to act.

Some city/state governments have banned Uber:

• Austin, TX
• Parts of Oregon

Countries that have banned Uber:

• Bulgaria
• Denmark
• Hungary
• Italy
• France
• Netherlands

All of this is to say, if you take on an industry head on, be prepared to spend hundreds of millions of dollars fighting them.  Not a good way to get a business off the ground.  It is far better to utilize the second method.

 

Redefine an industry’s existing problem and solve it

This is a way to reexamine a current market and the reevaluate how products and services could be provided; how pain points could be eliminated.

What if your industry is operating under certain assumptions and those assumptions limit demand for the product?  That is what Groupe SEB, a French multinational discovered.  As described in W.Chan Kim’s book Blue Ocean Shift, Groupe SEB, maker of a French fryer took a fresh look at the assumptions around their product, which was, French fryers use lots of oil.  Oil is messy; it produces a product that is fattening (the fries) and the oil must be disposed of after use.  Groupe SEB redefined the product by eliminating these two main issues.  With the new product it only took one tablespoon of oil to create 2 pounds of fries and those fries had 40% less calories and 80% less fat; yet tasted delicious.  Product sales increased greatly, even attracting buyers who had never bought a French fry maker.

So often the industry assumptions are so engrained that it is difficult for incumbents to look past those assumptions and create a product that solves the problems inherent in the existing product.  This where you, someone that is on the outside, that thinks differently, can provide a solution.

 

Identify and solve a brand-new problem or seize a brand-new opportunity

The third and final way is creating a brand-new market and create a new customer base.  This is very costly because the customers don’t see a need for the product.  Convincing potential customers to the merits of the product and getting them to open their wallets to buy, takes time and there is no guarantee there ever will be a market.   Below we will look at two products.  One that worked and one that didn’t.

 

A product that created a new market:

The airplane identified a new problem; how to have fast, safe transportation.  Before the airplane, people took a ship from one continent to another, knowing the trip would take days and in many cases weeks.  This was the method of transportation for centuries.  But once the airplane came along, transportation thinking changed.  While it took about 20 years for the airline industry to get established (first flight 1903, first airline 1919), once it was up and running, ship travel began to decline and never regained its market share.  Today, you would only take a ship across the ocean for pleasure.

 

And one that didn’t

But not every breakthrough idea, finds a market.  Segway has been around for almost 20 years (burst on the world scene in December 2001), and was heralded as the next big thing in transportation.  The technology worked flawlessly, and the system was reliable. The scooter was able to maintain its balance using gyroscopes, a pretty ingenious idea, that was destined to be in every home within the next decade.  Except that didn’t happen.  Why not?

Unlike the airplane which solved a problem people didn’t know they had (how to travel great distances in a much shorter time), the Segway didn’t solve a problem.  It didn’t replace the bicycle because it couldn’t be used as a commuter device, (Segway is 47 kilograms or 103 pounds), so it was too heavy to lug into the office.  It is a motorized device so in many locations it can’t legally be ridden on the sidewalk and it is not licensed so it can’t be ridden in the street.  It was too slow to replace motorcycles and at a cost of $6000, it was too expensive to be toy for kids.  So, while Segway is still around today, largely used by security and police forces in pedestrian areas, its impact is very minimal on society.  In a sad note that sums up the company’s history, Jim Heselden, who bought the company from inventor Dean Kamen, died when he drove a Segway off a cliff at this home.

So before starting a new business based on a brilliant new concept, take a moment to examine what problem it solves.

 

Actions:

1. Examine your new idea and determine which of the three categories it falls in.
2. Think through the benefit(s) it provides and problem(s) it solves.
3. Get input from others (e.g. your mastermind group) on your idea, the benefits it provides and the problem it solves. If you see the excitement in their eyes, hear it in their voices, then you may be on to something.
4. Go for it!