Innovative ideas are exciting. They are fun to uncover and discuss with friends and colleagues – although please be aware of any potential intellectual property implications with this. 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 answers a question that every innovator and business owner must ask: Does this idea represent real value to current or potential customers? Being able to answer this question correctly is as important as having the innovative idea in the first place.
The opportunities of most innovations are not always obvious. Innovators must ask themselves – what could we do with this? It is at this point that more often than not an external viewpoint can add real value. Even when an opportunity is recognised that opportunity may be relatively small to the innovations full potential.
Whilst there is no one exact way of recognising the opportunity associated with an innovation there is a theory entitled 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 (utility)? 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 greatest change to customers in the areas that matter most to them?
In addition to looking outside of the business to evaluate an innovation business owners and innovators should really consider how the business is lined up to exploit this innovation.
- Does the innovation have a strategic fit with your company?
- Do you have the technical competencies to make it work?
- Do you have the business competencies to make it successful?
If the business owner can answer yes to all 3 of the above questions it’s likely that the idea has the business is in a sufficient position to exploit the innovation.
Finally as mentioned earlier the business owner should make an assessment of the market potential if the new idea / innovation is allowing the business to enter a new market.
- 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’s shrinking will the innovation change this and send the industry life cycle on an upturn again?
If you would like to find out more about how we can support you to recognise, review and evaluate business ideas either directly or as part of a university enterprise programme then please click the appropriate link.