How to determine the opportunity for the idea?

In the earlier article we explored how to generate ideas. Now we need to determine the opportunity for the idea. Ideas are not opportunities but they are merely a tool for opportunity. An idea becomes an opportunity only if there is a need or want. The idea must be based on a solution and market driven. We need to identify the stakeholders and create value for them.

Unless there is an opportunity who will be able to make good their ideas. Therefore ensure that you spend enough time to determine if the idea has real opportunity. The time spent in doing this will help you increase the chances of success.

There are two approaches to determine opportunity. One “Systematic Approach” (by the late Professor Peter Drucker) and the other “ market Approach”.

Determining by Systematic Approach. In this approach there are seven ways leading to opportunities. The first is known as the unexpected opportunity. This is probably the largest source. This happens unexpectedly and it can come from unexpected success, unexpected failure or unexpected outside events. The second is known as the incongruities opportunity. This is a discrepancy between what it is and what it ought to be. This is basically a fault leading to opportunity. The third is known as the process need opportunity. This is a necessity and an opportunity results from this. The fourth is known as the Industry and Market Structures opportunity. This happens when there is a need for change in an industry or market structure. The fifth is known as the demographics opportunity. This happens due to change in population in terms of size, age, composition, education, income etc. The sixth is known as change in Perception opportunity. This happens when we look at things differently and gives rise to an opportunity. The seventh is known as new Knowledge opportunity. This is the big one and gets a lot of limelight and creates history.

We have not gone into the details  as you can read Professor Peter Drucker’s book “Innovation and Entrepreneurship” to get the full details.

Determining by Market approach. This process has five steps to determine opportunity. The first step is to ask how these products create value for a potential customer. Value is created when it is an improvement or lower cost of product or service. What are the barriers to adopt the products? Is it user friendly? Doe it need training? Is the market slow to adopt new products? Does adoption make other products obsolete? How to overcome these barriers? Once we are able to answer these questions we can conclude the potential demand and the revenue. The second step is to determine the risks. Risks fall into three categories, technical risks, financial risks and competitive risks. In technical risk we need to explore the barrier to entry, adoption, and obsoleteness of our product. In financial risk we need to explore the cost of research, development and marketing of our product. You must be able to recover or take the money lost in the event of product failure. Competitive risk is very important. The only time this does not happen is when there is no opportunity or no one has seen the opportunity. Both are bad for you. So you must be prepared to mitigate this risk. In the third step you must analyse the service, production and manufacturing process depending on your business. Here, can sufficient numbers of products be produced at the right cost and if it is a service can you offer enough. In the fourth step you need to explore the initial cost to setup your operation. In the final step you must expand the risks determined in the second step to see the opportunity.

Both approaches can be applied to determine opportunity. The first “the Systematic Approach” (by the late Professor Peter Drucker) was suggested many years ago  but till today it is a great approach. The other “the market Approach” is determined by applying logical steps to determine an opportunity from an idea.

The unfortunate thing about us entrepreneurs is that we tend to fall in love with our ideas and ignore the  million rupee question “does it have an Opportunity”. This leads us to say that people do not fail but ONLY ideas because they did not have an Opportunity in the first place. Now that this has been brought to light and the approach has been clearly explained to you we hope you will focus on this aspect of Entrepreneurship  extremely seriously to ensure success of your ideas.