From Idea to Startup (Pt. 1/5): Generate Winning Business Ideas

Key Takeaways

  1. The “From Idea to Startup” series is your end-to-end guide from idea generation (focus of this article) to growing your business.
  2. Start with your “Why”: Align your entrepreneurial journey with your inner purpose, values, skills, and interests.
  3. Empathize with your target customers and use design thinking to identify their most pressing problems.
  4. Generate a value proposition that exceeds your customers’ expectations and the competition.
  5. Carefully evaluate your ideas for desirability, feasibility, and viability to pursue the most promising ones.
  6. Follow our step-by-step guide for the practical application of these principles for your own venture.

Have you considered starting a business as a means of self-realization but don’t know where to start? This article series “From Idea to Startup” covers all you need from generating winning ideas, to “planning the work and working the plan” of launching your venture (click on the image to see all articles).

Specifically, this first article guides you through a tried and tested six-step approach to generate business ideas which align with who you are and what your customers are willing to pay for. Note that the principles outlined in these articles are just as useful/applicable for start-up entrepreneurs as for corporate innovators (sometimes with some creativity).

At the end of this article, you’ll also find a handy step-by-step guide which ties all these learnings together for you to get started.

Align Your Entrepreneurial Journey With Your Purpose and Skills

The first step to start a business is finding a problem worth solving. Only by solving an actual problem your product or service (from now on I will only say product for both) will create enough (perceived!) value for people to pay anything for it.

The bigger the problem is – i.e., the more “pain” it creates and/or the more people are affected by it – and the worse the existing alternative solutions, the bigger will be your potential “market” (i.e., sum of paying customers). Against this backdrop, we should generate business ideas with a problem-based approach.

At the same time, we’re still humans and don’t want to bother with annoying stuff, so we shouldn’t neglect or overstretch ourselves. Luckily, we don’t have to. Science (and common sense) shows we tend to be good at what we enjoy doing and enjoy doing what we’re good at and what we consider meaningful work. Let’s make use of this and create an upward spiral. Thus, before we look into the “market”, let’s look into ourselves.

To kick off your idea generation, it’s crucial to understand your own core values, beliefs, and capabilities, i.e., what you “bring to the table” (or not). A comprehensive “strategic planning” session can help you get this 360° view on “where you’re coming from” (and going). That entails reflecting on your SWOT (i.e., Strengths, Weaknesses, Opportunities, and Threats), creating a vision for your future, and breaking this “big picture” down into manageable long- and medium-term goals.

This holistic approach ensures any entrepreneurial endeavors you pursue align with your core values and are meaningful to you. Keep an eye out for a separate article in which I will cover this exercise in detail (which is beyond this article’s scope).

You can also use dedicated tools (e.g., the “Ikigai” framework) for finding areas right in that sweet spot of what you enjoy, you’re good at, the market needs, and can be monetized) or ask yourself the following guiding questions to clarify your purpose and skills first, and then follow the article to learn more about the market needs and monetization “parts of the equation” and more):

  • What do I love to do (e.g., try remembering experiences “where you felt particularly alive”)?
  • What am I good at (e.g., try remembering relevant feedback – because we’re biased – from trusted peers and mentors)?
  • What problems do I see in the world that I would like to solve (e.g., what makes you angry)?

Identify Target Customers and Problems Worth Solving

When it’s “clear” where we’re coming from, we can start shifting our perspective outside onto the market. Again, the goal is to identify a problem worth solving. At its core, this is what “design thinking” techniques are all about: Approach your potential customers with empathy, i.e., try to really understand their situation and problems. In doing so, get a broad overview of their “problem space” and then narrow it down to the “right” problem to tackle.

(When it comes to finding solutions later, you proceed the same way, i.e., you ideate solutions broadly and then narrow the “funnel” of ideas down to the most promising ones.)

What the “right” problem or idea to pursue is depends on your situation (e.g., if “sustainability” matters to you, you might be particularly drawn to ideas around our carbon footprint) but there are some general criteria to vet problems, e.g., its…

  • fit with your inner purpose, values and capabilities;
  • possibility of realization (e.g., technical feasibility);
  • importance and urgency for customers;
  • expected competition and availability of alternative solutions;
  • potential for commercializing new solutions etc.

Along this iterative process of diverging and converging problem and solution spaces (“double diamond design process”), you have plenty of tools at your disposal. Start with low-cost and effective ones like desk research, talking to experts or using your own industry experience. You can quickly get a good overview of current trends (e.g., political, economic, socio-cultural or tech developments) and potential areas screaming for innovation (e.g., where people’s dissatisfaction is the loudest).

With this general knowledge you can then hone in on those areas that suit your interests, experiences and skills. One remark on “skills”: Don’t be put off, if you believe you don’t have all the “deep technical skills”. You don’t have to do everything yourself in business; you can always hire and partner up to access missing resources. More on that later and in other articles.

In these focus areas, you can continue with some desk research on particular target groups, the typical problems they face, value drivers/success factors etc. To understand what they are truly missing you should also get more empirical, i.e., talk to them, and ask them what they want to do, what’s going well and what not so well in that context.

You can summarize your findings to not lose track of the bigger picture with tried and tested one pager templates like “customer journeys” – which visualize the steps your (potential) customers take to do something incl. challenges (i.e., the process you want to improve with your product) – or “personas” – which are one pagers with key characteristics of your target segment (e.g., demographics, likes/dislikes, habits, shopping patterns etc.) to tailor the solution.

