S8 E10 Innovation is different in Startups. Frameworks for finding business opportunities with Jeremy Gray

Episode 10 Innovation is different in Startups. Frameworks for finding business opportunities.

How can you find good, innovative ideas that lead to business opportunities? Three exploration frameworks— changing what doesn’t work, making things easier for customers, and making things more affordable—can reduce the risk and uncertainty associated with new projects.

Start-up is a temporary status—a term for an organization whose vital objective is to launch a new business model or open up a new market. For such companies, the model that identifies four primary sources of innovation—product, process, business, and customer—is inappropriate, an obstacle to the development of truly transformational ideas. Start-ups look at innovation from a different angle. After considering the needs of a particular industry or market, they deploy a new plan to improve the industry (incremental innovation) or create an entirely new market (disruptive innovation).

Innovative ideas, by themselves, are not enough; they are just one element of the journey towards market domination. Just as a drug can cure one disease but not another, start-ups have to apply innovation in an intelligent way that actually solves their customers’ problems. This is the main difference between how start-ups and traditional companies approach innovation.

The concept of innovation encompasses three fundamental characteristics:

For the consumer, innovation must always result in something new. If you compare what existed before with the new creations, you should see a positive advance.

Innovation doesn’t always involve the incorporation of new technologies. Value can be created for customers in various non-technical ways: designing a special customer experience, applying the low-cost concept to other consumer services, or introducing an unusual distribution model.

Innovation must have commercial value; if it yields no benefits, it’s just an idea.

Innovative ideas, by themselves, are not enough; they are just one element of the journey towards market domination. Start-ups have to apply innovation in an intelligent way that actually solves their customers’ problems.

Three exploration frameworks

For innovative entrepreneurs, the process of solving the customer’s problems begins with observing people and keeping abreast of technological changes. The next step is to ask whether there are any business opportunities that solve existing problems or address existing needs, taking into account that the proposal must be relevant and valuable to customers.

By combining this reflection with the three fundamental elements of innovation, we can define three exploration frameworks that allow start-ups to generate ideas that are both innovative and aligned with the elusive taste of the customer.

Framework 1: Change what doesn’t work

In this framework, the idea is to innovate incrementally. Borrow an existing idea or well-known service, assess its problems, and figure out how to do it better. Many kinds of attributes can be improved; adding new functions to the product is not the only way forward. The most interesting approaches often have to do with reducing or eliminating inefficiencies related to time, cost, risk, or effort. To be clear, “doing better” means more than just a simple product update.

Framework 2: Make things easier for customers

Being disruptive is clearly more difficult, since it involves disregarding known problems and preconceived notions in order to see things in a new light. This framework requires a certain degree of abstraction; rather than improving a defined product, you’re finding a new way of doing something.