Problem-Solution-Fit: Ideate Winning Value Propositions

With a good understanding of your customer and their daily struggles, you can shift from “problem-” to “solution-finding mode” (as ideating before this point would be like throwing darts in the dark).

There are many creativity techniques to generate ideas (mind mapping, fishbone diagrams, morphological analysis, 6-3-5 brainwriting, bionic approaches etc.). Covering them in detail would be out of this article’s scope. However, I believe with an open mind you can develop great ideas even without such techniques. They can accelerate the process and sprinkle in creative inspiration though, so I might cover them in another article.

Essentially, in this creative stage, you want to come up with ideas, concepts, features, characteristics etc. of solution which helps your target customers satisfy their needs with as little pain/discomfort and with as much pleasure as possible (significantly better than their next best alternative).

One tool I use to pinpoint the “problem-solution-fit” is the value proposition canvas. Like the other templates, it’s a tried and tested one pager that focuses your creative efforts on what matters. You start with your customer profile on the right side, i.e., what they need to get done and the challenges they face in doing so. Then brainstorm features of potential solutions to address these needs and aggregate these feature into a product concept. Pretty straightforward.

Sorting Wheat from Chaff: Pre-Screen Your Business Ideas

After ideating (many) great ways to solve your customers’ problems, you face the agony of choice. Now, it can help to “score” your ideas (which seem plausible prima facie) with criteria like the mentioned ones (purpose-fit, desirability, feasibility, viability, overall gut feeling etc.) or whatever criteria matter to you.

Practically, you could, e.g., rate each idea on a scale of 1 to 5 for each criterion in a big Excel table, and then focus on the ones with the highest total score. With the “intel” you already gathered from desk research and talking to first potential customers or experts etc., you should be able to make such a preliminary idea screening.

You can also “pre-test” the business potential of the promising ideas with a (rough) market sizing. I will cover this in more detail in a separate article, but the top-down approach – which is simpler than bottom-up – works roughly as follows: Start with the total “relevant” market size of your idea’s category (e.g., all goat cheese sold in New York). In a series of “logical steps”, you then gradually narrow this starting value down to the market share your product could realistically capture.

For example, if you want to sell goat cheese online, you’d deduce all people who don’t shop food online or are too loyal to their go-to cheese vendor etc. You can fetch such statistics (e.g., “%-share of people who shop food online”) from market reports etc. Again, it’s crystal ball gazing but still “good enough” to indicate if your idea is a substantial value pool (or not).

A final word of caution for your idea selection from Voltaire: “Perfect is the enemy of good.” An idea doesn’t need to get “full scores” on all criteria to be worth pursuing. It’s okay to follow a “good enough” approach (“80:20 principle”) to prevent “paralysis by analysis”.

Putting it Together: A Systematic Approach to Generate Business Ideas

In summary, generating business ideas using innovation best practices involves six major steps (which run iteratively with “fluid” transitions):

  1. Understand “where you’re coming from (and going)” (purpose, skills, values etc.) to ensure your (time-consuming) entrepreneurial endeavor fits into your bigger picture.
  2. Identify and understand your target customers, their goals, challenges, current solutions, needs etc. with empathy and tools like “personas” and “customer journeys”.
  3. Let the “problem space” diverge: Get a broad overview of the “problem space”, i.e., the struggles and unfulfilled needs of your target customers with an open mind.
  4. Make the “problem space” converge: Narrow this vastness down to the most promising problems worth solving according to your selection criteria (e.g., urgency, expected competition etc.)
  5. Let the “solution space” diverge: Ideate broadly with creativity tools like the value proposition canvas in a non-judgmental way and think outside the box for unique and valuable ideas.
  6. Make the “solution space” converge: Evaluate and (down-)select the most promising ideas according to your selection criteria (match with purpose, tech feasibility, financials etc.) to further develop.

To get the ball rolling, you can apply the methods and tools covered in this article in the real world and ideate “real solutions for real problems” with promising business potential now. Please don’t hesitate to share your experiences in the comments or forums, so we can all learn and rise together.

In the next article, we’ll learn how to validate our business ideas so we are backing the right horse before making any big investments.

Cheers, John.

Recommended Resources for the Go-Getters

Here are some resources for the hungry ones to dive deeper into today’s topics:

  • “Ikigai” by Hector Garcia and Francesc Miralles – This book explores the concept of Ikigai, which is a Japanese philosophy that centers around finding joy and purpose in life, and can help aspiring entrepreneurs develop business ideas that match their inner compass.
  • “Change by Design” by Tim Brown – This book provides a comprehensive introduction to “design thinking” and its application to solve real customer problems for meaningful change.
  • “Value Proposition Design” by Alexander Osterwalder and Yves Pigneur – This is a practical guide to creating winning value propositions, including techniques for finding problem-solution fit, based on the same-named canvas.
  • “Hooked” by Nir Eyal – This book provides practical insights and frameworks on how habits of consumption are formed, and how to build products your customers want to use again and again.
  • “Inspired” by Marty Cagan – This hands-on guide covers the entire product development process, including how to determine customer needs, create valuable solutions, launch and improve your products.

Share your thoughts